Risk & Business - Cain Insurance Fall 2014 by Tulip Media Group

Cain Insurance

RISK& BUSINESS FALL 2014

MAGAZINE

The Freak Factor Discovering Uniqueness by Flaunting Weakness The Game is Different Embracing Change in Marketing Seven Strata of Strategy Eliminating Distortions in your Data

RISK & BUSINESS MAGAZINETM FALL 2014

RISK& BUSINESS

MAGAZINE

PUBLISHER EDITOR-IN-CHIEF GRAPHIC DESIGN CONTENT COORDINATOR

Carle Publishing Inc. Andy Buyting John Christenson Stacey Cowperthwaite

CONTRIBUTORS

Gary Belding Andy Buyting Brian Cane Greg Crabtree Jackie Dableh-Hakimian John DiJulius III Malcolm Fraser Damon Gersh Verne Harnish Insurance Bureau of Canada Eldon MacKeigan Jordan Rodney David Rendall

ADVERTISING (National) ADVERTISING (Local)

Keith Keane Reece Cain

PHOTOGRAPHY All images sourced from Carle Publishing Inc. or Thinkstockphotos.ca unless otherwise identified.

401 Bishop Drive Fredericton, NB E3C 2M6 Ph: 506-459-3000 • Fax: 506-458-2088 Toll Free: 1-888-475-2246 www.caininsurance.ca Cain Insurance Risk & Business MagazineTM is published by Carle Publishing Inc. All content, copyright © 2014, Carle Publishing Inc. All rights reserved. Risk & Business MagazineTM is a valued and recognized trademark of Carle Publishing Inc. This publication may not be reproduced, all or in part, without written consent from the publisher. Every effort has been made to ensure the accuracy of all content in this publication, however, the publisher nor Cain Insurance Ltd. will be held responsible for omissions or errors. Please address all editorial and advertising inquiries to Carle Publishing Inc., 60 Shayla Court, Fredericton, NB, E3G 0N3, Canada. Carle Publishing Inc. is not held responsible for the loss, damage or any other injury to unsolicited material (including but not limited to manuscripts, artwork, photographs and advertisements). Unsolicited material must be included with a selfaddressed, overnight-delivery return envelope, postage prepaid. Carle Publishing Inc. and Cain Insurance Ltd. will not give or rent your name, mailing address, or other contact information to third parties. Subscriptions are complimentary for qualified individuals. Carle Publishing 60 Shayla Court, Fredericton, New Brunswick E3G 0N3 Phone: (506) 238-4683 Fax: (866) 609-5674 Email: andy@carleventures.com Website: www.carlepublishing.com

Best Selling Author David Rendall

The Freak Factor Discovering Uniqueness by Flaunting Weakness

welcome to R&B

CONTENTS Letter from the Owner

What’s Going on

What is Risk?

Crisis, or Revolution?

Not only have the rules changed, but the entire game is different.

Embracing Change in Marketing

Going Under the Microscope

Seven Strata of Strategy

The Self-Fulfilling Prophecy

Eliminating Distortions

Pollution Liability Insurance

Mold Issues in New Construction

Starting Your Own Business

Reducing Red Tape for Business

The importance of conducting effective workplace investigations

Why your P&L is not worth the paper it is printed on. Why should contractors purchase Pollution Liability Insurance?

What to Consider

By the time the Fall edition of Risk & Business MagazineTM comes out, New Brunswick will have reelected the current government or replaced it with a new one. Regardless of the party that wins, let’s hope that developing our economy and streamlining government operations gets the attention it deserves. Risk management comes to mind as we remember the lessons learned from the severe weather conditions of 2013–14. Many businesses and individuals were affected by weather related events. Insurance companies paid millions of dollars to repair damage caused by snow load. Who can forget tropical storm Arthur and the havoc that it left in its trail. Businesses need to plan in advance for severe weather. We know in the insurance business that weather patterns are changing. The severity of the claims that occur is having a significant financial impact on insurance companies and by extension its customers. On another note, Cain Insurance Services continues to grow because of our investment in technology, people and management systems. Our growth is in spite of a tough local economy. We are local business people just like you and understand the risks of conducting business in today’s environment. Should you feel that your business needs a review of your insurance and risk management program don’t hesitate to give us a call. We invite you to contact either of us personally.

Best Regards,

Dan & Luke

www.caininsurance.ca RISK & BUSINESS MAGAZINETM FALL 2014

Whatâ&#x20AC;&#x2122;s going on at Cain Insurance Welcome:

Natasha Livingstone: has joined the Cain Insurance team in the Personal Lines Department. Natasha has been involved in the insurance industry for nine years working both in Nova Scotia and Alberta. Natasha received her CAIB in 2006 to become a full time licenced broker. Robyn Lattie: has recently joined the Cain Insurance team in the Commercial Lines Department. Robyn has had several years of experience in the industry working as a Commercial Lines P&C underwriter with Aviva from 2006-2010 and Intact Insurance from 2010 to May 2014. Robyn will also be graduating with her Chartered Insurance Professional designation in November of this year. Reece Cain: joins the team as the new Marketing Coordinator at Cain Insurance. Reece is a St. Francis Xavier graduate with a BBA and a focus in marketing.

Farewell:

As we welcome new staff members in, unfortunately we must say goodbye to a few as well. Laura Gordon and Andrew Wright we wish you all the best in your future endeavors, and would like to thank you for the time you have spent with us at Cain Insurance.

Charitable Donations

This past summer Cain Insurance was lucky enough to have the opportunity to help families in need by making charitable donations to the Fredericton Food Drive and the Back to School Campaign for children. Cain Insurance also participated in the ALS Ice Bucket Challenge helping raise awareness for this terrible disease.

RISK & BUSINESS MAGAZINETM FALL 2014

Don Cain Memorial Scholarship Congratulations!!

We would like to congratulate the 2014 Don Cain Memorial Scholarship recipient, Christopher Webb. Chris will be attending NBCC Woodstock this fall and will be taking his first block study in welding and metal fabrication. The Don Cain Memorial Scholarship is awarded to a child of an existing Cain Insurance customer who is entering their first year of full-time study at a recognized post-secondary institution. Make sure you apply for the 2015 scholarship.

RISK & BUSINESS MAGAZINETM FALL 2014

What is Risk? BY: INSURANCE BUREAU OF CANADA

Risk, in insurance terms, is the possibility of a loss or other adverse event that has the potential to interfere with an organization’s ability to fulfill its mandate, and for which an insurance claim may be submitted.

What is risk management?

Risk management ensures that an organization identifies and understands the risks to which it is exposed. Risk management also guarantees that the organization creates and implements an effective plan to prevent losses or reduce the impact if a loss occurs. A risk management plan includes strategies and techniques for recognizing and confronting these threats. Good risk management doesn’t have to be expensive or time consuming; it may be as uncomplicated as answering these three questions: 1. What can go wrong? 2. What will we do, both to prevent the harm from occurring and in response to the harm or loss? 3. If something happens, how will we pay for it?

