Canadian’s Personal Finances Fiscal Cliff: Are We There Yet?

Today we hear much talk about the USA’s economy approaching the so-called “fiscal cliff.” What about your personal financial affairs? Are you at the fiscal cliff as we inch toward 2013? Canadians are swamped in debt. Monthly, we read about the rising debt-to-disposable income ratio that stands now at around the precarious 164% level.

Although the world and many at home commend our government for its brilliant fiscal management, few warn about the unsustainable personal debt levels. Indeed, our central bank chief, Mark Carney, accepted an appointment to a similar role at the prestigious Bank of England. Will his legacy here be that of hero or villain? Will history show that he held interest rates low for too long, encouraging many folks to take on debt they cannot afford?

To his credit, he, our finance minister, and prime minister have been warning Canadians about these dangerously high personal debt levels. However, Carney could curtail the rise by raising interest rates. Sure, higher rates will dampen current slow economic growth. Even so, I think short-term pain is better than the likely personal finances’ crash that might happen if debt remains at present levels, or grows.

What can Canadians do to avoid their fiscal cliff? Let us examine three vital steps.

Accept you are dangerously leveraged.
Set a mechanism in place to live with declining debt
Develop a new vocabulary to guide your behavior
Accept You Are Dangerously Leveraged

You can’t solve a problem unless you recognize it. Do you think you are carrying too much debt? Your banker might tell you no; however, you alone can answer this. Take a helicopter view. What are you and your family’s emotional responses to your debt? Are you worried? Can’t sleep? If yes, you have too much debt. Certainly, look at ratios, but this is the key barometer.

The emotional cost of debt is the first and the most significant cost. If debt is 10% of income, and is causing problems for you or at least one in your family, it is too much. Still, you must accept reality and decide to live with it, take on no more, and start a debt free lifestyle.

If you are a Christian, give this emotional stress to Jesus (Matthew 11:28).

Set A Mechanism In Place To Live With Declining Debt

People are impatient. We live in a now society. Sadly, probably you got into debt over a long period, and it is likely you will get out over an extended time. Accept this fact and learn to live with it.

Develop a strategy to live in your debt. Look at how you got there; draft principles to prevent a recurrence; and then write a financial plan – alone or with help. The plan should show concisely how, by following your principles, you might be debt free in a specific time.

If you got into debt by impulsive spending, you might develop a principle never to buy without a list and a budget. As well, when you feel you need to spend, you might want to wait 24-48 hours during which time you would talk with your spouse or accountability partner.

You will have to find what might work for you, decide if you need help, and try to get it.

Prepare a debt-meter and place on your fridge. Monthly, as you repay debt, adjust the debt-meter.

Develop a new vocabulary to guide your behavior

This sounds easy, is simple, and when you get it, will be your most effective debt control “tool.” What you believe will decide how you behave. If you believe emergencies happen and cause you to spend erratically, you won’t change your behavior. However, if you believe that apart from the timing, most “budget emergencies” can be planned and should be planned by setting aside funds regularly to meet them, you will plan accordingly.

Your car will need repairs. It will need new tires. Your furnace will go, and so on. The issue here is timing. You don’t know when these potential budget busters will happen. Even so, you know they will occur, so create a capital fund, a rainy-day fund, emergency fund, or some other means to save for these predictable events. If you accept this fact about emergencies, and understand that to get there you must sacrifice today’s consumption, this is the start of your major victory over debt.

Another key vocabulary change is to accept that you can’t mange money, you can manage only your behavior – change from money management to lifestyle management.


As we enter 2013, look at your finances. You will know if you are at the fiscal cliff. Rest assured, you do not need more money to get you through, first, you need to accept where you are. Next, set a mechanism to live where you are as you work off your debt. Then examine your vocabulary, your beliefs, and adjust them to reality.

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UK Finance Minister Outlines Thinking on Bonuses

The British Chancellor of the Exchequer Alistair Darling has been intimately involved in the creation of the modern British regulatory landscape, but all this may be about to change with a General Election due within 10 months. He also succeeds arguably one of the most successful Chancellor’s in the 21st Century – the current Prime Minister, Gordon Brown – just as Tony Blair has been a tough act to follow, Darling has had to step into Brown’s shoes at The Treasury. Darling has remained silent all week since the announcement of the opposition Tory party’s proposals for the abolition of the FSA; handing prudential financial oversight to the Bank of England, a general carve up of the FSA and probable delay on RDR commitment. Today, that changed with an interview published in a leading, left-wing publication, The Tribune.

