Monthly Archives: October 2011

It’s almost that time. Movember. The month formerly known as November, when men grow moustaches in support of men’s health, and women around the world have to put up with that (often unappealing) facial hair … because it’s for a good cause.

Over the last few years, as we’ve slowly accepted this hairier month, we’ve also come to accept the phrase, “Get tested.”  There is lots of encouragement for men to be screened for prostate cancer, early and often. Yet just recently, a different message emerged. The US Preventive Services Task Force suggests PSAs (the blood sample test used to detect prostate cancer) shouldn’t be used, as the test does more harm than good in the long run.

Based on a worldwide study, the task force found a positive PSA result can result in significant amounts of further testing and treatment, and that the negatives outweigh the positives. Side effects from treatment can include impotency and incontinence.

They determined there are many slow-growing cancers that, in fact, that would be best left untreated. Overall the studies determined mortality was not reduced by taking the test. So because of the risks of unnecessary intervention and the negative outcomes, they recommend the test not be used at all.

As usual, there’s another side. Opponents agree the PSA test over diagnoses cancers that don’t need to be treated, but they point out it also picks up the lethal aggressive ones—and in those cases, early detection improves the chances of survival. They argue that if the cancer isn’t fast-growing, the best treatment is to simply monitor the patient. If it is a fast-growing type, then aggressive treatment is warranted.

They argue it is not the test results that create problems. Instead they point to the structure of the US medical system, where there is financial incentive to perform treatments and surgeries.

Personally, I will continue getting tested. I believe I would rather detect an aggressive cancer early, and if it is a slow to moderate form, I’ll be able to arm myself with information about alternatives and risks.

If you’re wondering why an accountant is writing about cancer in connection to accounting and business performance management, there’s a reason. What struck me about this issue from a work perspective is how different people can look at the very same data and come to very different conclusions.

In this case, understanding that the test is performed in a health system that financially rewards further testing and procedures helped provide a context for understanding the task force recommendation. Without context, people may not have reached the same conclusions.

The lesson for me in analyzing information about any business is to make sure all of the information surrounding the problem is available before coming to any conclusions. It’s very important to understand the context of the problem as well as the hard data to help find the right solution.

But for some men next month, any reason to grow facial hair is a good one – regardless of context.

There has been much in the press lately about Americans living in Canada who face stiff penalties for not filing appropriate income tax and information returns to the U.S. government. It sounds straightforward, but in compelling stories like this one, about a pair of long-time Canadians married to retired farmers in Saskatchewan but born in the U.S., it’s easy to understand why people aren’t aware of the rules. For most Americans working in Canada there are likely no taxes owing on income tax returns, but the penalties for late filing information returns can still run into the tens of thousands of dollars.

While Canada doesn’t have quite as harsh a system as the U.S. in terms of information returns, there is one return in particular that can run you up a $2500 penalty if filed late.

Taxpayers who own foreign property must disclose ownership if it has a cost of more than $100,000 on CRA form T1135. The form is due on the same date as your tax return. But with different consequences.

Many people who know they’re getting a refund choose to file their tax returns late because there won’t be a penalty. While this may be true for income tax returns, the T1135 must be filed by April 30 (June 15 if you’re self-employed). It’s an expensive deadline to miss. You’re subject to a penalty of $25 per day, with a $100 minimum and a $2500 maximum per return.

Common foreign property items include:

• foreign bank accounts
• shares in foreign corporations (even if held in a Canadian brokerage account)
• investments held in foreign brokerage accounts (including Canadian investments)
• foreign mutual funds
• real estate
• interest in partnerships that hold foreign property

People often don’t realize the breadth of items.  For example, it’s very easy to overlook foreign securities held through Canadian brokerage accounts (not including those in your RRSP). Despite the fact all that income is accounted for on your T5 slips, you still need to file a T1135.

Another frequent mistake is made about vacation properties owned in places like Florida and Arizona. There is no obligation to report them if they are used strictly for personal use. If you rent them out for any time at all, they need to be reported annually on the T1135.

If any of these situations applies to you, your best solution may be to undertake a voluntary disclosure. Read our blog on the issue and feel free to call our office to discuss any of it further.

When I started my top ten list for business success, the very first item was the importance of having a business strategic plan. The founder of IBM had one. The visionary behind the Panama Canal had one. If you’ve been reading these posts, I would hope you, the entrepreneur, has one as well.

As any good businessperson knows, it’s not enough to have a plan and then sit back and watch the money roll in. Planning is a fluid, continuous process.

If your business is like most, you have plans, either formal or informal ones, for the upcoming year. Considering “plan” only has four letters, it’s a big and encompassing word. In your business, plans may cover marketing initiatives, sales, capital acquisitions, human resources and much more. Too often this planning happens in the context of daily management, trying to cope with everyday problems. Rarely does a small business owner step back and truly try to understand exactly what they need to do to be successful.

Even with the dark clouds over today’s business world (impossible to escape in the media); we also see businesses that seem to thrive—in all industries. The real winners are not only doing well, but outperforming their competitors.

The only possible explanation is that these “winners” have created a sustainable competitive advantage through superior strategic positioning.

Let’s break that down into a simple example. In that very first business planning blog, I focused on the success of McDonald’s founder, Ray Kroc, and his ability to see the big picture: a business that was simple to run, and could be replicated anywhere. It just needed to meet customer needs by serving simple, reasonably priced food in a clean environment. He saw where he wanted to take the business, and kept the big picture in mind during the development.

The people at McDonald’s never stop tinkering. The McPizzas and McRibs may come and go, but that drive to find out what customers want – and find out how to do it better than anyone else – is what keeps the brand successful. In the newest incarnation, we see the McCafé. You may have noticed Ronald McDonald would feel out of place in the new, trendier golden arches hot spots. And I have heard more than once that McDonald’s coffee is far better than Tim Horton’s or Starbucks. If a health-conscious, stressed out population isn’t chowing down on as many Big Macs, that’s no skin off the Hamburgler’s nose. The company has proven itself flexible and adaptable time and time again.

I know we can’t all be McDonald’s. Every small business has scarce resources—whether your shortfall is capital, human or technology. By allocating those resources in the same way as your competitors you cannot achieve any type of competitive advantage. If everyone in a particular industry conducts business exactly the same way, they will end up with the same result: a margin of profit just wide enough for the industry to survive. While some businesses will eventually fail they will be replaced by another group, some of whom will survive.

What should you do that is different? So you don’t have the billions of dollars and thousands of staff that McDonald’s has to keep the machine going. Not necessary. (Though it would be nice.) If you can identify the areas that are the keys to success in your industry, and apply a mix of the resources you do have, you may be able to get an edge.

Here’s where we blend two important techniques into our large cup of McCoffee.

Business strategy planning is the process of identifying the keys to success in your marketplace. It’s concerned with the structure of your industry and your position in it.

Business planning is the process of focusing your resources on those keys to success. It includes business and operational planning and control.

In future blogs I hope to offer insights into these two very different—and important—processes.