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Financing Small Business during the Covid-19 pandemic

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The worldwide pandemic has wreaked havoc on a large number of small businesses, leaving many looking for solutions to ease financial strain.

We asked 11 experts to share their financing tips to help small businesses during the Covid-19 Recession.

Here’s what they had to say:

Don’t cut Marketing 

During recessions, the first thing most companies do is cut their marketing budgets. How are you going to stay at the forefront of your customers’ minds with so much going on? Instead of cutting your marketing budget altogether, be more strategic and mindful about what you are spending your money on. Consider marketing efforts you wouldn’t normally try in robust times. Don’t let customers forget about you. John Yardley, Threads

Get creative

Small businesses that sell goods should explore options related to cutting inventory costs without giving up the quality of your products or hurting your customer experience. Some ideas of this would be reducing inventory to accommodate the current and projected demand during this time, negotiating better prices with suppliers or shipping items straight to consumers rather than to a warehouse. Being creative and resourceful when cutting costs will get small businesses through these hard times.  Peter Babichenko, Sahara Case

Cut nonessential costs

Financing tips during a pandemic aren’t easy, but I think it’s important to find what makes your business special and do everything you can to keep that going. The rest you can build back later. For now, focusing on cutting costs and staying afloat should be priority number one. A good number of the largest companies on the planet are going to remote work (Twitter, Facebook). If you’re a small business cutting costs can be tough, but office expenses are a great place to start. William Daniel, Financial Services SEO Company

Diversify your offers

One great way to survive during the COVID-19 recession is to diversify your offerings. Many of my clients have already started working in this direction. Most of them who mainly had a physical product are now developing a digital version of it. We are already seeing so many academic institutes turning their class-based lectures into downloadable online courses. Likewise, many eateries are transforming their traditional phone ordering systems into online food delivery apps. Small businesses need to pivot and think about going digital to weather this crisis. Joe Wilson, MintResume

Monitor your Credit Score

Small business owners should pay close attention to their personal credit score to give themselves the best chance at obtaining reasonable financing in the future. Most banks use personal credit for small business owners when assessing risk. This is especially true for small businesses that haven’t been around long or are too small to establish a business credit score. One tip is to look at your credit utilization, which is the amount of credit available versus the amount being used. A good rule of thumb is to use less than 30% of the total credit you have available. Getting below this number can help quickly improve your credit score. R.J. Weiss, The Ways to Wealth

Consider consolidating

Maybe it’s time to consolidate operations or offer similar non-competing business space in your office to share? Talking to someone facing the same concerns has many other benefits for the mind and soul – not to mention the ideas that may come from collaboration. Alex Pesic, Invoice Quick

Offer discounts to rid stock before tossing

Small businesses are dying, and that’s even without the pandemic coming into effect. However, due to what has happened around the world, more of us are conscious to shop local and use small businesses in order to support the local economy. Continue Reading…

Looking in the rear-view mirror to avoid hitting something that lies ahead

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By Noah Solomon

Special to the Financial Independence Hub

The vast majority of today’s portfolios represent a Pavlovian response to the obliging nature of markets over the past several decades. The unprecedented increase in the value of risk assets coupled with low volatility have lulled investors into a false sense of security accompanied by an “if it ain’t broke, don’t fix it” approach to portfolio construction and risk management.

Most portfolios are dependent on the next few decades mimicking the last few. Specifically, they are over-allocated towards assets that have performed well during the secular (yet unusual) goldilocks environment of the past 40 years. As is typical of human behaviour, investors are looking in a 40-year rear-view mirror to avoid hitting something that may be in front of them.

What is Normal?

The past four decades have been unusually kind to investors. Strong tailwinds of favourable demographics, low inflation, falling rates and globalization have fueled an unprecedented rise in stocks, bonds, real estate, and almost every other major asset class. While it would be nice if these conditions were the norm, the fact is that they are unique from a long-term historical perspective.

An astounding 91% of the total price appreciation of a classic 60/40 equity/bond portfolio over the past 90 years is attributable to 22 years between 1984 and 2007. This period was also an atypically strong period for real estate, representing 72% of total appreciation over the past 90 years.