Darling on Bonuses

Bonuses are going to be a sticky issue for regulators, politicians and employers – “Bonuses are Back!” may be the cry on the Square Mile, after all, if it’s being earned they’re going to be paid or risk losing competitiveness. Darling’s response is that many bank and financial sector employees only have a job today because of the taxpayer monies used to bail out the sector and shore up the banks. For banks now owned by the UK Government, there will be no bonuses this year;

First, we do have restrictions on the banks we own in terms of bonuses; they can’t get cash bonuses this year, it’s got to be deferred, it’s got to be capable of being clawed back, the people who failed can’t get rewards and they always have to be linked to long-term success.

The interim Walker report on working practices and pay structures including bonuses, published a couple of weeks ago, seems to simply state bankers should worry about doing the job they are already being paid to do. Darling disagrees in that Walker is going further; bankers did not do their jobs to begin with which is why we ended up in the global economic mess culminating in the near-miss, banking collapse. As Darling states,

One of the causes of the trouble is that they were not doing what they were supposed do be doing. Too many of them patently didn’t even understand what was going on in their own banks.

When pressed on disclosure of who actually is paid a bonus, Darling rightly concedes that naming the recipient poses issues outside of transparency and financial regulation; after all, I certainly would not like my name published anywhere with a big number printed after it – there is a dividing line between personal security and public disclosure, though directors at the Co-Operative Bank have been making personal identity disclosure without issue. With the FSA under political fire from the Conservatives, who announced they would dismantle the regulator if elected, Darling’s responses give some insight into why Labour wants the FSA to remain and enjoy enhanced power. For instance,

A lot of these people have got to realise they just would not be working today if they did not have the insurance policy provided by the British and American taxpayers and others. That’s why it is right that the Financial Standards Authority now has the power to say to a bank that they don’t like the pay structure of a bank, it’s too risky, you can’t do it.

Also when questioned on Walker’s proposal for a voluntary rather than statutory regime, Darling’s response was,

We have gone beyond that with the FSA and its new power to say we don’t like your pay structure, it’s too risky. That’s not voluntary, because ultimately the FSA can put you off the road.

This fundamentally underlines the difference between Labour and Conservative thinking on who will regulate the banks and financial sector – Labour clearly envisages an FSA with a very wide-ranging remit and the power to assert itself in virtually any aspect it sees fit. The Conservative focus beyond dismantling the FSA is yet to become clear, but it is reasonable to assume at this stage that they see a return of the Bank of England as the banking regulator and not as an “academic” body as Labour Minister Lord Myners recently put it. The Tribune article focused on pay structure and especially bonus payments, it’s to be expected from a socialist paper, but Darling fielded answers which did take the position that pay and bonuses are actually one commercial factor to be taken into account when dealing with banks who received bail-out monies. As he went on to say,

I think, in relation to telling the banks what to do, there is a broader question.

The interviewer’s observation of Darling when the question regarding a National Maximum wage is as telling as the Chancellor’s response:

What about a national maximum wage? Darling’s jaw drops discernibly amid a slight shudder: “People who call for these things are the same people who argued against a national pay maximum in the 1970s. I don’t think pay restraint or arbitrary controls work.”

This article was commissioned by ComplianceAsia, the leading APACS region provider of outsourced compliance support for leading banking and financial institutions operating in the region.

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How Lean Startup Methods Apply to Non-Tech Small Businesses

The traditional trajectory of idea, assemble a team, build a product, market the product and sell it as hard as you can has proven to be a recipe for failure in today’s fast-paced competitive business environment. Big and costly mistakes are made when this type of hit-or-miss new product introduction process. The big idea isn’t validated in the marketplace, market behaviors, needs and desires are often misjudged and what could have become a compelling business proposition becomes small business roadkill on the startup highway to success.

In 2008 US based tech startups have used the lean startup processes outlined by Eric Reis, Steve Blank and Alexander Osterwalder. It is a system that values experimentation over planning, market feedback over intuition and an iterative approach to product development instead of a belief that if fully built the customers will come.

The ever evolving lean canvas has replaced the established business plan. Instead of assuming that the imagined business model will work, the lean system searches for a business model that works based on actual evidence. It is said that business plans rarely survive the first contact with customers. They often don’t behave in the way you think they will. Boxer Mike Tyson perhaps articulated this truth most colorfully when he said, “Everybody has a plan until they get punched in the mouth.” The same is true for small business owners and the customers they wish to serve.

Small business owners can leverage the lean startup principles and processes used by tech entrepreneurs to build and deliver great products to thousands, if not millions, of customers quickly and affordably. Here are 3 ways you can leverage tech lean startup principles to boost your small business today:

1. Validate Assumptions to Mitigate Risk

The primary difference between the old established route to business success is that the lean startup entrepreneur first asks “Should this idea be brought to market?” instead of “How do I build my product?” Write down all of the assumptions you have about your idea and how the market will respond to your idea. Include what you think it will cost to develop your product, who it will benefit most, how you will drive awareness to your big idea and how you will sell it. Then come up with small experiments to test your idea.