Benefits to managing risk

Risk management provides a clear and structured approach to identifying risks. Having a clear understanding of all risks allows an organization to measure and prioritize them and take the appropriate actions to reduce losses. Risk management has other benefits for an organization, including: • Saving resources: Time, assets, income, property and people are all valuable resources that can be saved if fewer claims occur. • Protecting the reputation and public image of the organization. • Preventing or reducing legal liability and increasing the stability of operations. • Protecting people from harm. • Protecting the environment. • Enhancing the ability to prepare for various circumstances. • Reducing liabilities. • Assisting in clearly defining insurance needs.

An effective risk management practice does not eliminate risks. However, having an effective and operational risk management practice shows an insurer that your organization is committed to loss reduction or prevention. It makes your organization a better risk to insure.

Role of insurance in risk management

Insurance is a valuable risk-financing tool. Few organizations have the reserves or funds necessary to take on the risk themselves and pay the total costs following a loss. Purchasing insurance, however, is not risk management. A thorough and thoughtful risk management plan is the commitment to prevent harm. Risk management also addresses many risks that are not insurable, including brand integrity, potential loss of tax-exempt status for volunteer groups, public goodwill and continuing donor support.

Why manage your risk?

An organization should have a risk management strategy because: • People are now more likely to sue. Taking the steps to reduce injuries could help in defending against a claim. • Courts are often sympathetic to injured claimants and give them the benefit of the doubt. • Organizations and individuals are held to very high standards of care. • People are more aware of the level of service to expect, and the recourse they can take if they have been wronged. • Organizations are being held liable for the actions of their employees/volunteers. • Organizations are perceived as having a lot of assets and/or high insurance policy limits.

RISK & BUSINESS MAGAZINETM FALL 2014

Crisis, or Revolution? Not only have the rules changed, but the entire game is different. BY: JOHN DiJULIUS, PRESIDENT, THE DiJULIUS GROUP

A revolution is the ability to rally a group of people around a cause, so committed to seeing it through because it will benefit and change the world. Are you part of the Customer service crisis, or the Customer service revolution?

Strong economic times can disguise a company’s weaknesses, and too often businesses with poor fundamentals can survive and sometimes grow for the short term. However, eventually the rubber meets the road, and only the businesses built on the premise that employee and Customer loyalty are their strongest assets are the ones that thrive and emerge as market leaders for the long term. These businesses realize that Customer service training is an investment, not an expense.

Every business is under a microscope now

not, then you run the risk of a potential nightmare. Social media is not just for marketing and promotions. I am actually turned off by companies that only shamelessly promote themselves. Social media is also a way to communicate with your Customers, answer their questions, and respond quickly to their complaints. Every business has to have someone managing what is being said about its brand in the social media channels. Share insights, educate your Customers, show them resources, and find ways to help others—ways that can’t come back to benefit only you.

Companies can no longer hide if they deliver unacceptable Customer experiences and treat people disrespectfully. They will be out of business; it’s that simple. I ask my employees, “How would you behave if CNN were on site shooting a documentary?” With smartphones, everyone now has a video camera in hand.

What used to be “word of mouth” is now “word of mouse”

You earn business by being generous with your knowledge and resources without asking for anything in return.

According to a recent report from Fleishman-Hillard, the company found that 89 percent of consumers turn to Google, Bing, or another search engine to find information on products, services, or

The biggest influence on Customer service in fifty years

Technology has always changed the way business operates. The Internet opened up an incredible dynamic and an opportunity for information, marketing, and sharing. The biggest influence, no question, is social media, on so many different levels. Social media has turned Customer service upside down. Today, more than ever before, Customers are informed and empowered, and expect personalization and quicker responses. Remember the days when the business controlled the communication, actually controlled the customer? The business would decide if you would get to talk to someone, who that someone would be, on their own timetable. Not any more, the Customer is in complete control of communication, since now the fact that your customer has instant access to social media, which means instant access to thousands of people. Companies need to make sure they have proper procedures in place to react when a Customer reaches out on social media. If

RISK & BUSINESS MAGAZINETM FALL 2014

businesses prior to making purchases. What you do well and not so well will be broadcast to hundreds, if not thousands, of potential Customers. They expect your company to be easy to contact and quick to respond.

You are creating either brand ambassadors, or brand terrorists doing brand assassination. People do not expect you to be perfect, but how you handle imperfection better be. We need to be zero risk to deal with. Zero risk does not mean you will never screw up, but it does mean you will admit when you drop the ball. As a result, Customers can become more loyal because of the way you handled the problem.

The Customer rebellion

All this has resulted in the Customer service crisis. Companies spend millions creating and advertising their brands, yet the Customer’s experience is what drives Customer perception. Consumers have less patience and are more outspoken than ever before.

RISK & BUSINESS MAGAZINETM FALL 2014

Customers are no longer tolerating subpar service, indifference, and unempathetic businesses, and they are standing up for themselves. They won’t take it anymore, which has resulted in the Customer rebellion. For hundreds of years, the best form of advertising was word of mouth. Today, it is word of mouse. Social media represents a gigantic power shift back to the consumer. Now consumers can share their displeasure with thousands of others just with a click of a button. It takes twenty years to build a reputation and five minutes to ruin it. Also, the Internet and technology have made Customers more demanding, and they expect information, answers, products, responses, and resolutions sooner than ASAP. As Sam Walton, founder of Walmart said, “There’s only one boss, the customer, and he can fire everybody in the company from the chairman on down, simply by spending money somewhere else or on something else.”

Power to the people

A decade ago we saw a massive decline in face-to-face interaction due to the dramatic increase in e-commerce. However, today, social media has brought back a huge shift of people-to-people interaction. Consumers have more direct, daily contact with other consumers than has ever been possible. More contact means more sharing of information, gossiping, exchanging, engaging— in short, more word of mouth. An article titled “How Social Media Are

Amplifying Customer Outrage” that was on CNN.com illustrates the power of the Customer’s voice today. In 2011, Netflix had a severe fallout. The Internet magnified the situation. Overnight, the company decided to increase its prices 60 percent. As a result, Netflix had to staff hundreds of extra Customer service reps to handle the incoming calls of irate Customers. It didn’t stop there. It also had to deal with four thousand negative posts on its blog. If that wasn’t enough, the company got eighty thousand posts on its Facebook page! These social media outlets allow Customers to voice their dissatisfaction and gain momentum like never before. There is only one true growth: growth that occurs because Customers love doing business with you and become brand evangelists for you. Brand evangelists don’t just come back. They don’t simply recommend you—they insist that their friends do business with you. The American Customer Satisfaction Index (ACSI) reached a record high in the third quarter of 2013. Stock price and ACSI scores tend to move together for individual companies. John R. DiJulius III is considered the authority on world-class Customer service and is the author of three books on Customer experience. He is the president of The DiJulius Group—a Customer service consulting firm that works with companies like Starbucks, Chick-fi l-A, The Ritz-Carlton, Nestle, PwC, Lexus, and many more. John is also the founder and owner of John Robert’s Spa—named one of the Top 20 Salons in America.

