Monthly Archives: June 2011

Switzerland gets all the good press. Chocolate, health care to rival ours, and, of course, its reputation as tax haven central.

There has been much written in the press recently about the US and Canadian governments trying to get information about people holding money in offshore tax havens. The Canada Revenue Agency has been successful in forcing banks in jurisdictions with strong privacy legislation to give out such information about their depositors. This has resulted in many people stepping forward and voluntarily disclosing previously unreported income to the CRA.

If you own a small business but don’t have a Swiss bank account … trust me, you’ll want to keep reading. Most small business people don’t have money in offshore accounts. But there are a number of other situations where it may be appropriate to take advantage of the CRA’s Voluntary Disclosures Program.

It’s usually a simple situation. Maybe you didn’t file a corporate income tax or HST return. Maybe you work in an industry where you’re paid in cash, and the money hasn’t previously been reported on the tax returns.

Whatever the reason, if you find yourself in a situation where you haven’t completed all required returns, or if you are aware that there are errors in returns you previously submitted, the voluntary disclosure program may be helpful.

Here’s the advantage: if the CRA accepts the disclosure as voluntary, all penalties and possibly some interest will be waived for up to 10 years of delinquent returns. There are big savings to be had because penalties for undisclosed income can be stiff.

In order to be eligible for the program, your disclosure must meet the following conditions:

• The mistake must involve the application of a penalty
• Include information that is at least one year past due
• It has to be voluntary. Seems logical…but it means you can’t be aware of any collection action by the CRA before you come forward
• You must provide full and accurate facts for all the taxation years where there has been inaccurate, incomplete or unreported information. If you don’t tell the truth, the whole truth and nothing but the truth, and the CRA finds out, the disclosure becomes invalid.

At Silver+Goren we like to explore all possibilities to help make the most of your wealth and your business. This route is not part of normal year end tax planning—but it can be a valuable tool, that saves you cash as well.  Without involving the Swiss.

It seems we can’t turn around without hearing gloomy epithets about the future of Canada’s biggest technology success story. RIM’s operating results were less than expected and, even worse, expectations for the future were downgraded considerably…not to mention RIM’s euphemistic “headcount reduction.”  With RIM perceived as the hub of technology innovation in Canada and a major economic driver, there is much concern about long-term implications to Canada. (Read what RIM says here and what that’s interpreted as here.)

I recently attended a technology conference. You can imagine how exciting the words “future technology trends” sound to hundreds of technophiles sitting in one room. But RIM didn’t seem to be in that forecast. It’s shocking when you remember that RIM created the category of smart phones. At one point, the company held a monopoly in it. RIM has always led the number of new phone installations.

Now these tech experts say RIM dropped to third behind Google Android and Apple OS.  Even more troubling: their statistic for new installations placed RIM at 5% of the market in April.

Compare these woes with IBM. The company just turned 100 years old. IBM was a market leader, dominating its category while pulling in huge profits.  Yet, during the early 1990s, it almost ran out of money as its mainframe computer business was overwhelmed by the newer, cheaper, faster and evolving personal computer.

So what did IBM do to beat the slump? New leadership was hired. Staff charted a new path to success recognizing the mainframe computer was no longer the CPU for growth and profits.  IBM moved beyond mainframe sales and built a hugely successful and profitable business based on software and services.

Microsoft now faces similar challenges.  Although it’s still very profitable, that money is driven by products with an uncertain future, as technology rapidly changes the business environment.  The growth of the mobile platform and the evolution of software as a service delivered through the Internet present significant threats.  Investors see the risk as so severe they are starting to call for the replacement of boss Stephen Ballmer.

As an entrepreneur, what lesson can you learn for your own business performance management?  First, be aware that the lifecycle of your products and services is shortening. More attention needs to be paid to changes in customer needs and competitor offerings.

You should also look at developing new business models to enter marketplaces you haven’t explored. Can you add services and revenue streams to existing product lines that have become stale?

Can you leverage your existing skills, technology and marketing relationships to generate new opportunities?  Or utilize long-term relationships with solid customers to find more revenue streams?

The most important lesson is to not be satisfied or complacent with your current product and service offering but to continually look for new and better ways to deliver value to your customers.  The longer you wait to find and develop new innovations the more you place your future at risk … and we all want to celebrate our company’s hundredth birthday.

At Google’s newest Canadian offices if you don’t want to take the stairs … the elevator isn’t your only choice.

You can take the slide. There are only two rules: no going down head first and no eating.

The “no eating” rule may seem a little strange… that is, until you learn about Google’s culture of food. Free food. At the bottom of the slide is a cafeteria open around the clock … at the top is a breakfast and snack bar.

While Google’s employee perks are impressive in both ingenuity and popularity, you don’t need a slide to retain great employees. Each year, I always look forward to reading Fortune Magazine’s annual survey of the hundred best companies to work for. I’m always amazed at the creativity companies demonstrate in trying to ensure a happy and energetic workforce.

What is notable about this list is the diverse nature of the companies. Large and small businesses are included. And the diversity is impressive: the latest includes a nine-store supermarket chain, law firms, car dealerships, construction companies, retailers, hospitals and hotels. The types of benefits are varied, too: bonuses, on-site childcare, summer camp for kids, car cleaning, free food of all types and cheap holiday accommodations, for starters.