For example, if you’re thinking about starting a food truck business selling meat pies, you could easily and affordably launch a simple landing page announcing that your “Meat Pie Food Truck” is coming soon and a spot for people to enter in their email address if they want to be notified when it arrives in their area. You could then run a series of Facebook ads to drive targeted traffic to your landing page and analyze how many people sign up for the announcement. The campaign could run for 10 days at $5 per day. If no one signs up you may want to rethink your idea or test with a better value proposition, or ad “hook” to motivate interest and the click through to the landing page. Start testing the assumptions that are the most riskiest to your business viability.

2. Talk To Your Market

One of the biggest reasons business owners struggle is that they look at their business and their product from their own perspective. The problem with that strategy is that the market doesn’t think about your business and product the way you do. They have their own opinions, their own perspective. In order to find out, specifically, how your market thinks about your company and what you have to offer you have to talk to them. Google does not have your answers. You need to get away from your desk and go to where lots of people in your market can be found. You might find groups of them at meet ups. They could be shopping at the mall. Figure out what they have in common in the types of places and events they attend and get your butt over there.

Ask open-ended questions about the relevant problems they have, what pisses them off, what creates the biggest pain in their daily life or work. Seek to learn. Dig deep to fully understand their perspective impact of the problem (pain), what difference it would make to have a solution (benefit) and what’s working and not working about the things they are now using to try to solve the problem. Do no selling. Just learn as much as you can.

3. Start with a Minimum Viable Product

Instead of investing a lot of time, energy and money in fully developing your product just build the simplest and smallest version of it to test to see if you’re headed in the right direction. Analyze the feedback you get in your initial talks with people in your market. Identify the one most important thing your product must do to deliver the benefit your market is actively seeking.

For example, if you’re the meat pie food truck visionary the most important thing might be that your meat pie tastes really good. Make a few pies and find ways to do some taste testing with people who don’t know and love you. In other words, friends and family don’t count. Their feedback will likely be biased. Solicit honest opinions from lots and lots of people. Gather and examine what they had to say and iterate from there. You may find that your customers would rather be able to pick up your meat pies at the local grocery store rather than wait for a food truck to arrive in their area.

The continued repetition of continued product development based on a constant customer feedback loop is what will get you to the holy grail of what is known as product-market fit. What this means is that you have a product that you know, rather than hope, your customers will love and buy at a profitable price.

Using tech lean startup planning and development processes in non-tech small business development assures that risks are mitigated, big and costly mistakes are avoided and assures that the business has the flexibility and agility it needs to grow in a fast-paced, every changing, competitive marketplace.

What assumptions have you tested? Where can you mitigate your risk? Let me know what you discover.

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Canvas Digital Printing

Digital printing on canvas produces images with distinctive quality that are capable of visually binding the onlookers. With the advent of high-end printing technology, canvas printing is now as simple as taking your photograph in a digital camera. Today most of the people look for a difference in their photographs – they wish for elegant prints that can attract onlookers or masterpieces to decorate their homes.

Digital printing is a real breakthrough in printing technology and has created history in canvas prints and colour modeling. Canvas digital printing requires creativity as it’s a tricky job, where you need to be conscious about the limitations of the technology and the use of colour, print sizes and other factors. Canvas prints are highly effective and innovative tools for advertising a business and ensuring increased sales.

Digital prints can be made on canvases of different sizes, shapes and colours. Clever use of contemporary designs with outstanding colours and interesting captions can easily attract potential customers. Archival quality inks and UV artist’s grade canvas used for digital printing guarantee more endurance to the prints. The printed canvases can be stretched and framed so that they can be easily hung on the walls.

Canvas prints are gaining popularity at a rapid rate. These are stunning due to their excellent color reproduction and clarity and are sure to make a lasting impression on the viewers. Canvas prints can be made from photographs, slides and negatives. Your old photos can also be well preserved as digital prints on canvas. You can also make digital prints of favourite paintings and artwork.

Give a longer life to your cherished photos, paintings, and artwork with the help of digital prints on canvas. A digital print adds life to the photograph or painting, transforming them into excellent pieces of artwork.

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Practical Business Tips – 5 Questions to Ask When Creating a Business Model

If you have never started a company before then beginning with a business model can be the ticket to your success. It is easier to get moving when you have a template than it is to build from a blank canvas. This article looks at five considerations for selecting a business model.

#1) Where to find a successful approach?

It is good to start with companies in your field to see what works and where there are opportunities for improvement. But you can also look outside the industry to get great ideas. Observe industry leaders and study their successes. Be creative and compile best practices in such a way that you make them your own.

#2) What skills do you need?

A new business model may require additional skills that you do not possess. If so, consider getting more training. Use this opportunity to read, listen, and get more experience in the areas where you need to develop. Another alternative is to hire out your weakness by building a team that provides the expertise you need.

#3) What resources must you secure?