Content taken from the The Customer Service Revolution: Overthrow convention Business, Inspire Employees, and Change the World, (January 2015 Greenleaf Books) by John R. DiJulius III

Embracing Change in Marketing BY: MALCOLM FRASER, CEO, ISL

s a Digital Marketing Advisor, I spend a lot of time with senior management teams discussing how marketing is changing and how this change is redefďťżining what marketing success looks like today. There are two questions that are regularly asked by organizations in these discussions:

1. How do we continue to justify the marketing budget? In an increasingly competitive environment, where budgets are constantly scrutinized, it is an ongoing challenge to understand how marketing investments are actually improving the overall results of the business. The historical approach of cause and effect measurement between marketing spend and real results is no longer relevant in the current marketing environment. Consumer behaviour is aggressively changing due to unlimited media channels and we, as marketers, are forced to keep pace and learn how to effectively leverage these digital channels.

2. Who should we trust to make my marketing effective? Many Marketing Managers are unable to confidently determine which partners have the best ability to make an impact with their audience in an already oversaturated market. There is confusion

about who has the best understanding of the perfect media mix and tactics that will reach and engage the right consumer. Digital media offers the potential to answer both of these questions. As a highly measurable medium, digital media generates data that identifies what marketing channels and tactics are performing well and which are not.

The ability to measure the performance of these channels can also help identify which digital partners have not just good ideas, but the ability to execute and learn from their campaign results to make the next investment even more effective. However, the promise of digital marketing presents a number of challenges. The two areas that hinder success often revolve around people and planning. We work with our clients to overcome these challenges so they can effectively integrate digital media into their overall marketing plan. We have discovered that the following focal points represent important areas for marketing professionals to consider when incorporating digital in their marketing strategy.

Managing People & Partners

Many of the roles in the digital marketing profession did not exist five years ago and understanding what skills we need, when we need them and how to manage

RISK & BUSINESS MAGAZINETM FALL 2014

these individuals is an ongoing challenge for all Marketing Managers. This is compounded with the involvement of a traditional marketing agency, a media buying company and a digital marketing partner who often have overlapping roles and may offer conflicting advice. Here are a few key tips on how to approach the internal skills and external partners dilemma: 1. Dedicate an internal resource to digital. The need for a named digital resource could not be stressed enough. Every organization should have at least one allocated resource to digital media. responsibilities should include content development, social media, planning and strategy, and liaising with all partners. This role is increasingly supporting the success of the overall marketing strategy 2. Manage communications between the outsourced partners. The importance of managing all marketing partners should not be taken lightly. A dedicated resource to support and engage partners, and who can clearly identify roles and responsibilities, will be better equipped to communicate and prioritize marketing initiatives, which will lead to better results. 3. Ensure all digital partners have a strong voice at the table. All partners should be engaged at the beginning of strategic campaign planning. Many of the techniques and tactics that are evolving can be overlooked if the digital partner is struggling to be heard above the traditional marketing agency or media partner.

The Fundamentals Commitment to being open to new and different approaches to marketing strategies is a must. 4. Encourage constant learning. The speed of evolution of digital media is increasing. It is critical that Marketing Managers make every effort for their team to continually educate themselves in this fast-paced industry, through conference, webinars and workshops.

Knowing What to Measure

One of the biggest barriers for effective digital marketing is getting buy-in from senior management and in some organizations the Board of Directors. These senior leaders struggle to understand when digital investments are successful. The delivery of generic website traffic statistics is not enough to engage them in understanding the potential that digital can bring to achieving marketing goals. Analytics isn’t just a buzzword anymore but a key tool that helps define digital marketing goals and track the results of marketing efforts. The challenge with digging deeper into analytics is that it requires outlining a clear set of outcomes. “Awareness through reach” has little relevance today as Marketing Managers need to bring forward quality not quantity objectives to Senior Management. With analytics, Marketing Managers can provide real time results of marketing spend by focusing on reaching consumers who are actually interested in the product or service offering. Once everyone understands that “traffic” is meaningless there will be a great opportunity to start delivering leads, sales, or engagement statistics back to the senior leaders. They will then be able to ask more effective questions on how real goals were achieved.

In Summary

Scaling Up

How a Few Companies Make It... and Why the Rest Don’t BY: VERNE HARNISH

Scaling Up: How a Few Companies Make It...and Why the Rest Don’t is the first major revision of this business classic; Mastering the Rockefeller Habits. In Scaling Up, Harnish and his team share practical tools and techniques for building an industrydominating business. These approaches have been honed from over three decades of advising tens of thousands of CEOs and executives and helping them navigate the increasing complexities (and weight) that come with scaling up a venture.

Epic Content Marketing BY:JOE PULIZZI

It is critical that the senior team is educated on the changing face of marketing and how digital is making marketing investments more efficient. Ensure your internal team and all partners are aligned. the digital space is so vast, varied and new it requires all parties to be cooperative and focused to develop and execute the best ideas and content.

One of the world’s leading experts on content marketing, Joe Pulizzi explains how to attract prospects and customers by creating information and content they actually want to engage with.

Start all marketing campaigns with defined measurable goals that will have meaning to the senior team. This will engage them to allocate more investment towards the digital marketing program.

No longer can we interrupt our customers with mediocre content and sales messages they don’t care about.

Malcolm Fraser is the CEO of ISL, a Digital Marketing company that is helping small and medium sized businesses change the culture of marketing in their organizations. Malcolm can be reached at mfraser@isl.ca.

RISK & BUSINESS MAGAZINETM FALL 2014

Going Under the Microscope The Importance of Conducting Effective Workplace Investigations BY: JORDAN RODNEY, PRESIDENT, MAXPEOPLEPERFORM

our business is in trouble. You have uncovered a problem (e.g. ethics violations, harassment, discrimination, breach of conduct, etc) which may have started small, but you realize that it goes well beyond your scope of expertise. You need a resolution, but are unsure of where to start, and need an expert consultation to properly determine the root of the problem and where the solution begins. In other words, you need a workplace investigation.

Examining the Roots

If you view your business like a garden, failure to conduct a proper workplace investigation is like a poison moving through your ecosystem. A problem that starts at the root and goes unabated will spread through the plants and eventually impact every single leaf. Similarly, a poisoned work environment can leave individuals feeling unwelcome or uncomfortable in the workplace, and the issues can start the same way. Minor situations can easily escalate beyond one individual or one department. A workplace investigation puts your business under the microscope. The investigation can either be conducted internally with appropriate resources

or externally by a team of skilled thirdparty experts such as experienced HR professionals and/or employment lawyers. Investigators will discuss the situation with you and explain how they plan on conducting their analysis. The investigation will include confidential interviews with any witnesses or parties involved, a thorough review of all pertinent documents and workplace policies, and a thorough report on the results of the investigation complete with recommendations of how to move forward.

