The Cash Flow Dam; Relief for canadian small business owners?

One of the growing concerns a lot of my clients have is cash flow for their small business, for them the storm front is becoming just as large on the inside as the outside.

 

  At the end of the day payrolls must be made, inventory purchased and outstanding accounts collected upon.

Although we have recently seen a drop in energy prices-whatever happened to those headlines, it’s like a dream now, the pundits were claiming oil will never be under $100 a barrel again….OOps

Now restrictive credit markets and a sinking loonie, small business owners find themselves in the trenches taking grenades.

 

Good Friend and trusted advisor AARON THEILADE from Investors Group has been kind enough to share ideas about freeing up cash flow for businesses.

Aaron is a very knowledgeable with the mechanics of cash flow damming a concept that has been growing in popularity for a number of years.

As Aaron explains;

“The cash flow dam is a strategy that converts your personal debt into tax deductible business debt.  It’s similar in principle to the Smith Manoeuvre.

Like the Smith Manoeuvre, this strategy was used primarily by higher-net-worth clients.  Few others had heard about it.  Many that did know about it were uncertain of the tax implications.  That’s all starting to change. 

Nowadays, big financial institutions are starting to get in on the act.  National Bank now has a cash flow dam webpage.  Investors Group is quite involved and are looking at implementation as one of our tax strategies. Even RBC has an article on it.

If you’re self-employed and interested in the cash flow dam, consult a good tax advisor.

From a mortgage standpoint, you’ll need a line of credit or re-advance able mortgage.  May I suggest the TD Canada Trust Home Equity Line Of Credit http://www.tdcanadatrust.com/mortgages/home_equity.jsp , or HELOC. TD even has a Green Home Equity Line Of Credit http://www.tdcanadatrust.com/greenhome/index.jsp

 

1.     You use your business income to cover your current expenses and gradually repay your personal debts (ie, against your mortgage)

2.     You borrow money to cover your business expenses.

3.     You can deduct the interest on the borrowed money.

You save on taxes.

Both myself and Aaron can help you implement the cash flow dam and start converting your personal debt into a tax deduction.

 

Aaron can be reached at

AARON THEILADE
Consultant
LANGLEY, BC

Phone (604) 455-1430
aaron.theilade@investorsgroup.com

Came across this press release from TD Canada Trust Small Business group, very interesting stuff enjoy!

 

 

 

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Cash flow worries top the list of concerns for B.C.’s small business owners

    <<
    - TD Canada Trust Small Business Survey reveals the top challenges and
    rewards experienced by small business owners -
    >>
 
    TORONTO, Oct. 16 /CNW/ - Making payroll. Suppliers' bills. Rising fuel
costs. According to the TD Canada Trust Small Business Survey, these are the
top concerns that keep small business owners in British Colombia up at night.
    The first TD Canada Trust Small Business Survey polled 1,000 small
business owners from across Canada to uncover their biggest challenges in
order to help provide relevant advice for entrepreneurs. The survey found that
more than 30% of B.C. small business owners lose sleep worrying about cash
flow while 14% say rising fuel costs is their biggest concern.
    "Local Small Business Advisors are available to help small business
owners manage their cash flow in order to help make their lives easier," says
Norm Attridge, Regional Sales Manager, TD Canada Trust. "Small Business Week,
October 19th to 25th, is the perfect opportunity to visit a TD branch and
learn more about business financing and how to start - and grow - a small
business."
    Despite concerns about cash flow, 2008 is proving to be a good year for
small business owners. Seventy-two per cent of B.C. business owners graded
their business' performance as an A+, A or B, indicating that they have had
solid growth or that they did as well as they expected. Twenty-six per cent
gave their business a C saying that they did not have the year they planned
and only 2% gave themselves a failing grade.
    For small business owners that gave their business an A or A+, 37%
attributed their great year to innovating with the right products and services
at the right time. This was followed by hiring great talent and retaining the
right people (27%).
    Looking ahead to 2009, small business owners anticipate that the biggest
business challenges will be similar to what they worry about now: cash flow
(23%) followed by managing growth (18%). Rising fuel costs was the third most
common challenge cited (16%).
 
    Owning your own business has its benefits
 
    The best thing about owning a business, according to B.C.'s small
business owners, is controlling their own destiny (37%) and having a better
work-life balance (34%). Only 6% of respondents said that making more money
was the best thing about owning their own business.
 
    Advice from B.C. small business owners
 
    The top piece of advice from small business owners for those wanting to
start their own business is to raise enough capital before starting.
Twenty-two per cent of owners said they would have raised more capital if they
started their business today. The second change they would have made was to
diversify their services more (19%). Small business owners across Canada who
have been in business less than a year, are most likely to say that they
should have raised more capital (41%), whereas business owners who have been
in business 11 or more years, say that they would diversify services more
(22%).
 
    Small business and the environment
 
    The environment is a top priority for small business owners. In fact, 79%
report that it is important to run an environmentally responsible business.
The biggest barriers to adopting more environmentally friendly measures are
cost (40%) and lack of credible industry providers (26%).
 
    Small business and technology
 
    The TD Canada Trust Small Business Survey also asked business owners
about their views on technology. Half of B.C. small business owners say that
e-mail is often a more effective communication tool than using the phone.
Seven per cent of respondents are so dependent on technology that they would
rather have a root canal than give up their BlackBerry.
 
    About TD's sponsorship of Small Business Week
 
    Small Business Week is a nation-wide celebration of entrepreneurship,
October 19th to 25th, 2008, organized by the Business Development Bank of
Canada (BDC) to pay tribute to Canadian small business. With the endorsement
of the Canadian Chamber of Commerce, organized events such as conferences,
trade fairs and seminars provide an opportunity for entrepreneurs to network
and exchange ideas to enhance business growth. TD is a sponsor of Small
Business Week and to recognize its small business customers, TD is conducting
a national advertising campaign, sponsoring SOHO (small office home office)
conferences in Toronto and Vancouver and sponsoring regional events with
chambers of commerce and business associations across the country. To see
events that TD is sponsoring, visit
http://www.tdcanadatrust.com/celebrate/index.jsp?id=2. As well, TD will host
in-branch customer appreciation days at more than 280 branches staffed by a
small business advisor.
 
    About the TD Canada Trust Small Business Survey
 
    The TD Canada Trust Small Business Survey polled small business owners
from across the country to uncover their biggest challenges and to help
provide advice for entrepreneurs interested in starting a business. The survey
was conducted by Angus Reid Strategies from September 4 to 8, 2008 with
English and French speaking small business owners (defined as business owners
with fewer than 20 employees) across Canada using the Angus Reid Forum. The
sample size included 1003 men and women.