Whether you are starting a new company or reinventing an existing one, you may need to secure more resources to move to the next level. Some examples of resources that you may need include money, people, and equipment. Consider what industry leaders are doing and the resources that make it possible for them to achieve extraordinary results.

#4) What will it cost?

There is an investment cost for implementing your business start-up, expansion, or growth model. Look into the capital requirements as you go through each of the decision points. A good rule of thumb is to start with a budget. Creating your ideal company can be exciting and having a budget helps you maintain financial discipline in the process.

#5) When should you start?

Putting the new model in action requires research and planning that you can done in stages. Start with the objectives that you want to achieve then create a reasonable timeline for the results. Consider current capacity and financial resources as you make your decision.

The purpose of using a business model is to accelerate results using proven practices for success. They are a great way to get big business results on a small business budget. To keep building momentum it is important to have measures to monitor performance. Track results and be willing to make needed adjustments along the way.

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Use the Business Model Canvas to Grow Your Business

When you think of creating a business model, what comes to mind? – Your product/service; who your customers will be; your financial costs, short and long term profits; what your revenue streams will be, etc.? In all probability, lists will be created under several headings, which will then develop into greater detail over several pages, before you have your finished business model. This is all very time-consuming, especially as you will have to change these plans if something doesn’t quite work the way you thought it would. It’s usually a case of, back to the drawing board and going through all those details, and making necessary changes – right? That’s a lot of time and money.

Using a Business Model Canvas, on the other hand, could prove to be a valuable tool in helping you to develop your venture’s model and achieve success in it, regardless of what type of venture it is. It enables you to visualise and map your model onto one page and allows you to make changes as and when required. This canvas (made up of 9 building blocks) provides you with a clearer understanding of the relationship between, products, channels of distribution and costs, etc. (see reference below)

These blocks consist of:

Key Partners – e.g. partners, suppliers
Key Activities – e.g. distribution channels, customer relationships, revenue streams
Key Resources – e.g. human, financial
Value Propositions – e.g. brand, price, design
Customer Relationships – e.g. personal assistance, self service
Customer Segments – e.g. mass market, niche market
Channels – e.g. delivery, after-sales
Cost Structure – e.g. fixed costs, variable costs
Revenue Streams – e.g. commodity sale, subscription fee

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The “Business Model Canvas” – Is the New Approach Really Better?

I’ve come across references to a “new” strategic planning tool called the “business model canvas” in a few places recently. As with other “new” tools, it does offer a different way to structure how you think about your business. But how new is this tool, really?

The most common approach to the business model canvas is to segment your thinking about your business into a small number of topics – such as customer segmentation, channels, customer relationships, value proposition, key resources, key activities and key partnerships. In some ways, this appears to match up to Porter’s Five Forces model, though it can – and will, in practice – ignore key environmental forces. This limitation saves critical time in the process of assessing and communicating strategy, but may lead to critical errors in strategy formulation in industries where environmental forces are in tremendous flux, such as health care.

Customers vs. Channels

The basic business model canvas – correctly – places great emphasis on the flow of value to the customer. Interestingly, channels are treated entirely separately from customer segmentation, despite the fact that the value proposition may be more advantageous to channels (fitting into a retail channel’s distribution strategy, for example) or to customers (offering a superior product or service regardless of how well it works for any channel). Failure to assess these advantages holistically can be crippling. A product which flows smoothly through a specific channel may have very low appeal to customers, and risks rapid displacement if other channel concepts become widespread. Similarly, a product which has high customer appeal may still stagnate if the dominant channel architecture does not fit key attributes of the product. In many industries – manufacturing or service – it is the holistic compromise embodied in your value proposition which really determines your success or failure at any given time, and separate assessment may create a blind spot around this phenomenon.

Strategic Competency; the Importance of Differentiation

I find the canvas approach to assessing “key resources” and “key activities” to be interesting. In Strategic Planning, we began a practical application of Prahalad and Hamel’s concept of Strategic Competency, which has become a cornerstone of the most successful strategies of recent years. In practice, using the canvas categories, you would likely find your strategic competency somewhere in one of these two boxes – but, unfortunately, other strategic assets might be mixed in with competency in “key resources” and the core competency may or may not be recognized as the focus of the most important “key activities”. Still, many companies may find they can correctly identify strategic competency using this categorization, so it may be useful. Indeed, it may be a useful tool for identifying strategic competency in a more thorough strategic planning process. That being said, a thorough examination of strategic competency backed up by market data is a far better way to approach this critical part of the strategic planning process. Most importantly, I would contend that the fact that most people have approached strategic competency incorrectly, and failed to adequately use the tool to build clear differentiation is the main reason why people like to back up to a more simplistic approach such as “critical resources” and “critical activities”. There is no substitute for competency-based differentiation, and true differentiation of a focused competency is the single biggest factor in strategic success.

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