Doing It Right

It is crucial that workplace investigations are carried out properly to produce maximum benefit and minimize any future risk. A sloppy investigation is like a half-finished painting, and the picture painted of your business is wholly incomplete. Businesses have been severely penalized by courts and tribunals for failure to properly address claims of harassment, discrimination, and other forms of wrongdoing. An expert investigator will ensure that no stone goes unturned and a well-written report will help implement effective solutions.

RISK & BUSINESS MAGAZINETM FALL 2014

There are common mistakes that are made during shoddy workplace investigations, including: • Waiting too long to begin an investigation. • Failure to interview all key witnesses and take proper accounts. • Ignoring one or more allegations in the complaint. • Failure to acknowledge key documents on which the case may turn. • Punishing or singling out a complainant for coming forward and following policies.

For employers, there are a few key tips to remember for conducting thorough and comprehensive investigations: • Plan the investigation extensively before it begins to determine who should be leading the investigation, what will need to be reviewed, and what policy violations (if any) have occurred. • Ask questions at every step. • Communicate thoroughly with all involved parties in order to ensure there has been due process. • Once the investigation is complete, ensure findings are objective and clearly communicated to the appropriate parties in your organization. • Lastly, follow up on any proposed resolution! A report that goes unheeded means the investigation would not achieve its purpose.

The End Result

The standards for workplace investigations are sky-high and they should be. The method in which an employer chooses to respond to a complaint or allegation is critical. To issue the right response, an employer must act on a clear and complete picture, the kind that can only be provided via a thorough workplace investigation. Good investigations are like healthy gardens – employers who properly look after their teams will see their teams blossom. Jordan Rodney is the president of MaxPeoplePerform, a Human Resources Consulting organization and the founder of Rodney Employment Law, a boutique employment law firm. Jordan is a Human Resources professional and employment lawyer with close to 20 years of experience in his field.

The Freak Factor BY: DAVID RENDALL

Discovering Uniqueness by Flaunting Weakness

Each of us has unique characteristics. These characteristics have both positive and negative features.

RISK & BUSINESS MAGAZINETM FALL 2014

“We do not believe in ourselves until someone reveals that deep inside us something is valuable, worth listening to, worthy of our trust, sacred to our touch.” - e.e. cummings

he most common approach to self improvement is to build on strengths and fix weaknesses, usually with special attention to fixing weaknesses. This is prevalent at work where annual appraisals are focused on overcoming our apparent limitations. Similarly, in homes and schools, parents and teachers expect children to excel in all academic subjects, athletic activities and social skills. Those who are lacking in any particular area are confronted with their flaws and given strategies for improvement. The obvious goal of these remediation efforts is to foster success by producing well-rounded people. However, do these efforts really work and is being well-rounded a worthy or realistic goal? My experience as an individual, professor, parent and leader indicates that efforts to fix weaknesses are ineffective. Furthermore, I believe that the goal of being well-rounded is both undesirable and impossible to attain. So what is the alternative? In this article I’ll share a four-step process for getting better by embracing your weaknesses and amplifying them, instead of fixing them. Awareness - Weaknesses are important clues to our strengths “We are led to truth by our weaknesses as well as our strengths.” - Parker Palmer, Let Your Life Speak Each of us has unique characteristics. These characteristics have both positive and negative features. These features, which we usually refer to as strengths and weaknesses, cannot be separated. They come in pairs. The positive and negative elements are inextricably linked. This claim may seem outrageous and that is why I created the chart below. It lists 16 strengths and their corresponding weaknesses. Do any of these resonate with you? Have you seen these pairs in your own life or the lives of friends, co-workers or employees?

Strength Creative Organized Dedicated Flexible Enthusiastic Calm Reflective Adventurous Responsible Positive Realistic Assertive Humble Self-Confident Patient Passionate

Weakness Unorganized Inflexible Stubborn Inconsistent Obnoxious Emotionless Shy Irresponsible Boring Unrealistic Negative Intimidating Weak Arrogant Indecisive Impatient

Unfortunately, instead of seeing a weakness as natural and unavoidable consequence of its corresponding strength, we see weakness as a problem to be eliminated. Our efforts to eliminate weakness are doomed to fail because any characteristic has particular advantages and disadvantages. Acceptance - Apparent weaknesses are strengths in disguise “Strong people always have strong weaknesses too. Where there are peaks, there are valleys.” - Peter Drucker When I ask students and seminar participants if they should fix weaknesses, build strengths or do both, most choose to do both. However, there are a number of problems with this approach. Most importantly, since weaknesses and strengths are linked, attempting to fix a weakness can actually diminish the corresponding strength. This fact is best illustrated by the discount retail industry. Walmart’s main strength is low prices and its weaknesses include poor quality merchandise, long lines and unhelpful employees. On the other hand, Target’s main strengths are higher quality products from well-known designers, attractive stores and helpful associates who are quick to open a new checkout lane. Unfortunately, Target’s weakness is that its prices are not as low as those at Walmart. So, what would happen if Walmart tried to do both? What if they tried to build on their strengths and fix their weaknesses? What would happen to their low prices, their primary strength, as they added better products and extra employees at the registers? The answer is simple, their prices would climb, thus diminishing their strength. Similarly, what if Target decided to fix their weakness by lowering prices? What would happen to the level of customer service and the great products that give them their advantage if they focused more on cost cutting? Again, the answer is straightforward, their quality and service would decrease, thus diminishing their strength. If you don’t believe me, just look at Kmart. Kmart provides an illustration of what happens when a company, or individual, loses focus and tries to do both. Their historical leadership in discount retail was based on the blue-light special, a symbol of low prices. However, they did not focus exclusively on this price advantage and began to lose customers to Walmart. Kmart then began adding designer products from celebrities like Martha Stewart, but wasn’t quite ready to shed their low-price image. This allowed Target to capture higher-income customers that were design conscious. Kmart’s failure to focus ultimately led to bankruptcy. They weren’t the best at anything, so customers had no reason to shop there. Their failure illustrates the dangers of doing both, of trying to be well-rounded. There is a compelling reason to go to Walmart, low prices. There is a compelling reason to go to Target, a better shopping experience. There is not a compelling reason to go to Kmart, so people don’t.