Notwithstanding some painful bumps along the way, including the tech wreck of 2000-2002 and the global financial crisis of 2008, the investing experience of most people today has been a proverbial walk in the park. An entire generation of investors has never experienced anything like the 86% peak-trough decline in equities of the 1930s which resulted in two decades of lost performance. Nor has it faced anything remotely like the 25% decline in U.S. Treasury Bonds during the stagflation-plagued 1970s.

What If?

Nobody (including us) can know for sure what the future holds. However, there are strong reasons to suspect that the road ahead will be drastically different than the unusually smooth path we have been on for the past several decades. Historically high asset valuations, record corporate and sovereign debt levels, $17 trillion in negative yielding debt, the lowest capital gains taxes in U.S. history, historically high income disparity across the developed world, and a global rise in populism and protectionism all suggest that, as Dorothy stated in The Wizard of Oz, “We’re not in Kansas anymore.” Continue Reading…

Knowing your status is key to breaking up with the IRS through expatriation

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By Elena Hanson

Special to the Financial Independence Hub

Giving up U.S. citizenship isn’t an easy decision to make, especially since there are benefits to having it. For example, if you are career-minded and interested in the larger, more diversified U.S. economy, or you want to find employment with a Canadian affiliate of an American company, holding the status of U.S. citizenship can be an advantage.

But when it comes to taxation, there are plenty of reasons to consider cutting ties with the Internal Revenue Service (IRS).

For starters, being a U.S. citizen can be, well, taxing. The tax obligations and restrictions of U.S. citizens, even those who are non-resident, can be onerous, to say the least, and include such things as:

  • Filing U.S. tax returns and paying U.S. income taxes.
  • Paying gift tax on gifts to any recipients, including a spouse if he/she is not an American, if the gift exceeds a certain threshold.
  • Restrictions on types of financial assets in order to avoid additional reporting or double taxation.
  • Restrictions on how to run a non-U.S. based business or on how to be part of non-U.S. family wealth.
  • Additional complexities with non-U.S. inheritance.
  • Full disclosure of a financial accounts and assets, even those received through employment, if the American has a signature authority.

These obligations apply to any U.S. citizen, no matter where they reside or where their assets are held. This includes those who are considered ‘Accidental Americans’ – people who discover for the first time that they are considered U.S. citizens.

Yes, that might be the case even if you’ve spent your entire life as a citizen and resident of Canada, so it is important to explore how to become tax compliant south of the border. Feigning ignorance will not likely save you from the long arm of the IRS, and the only thing costlier than paying and/or reporting U.S. taxes is not doing so. In fact, the fines and penalties associated with willfully ignoring obligations can be financially devastating.

So, knowing your status is the first step in changing your status.

The only way to relieve yourself of these obligations is to renounce U.S. citizenship. The legal process involves an appointment with the U.S. consulate, remitting a USD $2,345 administrative fee to receive a Certificate of Loss of Nationality, and the physical surrender of your U.S. passport.

From a tax perspective, renouncing may also require paying U.S. taxes and filing additional forms disclosing all financial aspects of your life, but it is probably the lesser of two evils over the long term; by retaining U.S. citizenship you must file lengthy tax returns with potentially hefty penalties, and possibly pay taxes annually).

Obviously, this process is more straightforward for those who are aware of their U.S. citizenship and already have a social security number. For those to whom U.S. citizenship has come as a surprise, you may have to acquire a social security number in order to file your first … and maybe shortly after that, your last U.S. tax return. Continue Reading…

Supporting the Finances of Seniors in the age of COVID-19

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By Rick Lowes 

Special to the Financial Independence Hub 

COVID-19 continues to have a tremendous impact on every aspect of our lives, from the way we work and connect with friends and family to how we shop and bank. Yet as we look at the world around us changing, the need for social distancing measures and self-isolation has accelerated the pace of digital adoption, especially among a population that is considered highly vulnerable to this pandemic.

While ensuring there continues to be support for seniors available through in-branch visits, we want to keep our seniors safe and that means more focused efforts by phone, and stepping up support to  help seniors bank online.

RBC recently initiated customized proactive outreach to seniors, reinforcing the message “be safe, stay home” – and we’ve seen a very positive response from seniors. In the span of just a month, we saw an 84% increase in digital enrollment among clients aged 60+ and a 210% rise in digital activity from seniors who were enrolled, but had not actively used online banking for at least six months. The most actively used online and mobile banking options per week: sending electronic money transfers and making payments.