So how can a small business in Toronto improve its business performance management by keeping top performers and attracting new ones?  We find small business’ particular advantage while competing for good people is flexibility. This could mean flexible hours or opportunities to telecommute.

In our experience, recruiting working mothers is very successful choice. Flexibility on the part of the employer is key – not only in start and leave times, but in anticipating higher absenteeism due to childcare difficulties, illness and children’s school activities. The payoff is worth it: very loyal, focused, organized employees.

Another area where small businesses can compete effectively for quality employees is training and professional development. This can be as simple as subsidized training and education.

A key area of differentiation can be offering a much broader range of experience, particularly to younger individuals, than can be found in a larger organization, where it is easy to get lost.

And because there is much less hierarchy, you can offer a more effective mentoring program. To start, employees are much closer to business strategy planning. This will require spending time including key employees in problem solving and working with them to develop their skills.

As with most things in small business success, hiring and maintaining good employees doesn’t have to  be about spending money. If you focus on being creative and approaching the challenge in a unique and novel way, the reward is well worth the time.

So you’ve got the cash. The solid business plan. The unique approach that has you poised to succeed. But we’re not quite there yet. Now let’s focus on building an excellent team.

Hiring the right people is critical to the success of any business.  In all but the smallest businesses your employees will have frequent interaction with your customers.  No matter how hard you personally work at creating a great experience for your customers, your employees are the face of the company too. Their interaction with your customers will always have a significant impact on how your customers perceive your business. (see “Tale of Two Breakfasts” blog for an example.)

How do you find the right people who will represent your business’s goals in the most appropriate way?

Brain surgeons, lawyers, architects and zookeepers all have skills unique to their industry. Yet for most businesses, what employees do on a day to day basis can be taught.  Famous for customer service, Southwest Airlines admits they “hire for attitude, and train for skill.”  Your task, as the entrepreneur, is to define the employee attitudes that are critical to the success of your business.  Later, you can train people to write a report, submit blueprints or feed the lion.

Your starting point (as always) is to define what specific problem you are trying to solve for your customers and how your business is going to solve this problem for them.  We’ve run through this before – by now, it should be easy. How will your business relate to your customer while solving their problem?  Once you have an answer, you can hire employees to fill in the blanks. You look for people who have a similar way of approaching customers and you train them on the details – how to do things exactly as you like them.

Your training should start by teaching your employee everything you can about what your company is about.  This includes your marketing strategy, your message to customers, who those ideal customers are, the nature of your products and services – anything to help get them get up to speed. The more you share with your employees, not only will they be better able to reach your goals, they will feel more connected, which boosts morale and often productivity.

Once your employees understand what it is you are trying to accomplish, it becomes a matter of providing the necessary tools to do these things. In building an effective employee, I like to use a three-step guide:

1. Make sure the employees are crystal clear as to what is expected of them at work
2. Ensure they have the equipment and support necessary to fulfill those expectations
3. Be generous with appropriate recognition and praise for the work they perform

John Jantsch, in his excellent book “The Referral Engine” describes the process this way: “The company takes care of the staff, the staff takes care of the customer, and the customer takes care of the business.”

You’ve read it here before – to get an edge in your industry, you need to think outside the box. As the stereotype goes, often lawyers (or even accountants) aren’t the best at creative thinking.

Here’s a brilliant example of lawyers in the United States who saw an opportunity to help an underserviced niche market – with amazing results. As most of us north of the border are aware, our southern neighbours are in deep trouble with tens of thousands of homeowners facing foreclosures from their banks. Here is a great New York Times article that sums it up.

But the story becomes much more interesting when a Florida law firm uncovered that the banks, in their eagerness to take over the properties, have been, to put it kindly, “sloppy” in their legal paperwork – hiring Wal-Mart shift-workers and hairdressers to execute foreclosures.

Check out this video that explains the phenomena.

This gave homeowners the opportunity to challenge the banks’ methods and negotiate an improved position.  But, these homeowners were obviously already struggling financially, and couldn’t afford lawyers to assist them in their challenge to the banks.

The lawyers that uncovered the problem also pioneered a solution. In another New York Times article, Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Florida says: “We thought ‘why don’t we use a bit of ingenuity and find an affordable way to represent them?…It’s a new model, a new paradigm”.

Here’s the paradigm: offer to represent clients immediately, for a small monthly fee. Instead of big bills, the lawyers agree to receive a second mortgage on the property in question. American lawyers are able to accept contingency fees (i.e. only be paid if they win). It’s a great deal for the homeowners who have nothing to lose by signing up. This allows homeowners to get the legal representation they need while providing a brand new market opportunity for some creative lawyers.

This struck me as an interesting example of individuals in a very mature, established profession seeing a need that is not currently being met by any of their competitors.  They differentiated their firms not by practicing law in a different way but by offering a novel payment structure, not available anywhere else.  Mr. Ticktin, in the New York Times article, indicated that he had 3,000 foreclosure clients and was getting several new files a day.  His plan for taking mortgages on his clients’ property has already been copied by other firms.