RISK & BUSINESS MAGAZINETM FALL 2014

This is very important. If you try to be everything to everybody, you’ll end up being nothing to nobody. Appreciation - We succeed because of our weaknesses, not in spite of them “Every limit is a beginning as well as an ending.” - George Eliot Dyslexia is a disability. People with dyslexia get letters and words mixed up and this leads to major problems with reading and writing. This, in turn, is a major barrier to success. Or is it? A recent study showed that 35% of small business owners have dyslexia. This is surprising because only 10% of Americans have dyslexia, but they make up more than 33% of entrepreneurs in the US. Another study found that people with dyslexia are far more likely to become millionaires. In fact, almost half of the millionaires in the study had dyslexia. Examples of wealthy dyslexics include Virgin founder, Richard Branson, JetBlue founder, David Neeleman, and Kinko’s founder, Paul Orfalea. The subtitle of Orfalea’s book is Lessons from a Hyperactive Dyslexic who Turned a Bright Idea into One of America’s Best Companies.

I was dyslexic, I had no understanding of schoolwork whatsoever. I certainly would have failed IQ tests. And it was one of the reasons I left school when I was 15 years. And if I’m not interested in something, I don’t grasp it. Sir Richard Branson

RISK & BUSINESS MAGAZINETM FALL 2014

How does this happen? What explains their success? It seems that dyslexia is a two-edged sword. The obvious weaknesses are accompanied by important strengths. When asked if his dyslexia has hindered his business success, Richard Branson said “strangely, I think my dyslexia has helped.” Experts suggest that people with dyslexia are often better than most at being “creative and looking at the bigger picture” and this can make them better strategic thinkers. Daniel Pink, author of A Whole New Mind, believes that some of these advantages might result from a greater ability to use the right side of the brain. They don’t focus on their disability. Instead, they focus on their unique abilities. Alignment - Don’t force yourself to fit in. Find the right fit. “Every individual has a place to fill in the world and is important in some respect.” - Nathaniel Hawthorne Rudolph the Red-Nosed Reindeer was different. He had a major and obvious flaw. This flaw made him unpopular and led to rejection and isolation. It looked like Rudolph was destined for a life of pain and misery, but then the situation changed.

David Rendall at TED Talk

Rudolph discovers that his nose isn’t really a weakness. In the right situation, a “foggy Christmas Eve,” Rudolph’s nose is an irreplaceable advantage. When the situation changed, the value of his unique characteristic changed as well. He didn’t succeed in spite of his weakness; he succeeded because of his weakness. Rudolph’s success was a result of a perfect fit between his unique qualities and the situation. Do you want to succeed? Find your foggy Christmas Eve. Find the right situation, the one that offers the perfect fit between who you are and what is required. Unlike Rudolph, we don’t have to just wait for the right situation to come along, we can seek it out or even create it. If you want greater happiness, success and fulfillment, follow these four steps. Become aware of your unique characteristics. Accept your weaknesses, instead of trying to fix them. Appreciate the strengths that correspond with each of your weaknesses. Create alignment between who you are and what you do.

David Rendall has spoken to audiences on every inhabited continent. His clients include the US Air Force, the Australian Government, AT&T, State Farm Insurance, Ralph Lauren, and BASF. Prior to becoming a professional speaker, he was a management professor, stand-up comedian and endurance athlete. He earned a doctor of management degree in organizational leadership, as well as a graduate degree in psychology, and is the author of three books: The Four Factors of Effective Leadership The Freak Factor The Freak Factor for Kids www.drendall.com www.facebook.com/daverendall www.twitter.com/daverendall www.linkedin.com/in/daverendall

RISK & BUSINESS MAGAZINETM FALL 2014

Seven Strata of Strategy BY: VERNE HARNISH AND ANDY BUYTING

t’s no secret that the recession has decimated the building industry the last few years. But for Jeff Booth’s company, BuildDirect.com, isn’t hurting. It sells building materials at a steep discount through its website, thanks to arrangements to ship directly from manufacturers. “It’s almost like an online Costco of building materials,” says Booth, president and CEO of this fast growing Canadian Company. Expecting his sales to increase by more than 20% this year, Booth has increased his staff by about 10% to 53 people. What makes BuildDirect.com thrive in a struggling industry is its growth strategy. And our recent research involving more than 3,000 CEOs and executives from around the world confirms that strategy is their #1 focus this decade, as companies rethink their fundamental approach to changing markets.

The challenge is balancing all the complexities of strategy while keeping it coherent and simple. Your strategy must tell a simple story, yet touch on what we call the Seven Strata of Strategy. Booth and his partner are masters’ at all seven strata – principles that every business must master and integrate to achieve its potential in today’s uncertain global economy. Here’s a checklist that you can use at your own company.

Choose the words you want to own in your marketplace. If you don’t know how you want your customers to find you, then don’t expect them to track you down. BuildDirect. com optimizes its site to appear high in natural web searches for terms such as “laminate flooring,” “porcelain flooring” and “hardwood flooring,” which are key product areas. How? It publishes unbiased content – which

includes these keywords – to help site visitors tackle their building projects.

Offer a unique brand promise.

This is the experience you are promising your customers that differentiates you from the competition. BuildDirect. com’s is simple: “Best price, best quality and product expertise,” says Booth. It’s normally a three-part promise, with one of the promises – “best price” in BuildDirect.com’s case – that is most topof-mind. And it’s critical that you know how to measure daily whether you’re keeping your promises. Booth’s team has various KPIs (Kept Promise Indicators!) it monitors, like competitors’ pricing, to make sure it is keeping its promises.

Make it hurt to break your promise.

There should be some pain in your system if you let your customers down. This keeps your team laser focused on keeping your promises. BuildDirect.com has a 30day money back guarantee that includes paying return shipping (from $300 to $500 for a typical order), says Booth. The company offers the policy to customers who are unhappy for any reason. Nonetheless, says Booth, «Nobody uses it.» Why? The company works really hard to keep quality up and prices down.

“…Today our clients are beginning to use the Internet and search engines to look for specialty packaging instead of waiting for a salesperson to show up.” Create a one-PHRASE strategy.

Underlying the brand promises you express is a one-PHRASE strategy that drives your business model. As you know from reading my recent column on the topic, this isn’t necessarily a selling point you make to your customers, but it supports delivering on your promises. Southwest Airlines’ “Wheels Up” one-PHRASE strategy has kept every strategic and tactical

RISK & BUSINESS MAGAZINETM FALL 2014

decision, like no-advanced reservation seating, directed at keeping its planes in the air and generating profits so it can keep airfares low. We strongly suggest you keep your one-PHRASE strategy relatively secret, which is why I’m not sharing BuildDirect.com’s.

Support your one-PHRASE strategy with differentiating actions.

Underlying the one-PHRASE strategy is a set of specific actions that represent HOW you execute your business differently from the competition. BuildDirect. com, for instance, requires a minimum order of a pallet of material. It carries no name-brand products and instead create its own. And it doesn’t give anybody terms, instead requiring full payment on order (cash in advance). Competitors might share one or two of these same actions, but it’s the unique combination of all three for BuildDirect.com that truly defines its differentiation.

To establish and hold into your competitive edge, you need to aim for at least a 10x underlying competitive advantage over your rivals. Establish your “X Factor.”