We understand online or mobile banking can feel intimidating for Canadians of all ages who are first time users. This made it crucial to ensure we could make online and mobile banking as simple and convenient as possible. We set up our “bank easy” hub, with how-to videos and very clear instruction guides, to show how easily – and securely – anyone can bank digitally, using online and mobile banking to do their everyday transactions.

Front-of-the-line access for those over 70

With a significant rise in calls to our contact centre, we are also prioritizing calls from clients over the age of 70: and ensuring seniors get this same “front of the line” access for branch visits. Continue Reading…

What changes happen to the body as we age

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Image courtesy of Hartmann Direct

By Ruth Hilton

Special to the Financial Independence Hub

Every moment of every day, a cell in our body dies. Don’t worry, it is programmed to do this. However, this continual shedding of cells poses questions about how our body changes with age. We expect to change as we grow older, but we might wonder what is natural and what should cause us worries. Here we explore these changes, so you can know what to expect.

Aging Cells

Our bodies are a composite of millions upon millions of cells. As our cells age, they will function less well and eventually must die. The genes within some cells are programmed to cause this death. Cells can only divide a set number of times. When a cell can no longer divide. The process of apoptosis, as it is called, is a way of old cells making way for new cells. The body you have now is entirely different from the one you had 9 years ago.

Cells can also be damaged by harmful substances. Further damage can be caused by free radicals, which is a natural by-product of the work of cells. There are many foods you can help that will counter the effects of free radicals, and this is worth some research.

Loss of function in our body is usually a result of disorder and not because of this aging process within the cells.

Aging Organs

Obviously, our organs operate as well as the cells that make them up. When older cells die and are not replaced, our organs begin to work less well. Our testes, ovaries, liver and kidneys lose a marked number of cells as we age. The more cells that are lost, the less well the organ will work.

The natural consequence of this loss of cells is that our organs do not function as well as we grow older. However, not all organs lose cells. Our brain does not lose cells through aging, for instance. Most cells are lost in the brain from dysfunctions, such as a stroke or progressive nerve damage.

The function of our internal organs peak at the age of thirty and slowly decline from this point. However, when we peak, we have significantly more capacity than our body needs.

Therefore, declines in health from our organs are unlikely to a result of our age.

Bones and Joints

The first signs of aging usually begin with the musculoskeletal system. Our bones become less dense. Women are more likely to struggle with reduced bone density, known as osteoporosis. This can make the chance of a fracture more likely. The speedup of this process for women is directly linked to the menopause and reduced estrogen in the body.

Bones also decline with age because our body becomes less adept at absorbing calcium. Calcium is an essential mineral for strengthening our bones. Some bones are more likely to weaken that others, for instance, the hip is more likely to break, as are our wrists.

The cartilage at our joints is also susceptible to wear and tear due to age. The weakening of cartilage means that the bones do not rub well over each other, and this can make them open to injury. The consequence of reduced cartilage is arthritis, which is one of the most common disorders of our older age.

Muscles and Body Fat

Our muscles mass will start to decrease from about the age of thirty and will continue to decline into our old age. The decline is partly due to a decrease in physical activity, as our lives slow down, and partly due to a reduction in growth hormones in the body. We slow down as a result of muscle decline too. We lose the fast-twitch muscle fibres first, which then, as a consequence, results in the decrease in the slow-twitch muscles.

However, our bodies only lose about 10 – 15% of our muscle mass naturally over a lifetime. Further loss of muscle is preventable with regular exercise.

The only other explanations for a sudden loss of muscle are diseases and disorders, which either causes muscle death or results in an individual more static than is healthy. If you are restricted to bed rest for a day, you would need to exercise for up to two weeks to regain this lost muscle.

By the age of 75, your body fat will have doubled to what it was in young adulthood. Too much fat and you severely increase your chances of many life-limiting disorders. Consequently, as you grow older, it becomes essential to maintain a healthy diet and exercise regime.

Ruth Hilton is a Nurse Advisor in the continence management division for HARTMANN Direct, a UK-based supplier of  incontinence products.