To establish and hold onto your competitive edge, you need to aim for at least a 10x underlying competitive advantage over your rivals. At his previous lawn care company, Happy Lawn, founder Barrett Ersek reduced the typical sales process from three weeks to three minutes by using the latest digital technology and tax map data to estimate lawn measurements while customers were on the phone – instead of having sales people visit prospects’ homes to take manual measurements, write up quotes and then schedule appointments. It’s not surprising that industry giant ServiceMaster recently bought the company, which had $10 million in sales, from him. At Holganix, Ersek’s new company that manufactures

and distributes organic fertilizer, he’s identified another X-Factor. But like the one-PHRASE strategy, it’s best to keep it secret, really secret.

Measure your profit per X and BHAG.

And last, there is a key metric that defines the essence of your business model and is tied to your long range goal. Jim Collins calls this metric your Profit/X and it benchmarks your Big Hairy Audacious Goal (BHAG). In the retail building supply industry, the key metric is same-store sales growth. Most BHAGs are opening some number of stores within 10 years. At BuildDirect.com, the business model is built around focusing on profit per “building product category.” And it has a specific formula for how to maximize this. To reach Fortune 500 status by 2023, Booth figures the company needs to build out 20 specific product categories, ranging from $500 million to $2 billion in revenue. Given its mastery of these seven strata of strategy, we wouldn’t be surprised to see BuildDirect. com listed in Fortune even sooner.

And last, there is a key metric that defines the essence of your business model and is tied to your long range goal.

Verne Harnish is founder and CEO of Gazelles, a global executive education and coaching company, Verne has spent the past 30 years educating entrepreneurial teams. He’s the author of Mastering the Rockefeller Habits which is endorsed by over 100 CEOs of mid-size companies and is published in ten languages.

As a Certified Gazelles International Strategic Advisor, Andy Buyting provides strategic direction for high growth companies and their management teams as they grow their organizations to the next level. Using the Gazelles International strategies and methodology, he facilitates a structured approach to the Four Decisions™ framework; People, Strategy, Execution and Cash. Learn more at www.AndyBuyting.com

RISK & BUSINESS MAGAZINETM FALL 2014

The Self-Fulfilling Prophecy BY: ELDON MACKEIGAN, SANDLER TRAINING

uccess in sales is elusive. There are many good people who appear to have the stuff to make it in business development but unfortunately can’t seem to get past the biggest barriers – the ones between our ears. This is not exclusive to the selling profession. It can happen in any job or interest where people need a boost so they can perform what they are skilled to do. Sports people are prime examples. A baseball player who fails 70% of the time gets to the Hall of Fame. Does that mean when they approach the plate to hit they think “this is one of the seven times I’m going to fail?” If they are thinking that, they will fail. I’m sure every time they approach the plate they’re thinking this is a home run opportunity. Sales people have the same thoughts. If they are not confident, having second thoughts about their product, company or market, there will be that little voice

saying “I don’t have a chance.” This starts at the point of their outlook. If they are having negative self-talk it colours their outlook. We all have two choices. We can have an outlook of possibility or an outlook of limitation. Wherever we start is likely to pave the road for where we end the journey. The result of our outlook is how we structure our belief system. If our outlook says it’s impossible or it’s a waste of time, we believe it’s true. From there our judgment takes over and we look for data and examples that back up our belief. This mind-set drives our action or lack of action. If we have an outlook of limitation that affects our belief system and affects our judgment, we won’t take the time to change our behavior. This is a vicious circle: Outlook-Belief-Judgment-Action. It’s called a self-fulfilling prophecy and it kills good people and opportunities.

RISK & BUSINESS MAGAZINETM FALL 2014

Outlooks of limitation are caused by various things. It may be a lack of self-confidence, fear of failure, procrastination or listening to negative co-workers. Let me give you an example that is very real. The sales team isn’t hitting the monthly targets. The sales manager sits down with each salesperson to determine what they will do and how they will plan to achieve the numbers. The salesperson looks at his/her client base, checks who bought last year and comes up with a projection. When asked who he/she will approach to develop new business they suggest they will network the chamber events, the association dinner, and will ask for referrals. That’s a good approach, if it works. However, if it’s not hitting the numbers, something else needs to be considered. The manager suggests the need to have a plan for cold-calling, picking up the phone daily and making 5-15 calls to start the sales process. The salesperson says, “I’ve tried that, it’s a waste of time and it simply doesn’t work in this business.” So the sales manager inquires further, “How many cold calls have you made in the past month?” The answer usually reveals that there hasn’t been a significant amount of cold calling and when the calls were made they were approached negatively. Failure was inevitable. But failure wasn’t a result of the action; it was a result of their OutlookBelief-Judgment.

If you have children, you have probably encountered situations where they won’t try something because they perceive it to be unpleasant, their friends told them it wouldn’t work or they were afraid to make the effort. And all of this is normal. Cold calling is a bad term. I like to use the term opportunity calling. Call it what you will, new prospect calling is only one of the many issues where salespeople have an outlook of limitation. What about these: • I have to call on a purchasing agent first. • I can’t call on a company president or a plant manager. • I cannot close on a first call. • I cannot shorten my sell cycle. • My prospects will only buy if I have the lowest price. • It’s okay if my prospects want to shop around. • I need to educate my prospects. • Prospects who think things over will eventually buy from me. • It’s important that my prospects like me. • The economy is down and my prospects don’t have much money. • I don’t like to talk to strangers. • It’s impolite to question people about their budgets. • It’s impolite to question people about their decisionmaking authority. • Most prospects are truthful. • Most prospects are sincere. • I cannot sell without literature. • I cannot sell without demonstrating my product. • I cannot confront a prospect when they lie to me. • Too many questions will cause my prospect to become upset. • We need more advertising It’s rarely the outside forces that stop us from hitting our targets. The biggest barriers to success are very often our own self-limiting beliefs. The goal is to rewire those beliefs and work to develop positive attitudes and productive behaviours. That is the key to your success. What do you need to rewire? How will you do it? Who can help you? ©2014 Sandler Training Inc. (www.atlantic.sandler.com) is an international sales and management training/consulting firm.

RISK & BUSINESS MAGAZINETM FALL 2014

Eliminating Distortions

Why your P&L is not worth the paper it is printed on BY: GREG CRABTREE, PARTNER, CRABTREE, ROWE & BERGER, PC

Distortion #1 – Owner compensation distortion

You should get paid a market-based wage for what you do and a return (dividend) for what you own. Most entrepreneurs mix their ownership with their job role in the business, not realizing that it creates significant distortion in the true profitability of the business. If you are incorporated, you may be motivated to avoid payroll taxes on wages and just take distributions. Unfortunately, the government knows about that and will eventually get around to you and give you a nasty payroll tax bill and a headache to boot.

t is not uncommon for every business owner to start a discussion about their P&L statement with “well, that net income number is not correct,” then go on to list all of the things they would change but their accountant makes them do it that way. Business owners need to take back responsibility and control of their financial reporting and follow these simple principles to make their P&L a useful document.

If you have multiple shareholders working in the business, make sure everyone is being paid for the “job” they do and not getting a paycheck based on their ownership. As an owner, you get to pick any job you want to do, but the market picks your pay. You may choose to over or under pay yourself, but all that does is create distorted net income on the P&L. Take action: Stop thinking small and pay yourself the right salary so your P&L tells you the true economic output of your business. If you need to take distributions beyond your wage, we need to discuss why you are consuming more than you make!

RISK & BUSINESS MAGAZINETM FALL 2014

Distortion #2 – Revenue is vanity!

When entrepreneurs get together, I notice that they all talk about revenue but rarely about profit. I want you to stop talking about revenue internally and become a “Gross Margin” talker. My definition of Gross Margin is Revenue minus any Direct Costs that do not include labor. My reasoning for this is most direct costs are really “pass through” costs that you get paid for in advance or get terms from the vendors such that you essentially do not pay for them until you get paid. Think of a construction contractor. They may tell you they did $20 million in revenue, but they really had $17 million in material and subcontractors so they are really a $3 million services business. The same would be true for a marketing firm. I want them to celebrate a $50,000 services contract that uses no freelancers more than a $100,000 contract that uses $80,000 of subcontractors. It may hurt your pride a bit to talk about Gross Margin instead of Revenue, but you will start to realize that Gross Margin is the true top line of your business engine. It will make your marketing strategy simpler for what a good customer looks like and your team will understand they perform in relation to Gross Margin, not Revenue. Take action: Teach your team to think Gross Margin. If your accounting data does not report on Gross Margin now, adjust your bookkeeping process to never report on Revenue without Gross Margin, even if you have to use a good enough estimate.

Greg Crabtree, Author of Simple Numbers, Straight Talk, Big Profits, is a partner at Crabtree, Rowe & Berger, PC, an accounting firm focused solely on the needs of entrepreneurs, helping them build the economic engine of their businesses.

RISK & BUSINESS MAGAZINETM FALL 2014

Pollution Liability Insurance

Why Should Contractors Purchase Pollution Liability Insurance? BY: BRIAN CANE, VICE-PRESIDENT, ENCON GROUP INC.

damage arising out of their construction operations.

ommercial General Liability (CGL) insurance is a mainstay coverage to protect contractors in the event of a third party claim for bodily injury or property

While some CGL policies include limited coverage for environmental losses, itâ&#x20AC;&#x2122;s important to remember that contractors today face many complex legal issues, and regulatory and contractual requirements. Outlined below are the top five reasons why contractors should buy a separate pollution liability policy.

RISK & BUSINESS MAGAZINETM FALL 2014

Most CGL policies contain a pollution exclusion

CGL policies typically contain an exclusion referred to as the absolute pollution exclusion, which excludes claims resulting from the escape of pollutants brought to the jobsite by the contractor, as well as losses arising from the release of pollutants on a site that has previously been used to handle, store or process waste. Some policies contain an even more restrictive exclusion called the total pollution exclusion, which excludes indemnification for any environmental contamination. A pollution liability policy provides protection against losses typically excluded from CGL policies. There is limited value in the sudden and accidental pollution coverage endorsement

Some insurers provide limited pollution coverage on the CGL policy, commonly referred to as sudden and accidental pollution coverage. In order for coverage to apply through this endorsement, pollutants must be detected within 120 hours of the commencement of discharge and must be reported to the insurer within 120 hours of detection. Some insurers also offer options of detection and reporting within 240 hours. However, contractors should consider that many pollution losses occur over a much longer period of time, sometimes even months later. The value of a pollution liability policy is that it provides coverage for both sudden and gradual environmental damage.

Most CGL policies exclude claims involving asbestos and fungi

Asbestos and fungi/mould are risks that are excluded by most CGL policies. Despite widespread health concerns that have led many countries to ban its use, Canada still imports materials containing asbestos that are used in

new buildings. Contractors performing work in many building types should be mindful of the potential for asbestos. In the cases where coverage is provided, it is typically subject to a very low sublimit. Both the asbestos and fungi/mould risks are covered by a pollution liability policy.

Excavation work poses specific risk exposures

Contractors never really know what lies below the surface, and locates are often inaccurate or miss an old, or forgotten, utility. A notable Canadian case involving excavation work was the Burnaby crude oil spill where an excavator digging a sewer trench ruptured an oil pipeline. The resulting cleanup operations cost more than $15 million. For contractors with a total pollution exclusion in their CGL policy, there would be a significant coverage gap in a case like this. A pollution liability policy provides additional protection for pollution incidents resulting from excavation work.

Fines and punitive damages against insureds can be substantial CGL policies typically only cover the insured for compensatory damages. These are damages that are due or awarded in payment for actual injury or economic loss. Compensatory damages do not include punitive or exemplary damages, or the multiple portion of any multiplied damage award. While not all pollution liability policies cover such penalties, some may if they resulted from an insurable claim. Pollution cleanup costs are growing as our society, and legislators, demand that contaminants are cleaned up quickly and thoroughly. Accidents do happen and having the appropriate pollution coverage is essential to help protect contractors against that risk. To read the original full-length article, which includes claims examples, please go to http://encon.ca/English/resources/ LossControlInformation/Documents/ Environmental/Encon%20ELI_SNB2.E.PDF

RISK & BUSINESS MAGAZINETM FALL 2014

Mold Issues in New Construction BY: DAMON GERSH, CEO, MAXONS RESTORATIONS INC.

old is one of those four letter words in the English language that can invoke fear and panic. It’s ubiquitous and sneaky, it can hide behind walls, lie dormant and it can certainly cost thousands to remediate. In the last several years, weather events have lent a hand in putting this four-letter word in the forefront of people’s brains and definitely a hot topic for debate and discussion. Molds are naturally occurring and beneficial to our outside environment, they help break down dead organic matter like leaves and dead trees. Conversely, when mold is found indoors, it can potentially invoke subtle to serious allergic reactions in otherwise healthy individuals. When it comes to new construction, owners and managers rarely consider that mold will be an issue as part of the building process. Steel beams, concrete floors and brick facades in commercial buildings are rarely conducive to mold growth.

However, problems often arise when structures have not been properly enclosed. Roofs or facades that are not weather tight, windows that are not correctly sealed, and other exterior openings that have not been secured allow moisture inside the building enclosure. “Older buildings that have been retrofitted also have problems when old plumbing or drain lines are abandoned, not capped off or are not rerouted properly,” says Jason Van Namee, CMP (Certified Mold Professional) with Maxons Restorations, Inc. “Moisture can permeate into interior locations and cause a mold situation.” Contractors can reduce the opportunity for mold growth during construction by ensuring that all building materials are kept dry before installation. Properly flashing and water proofing building exteriors will reduce water intrusion and inhibit mold growth. In the aftermath of any hurricane or heavy rain storms, building structures that are more impervious to water

damage takes on new significance. There are a number of moisture resistant materials on the market that can be used instead of older, more conventional materials, which serve as a food source for mold. Some materials are treated with anti-microbial products to reduce mold growth if they get damp, and others can absorb water without any resulting damage. “Issues occur when moisture gets trapped behind the walls,” explains Ken Wilson, Maxons’ project manager. “Often it goes into a dormant state and it won’t become an issue unless it gets wet again. Some of the new products can take on a lot of water before there are issues.” If mold is discovered in a building, it is important for workers to be protected and for the problem to be addressed. Sometimes an industrial hygienist (IH) will be called to conduct testing to identify which areas are impacted. “Since buildings are built more tightly now than they used to be, this can cause the air quality within a structure to be more easily impacted by contamination if it is not vented, or if the air is not circulated and properly filtered,” adds Van Namee. A qualified restoration contractor can assist in identifying the water source, drying out the building and remediating a contamination problem. Damon Gersh is CEO of Maxons Restorations Inc. (www.maxons.com). In his capacity as CEO, Damon is one of North America’s leading authorities in commercial building and disaster cleanups. His company successfully manage the restoration of countless properties throughout lower Manhattan including the NYC landmarks St. Paul’s Chapel & Trinity Church which were damaged by the 9/11 disaster.

RISK & BUSINESS MAGAZINETM FALL 2014

Starting Your Own Business What to consider

BY: JACKIE DABLEH-HAKIMIAN, BBA, CGA, EPR DAYE KELLY & ASSOCIATES

re you thinking of starting your own business? What is involved in starting a business? One of the common questions people ask themselves is whether or not to incorporate a business. The following will address this and other key items to consider when starting your own business. The primary advantage of incorporating is limited liability. As a shareholder of a corporation, you may not be personally liable for the debts of the corporation. Other advantages are potential tax savings as taxes are generally lower for an incorporated business; it may be easier for you to raise capital; and ownership is transferable. Some of the disadvantages of incorporating include the expense incurred to incorporate your business, corporations are more closely regulated and there are more extensive record keeping requirements. Regardless whether you operate as a sole proprietor or an incorporated business

you will need to file tax returns. Sole proprietorship business activity will be filed on your personal tax return with a filing deadline of June 15. If you are incorporated, you can decide what your corporation’s year end date will be, and you have 6 months after your year-end date to file your corporate tax return. Please keep in mind that if you owe taxes you will need to pay by April 30 (sole proprietor) or within 2 or 3 months of your year end date (corporate) in order to avoid any interest on balances owing. Incorporated businesses generally need to have financial statements prepared in addition to filing a corporate tax return. There are three types of engagements: compilations, reviews and audits. How does a business owner determine which type of engagement they require? Unless your bank requests a specific type of engagement or there is a corporate by-law or other requirement to have a specific type of engagement, most businesses will choose a compilation engagement.

Another consideration is whether you need to register for HST. There are many rules and regulations related to HST but, in general, if you expect to have sales greater than $30,000, and your product or service is HST applicable, it is mandatory that you register for HST. HST can be filed monthly, quarterly or annually. Will you have employees? If so, you will need to register with Canada Revenue Agency (CRA), withhold CPP, EI and taxes from employee pay cheques, and make monthly remittances to CRA for the prior month’s payroll. If you have 3 or more employees, you must register with WorkSafe NB. It is mandatory within New Brunswick to register for coverage within 15 days of the start of hiring a third worker. Here are a few tips to remember when you have your own business, whether as a sole proprietor or a corporation. Make sure you don’t combine business and personal expenses. It is best to keep business activities separate from all personal activities. For example, it is a good idea to have a separate bank account for your business and not to use it for personal use. Stay organized. Keep all your receipts and all your invoices in a folder and organize them by the type of expense (make sure you have supporting documents for every transaction). This list is by no means inclusive, but just a few items to consider when starting a business. Also note that some of the items may be specific to New Brunswick and not necessarily for other provinces in Canada. For further information please contact your local accountant, lawyer and/or financial advisor.

RISK & BUSINESS MAGAZINETM FALL 2014

Reducing Red Tape for Business BY: GARY BELDING, BELDING BUSINESS FINANCING SOLUTIONS

n the Spring 2013 Issue of Risk & Business Magazine, my article touched briefly on Red Tape Reduction. Wading through government bureaucracy is a huge encumbrance on business in terms of time and expense. Government at all levels have made strides in reducing red tape for their internal use as well as responding to the private sector although significant barriers still exist with antiquated regulations, fees, permits, processing delays along with limited use of on-line applications. The level of red tape can be attributed to the public sector protecting the taxpayer. Although efforts have been made to assist both the consumer and business when dealing with government, control features and various levels of authority remain in place to ensure public information and resources are secure. Government departments and agencies have established detailed websites along with 1-800 #’s, some easier to navigate than others. There are still delays when attempting to speak and interact with a live voice.

determine if they were HST exempt. This required contacting no less than five different divisions of CRA across Canada over a six month period and still no decision. CRA staff in one office simply referred the company to the defined sections of Income Tax Act and the company could make their own interpretation.

with the ability to navigate and benefit from using websites and social media. Interacting with government is inevitable. The private sector needs to initiate dialogue with the political leaders and senior officials in various government departments and agencies. Discuss your specific concerns to determine what can be done and why the bottle necks still exist including outdated regulations, response delays, limited on-line applications, etc.

In business, time is money, a resource that cannot be wasted. This will in no way bind CRA and the company would still be liable for the HST if CRA later found them non-exempt. There is also a mindset that everyone is computer savvy which is not true for many small business owners or one person operations. However, business owners must become more computer literate and stay in tune with advancements including electronic banking and software updates along

Gary Belding has worked in both the public and private sectors for in excess of 40 years and understands the world of financing. Gary was the former Manager of Financial Programs with Business New Brunswick, the economic engine of the provincial government. Gary has the experience, knowledge and is able to navigate through the financial landscape and now operates his own business, Belding Business Financing Solutions, www. beldingsolutions.com

An example of bureaucracy is the Canada Revenue Agency (“CRA”). CRA has developed an extensive website which is reasonably easy to explore and now with “fillable” forms, it is much easier and faster. However, if you allow an authorized representative (company personnel, private accountant, etc) to work on your behalf and have access to your business account, you will need to complete a specific form. The form is simple to complete, however be certain it is the correct form and forward to CRA. If you allow the representative to access and work on your HST account, that requires a specific letter, the previous authorization is not acceptable. Completing an extra form and waiting for approval is additional red tape. There are instances of significant delays when waiting for a ruling from CRA. There was a situation whereby a newly established company wanted to RISK & BUSINESS MAGAZINETM FALL 2014