3 Ways To Survive A Minimum Wage Increases

The current minimum wage in BC as of June 1st, 2018 is $12.65 and that number is expected to rise steadily in the coming years. As small business owners in one of Canada’s most expensive cities, it should be no surprise that minimum wages are increasing. Many small business owners are already paying well above minimum wage to align with the cities livable wage of $20.91/hour and retain good talent.

Minimum wage increases are often met with mixed reviews from business owners. While some feel it will fuel the economy as employees will have more money to spend and create happier workplaces, others feel it will have a crippling impact on small business owners and their bottom line.

No matter what your point of view is on minimum wage increases the fact of the matter is – they are coming whether you like them or not. Here are 3 ways that you can make sure you are prepared for the increase.

 

 

1. Streamline Your Business

Inefficiencies, products and services with low-profit margins, and outdated systems tend to stick around longer than they should when a business is thriving. When a minimum wage increase hits and payroll taxes and accounting fees go up the reactionary approach for a lot of business owners is to start thinking about employee cuts because at face value higher wages appear to be the problem.

Rather than hastily cutting staff or treating your employees differently now that they cost more we recommend turning your focus on your business and getting real with yourself. Ask yourself when was the last time you shopped around to ensure your insurance policy, bank account fees etc. were the best price? What parts of your business could be automated with the right technology? Which product or service lines have small margins and should be cut? What systems can be upgraded?

Doing a thorough audit of your business, reviewing your profit margins and investing in better systems can save you thousands long term. Helping you stay on budget when minimum wage increases are announced.

2. Reduce Your Hours

It’s not always ideal but it is better than laying off good staff. If you have a storefront or provide services a lot of overhead can be reduced if you are smart about your operating hours and your scheduling. If your sales are low on a Tuesday and only barely cover your operating costs then maybe there is no need to be open that day. Or if you notice that most of the work is completed from 9am – 3pm and from 3pm – 5pm nothing gets done, reduce your teams daily hours to 9am – 3pm until you can ramp back up.

While reduced hours isn’t ideal for your existing staff it’s much better than no hours.

3. Increase Prices

While this isn’t always ideal it’s a very viable option to manage a minimum wage increase. With inflation prices can’t be expected to stay the same forever and when minimum wages increase it’s common for the cost of goods to increase with them. Talk to your bookkeeper to determine what the deficit is with the wage increase then look at how you can recoup that with incremental price increases across your products or services. So long as you continue to ensure your level of service remains high most customers will stay loyal.

A lot of small business owners in Vancouver are already paying above minimum wage to ensure they can retain talent so when wage increases are implemented the impact is minimal. If you happen to find yourself in a tight situation when the next increase is announced talk to your bookkeeper or accountant and look for ways to trim the fat from your business that are win/win for both you and your employees.

The Pros and Cons of Speculation Tax

Unless you have been living under a rock we assume you’ve heard the speculation about Speculation Tax (see what we did there). The speculation tax is designed to help make the housing market of urban areas more affordable and available by encouraging homeowners to rent out their homes and not leave them vacant. The areas affected include Metro Vancouver, the Capital Regional District (excluding the Gulf islands and the Strait of Juan de Fuca), Kelowna, West Kelowna, Nanaimo-Lantzville, Abbotsford, Chilliwack and Mission.

Who this affects

The speculation tax while seemingly terrifying, because, you know it’s potentially going to mean you pay MORE TAX will actually only impact 1% of residents and homeowners with BC properties.

The types of homeowners that will be impacted are:

(https://workingforyou.gov.bc.ca/speculationtax/)

  1.     If you are a resident of BC who owns a home but you aren’t living in it you will be taxed 0.5% of the value of your home unless your home is worth less than $400,000.
  2.   Out of province homeowners who own a home in BC that they don’t live in or rent out for at least 6 months of the year will be taxed 1% of the value of the home.
  3.   Foreign owners who don’t pay taxes to BC and who don’t reside in the home or rent it out for a minimum of 6 months out of the year will be taxed at 2%.

The 3 types of people who fall into the speculation tax bracket will have to pay the tax, rent their home out, sell or simply move in full time.

Who is safe?

Approximately 99% of people not affected by this new tax. If you own a home and live there all year, if you rent your home for at least 6 months of the year, if you don’t even own a home and are renting or if you own a home outside if the areas that were mentioned above, this new tax won’t impact you. Additionally, if the following apply to you then you are exempt – you are in the hospital or going through medical care, if you are temporarily away from home because of work, if you are in long-term care or in a supportive care facility or if the homeowner is deceased.

Pros

The Speculation Tax is aiming to improve livability in popular BC areas by encouraging homeowners to rent out their properties creating more access to housing which is a really BIG positive.

There are also a lot of measures in place to help make the tax more bearable. If you are a BC resident you will be eligible for a tax credit, the maximum amount for this is $2000, and $2000 isn’t something to scoff at. If you own 2 homes the Speculation Tax will only be applied to one of your homes, which is also a bonus. The tax itself is also so easily avoidable if you just rent out your second home or even sell (which is extreme but an option nonetheless). You can also completely avoid the tax if your home is valued at less than $400,000.

Cons

Even though there are exemptions in place to protect residents these exemptions take 3 months to be approved so this can be a real set back for some people. There is also a lot of chatter about the tax impacting the value of recreational homes in the areas where it is enforced, which could have a negative impact on tourism.

Some people have been petitioning against the Tax due to all of these cons, which is really not helping the Tax move along smoothly. It’s almost like a tightrope walk at this point, no one really knows what’s going to happen in the future as so many people are all for the tax and so many are completely against it. While the tax has been approved and implemented who knows how long it will remain in place.

Why Your Need To Know Your Numbers When Developing Your Marketing Plan

When measuring the success of a marketing plan a lot of business owners make the mistake of only focusing on website views, social media likes, and new leads. Don’t get us wrong, these key performance indicators (KPI’s) should be measured and reviewed regularly BUT to ensure that you are heading in a truly profitable direction you need to take your marketing and sales planning a step further. Talk to your bookkeeper or accountant to figure out how to accurately measure the following data so that you can use it to drive your marketing strategy.

1) Measure The Net Revenue Of Target Audience

Knowing the net revenue of each client will help you accurately determine who your most profitable clients are, which clients (if any) are costing your business money, and who you should be targeting with your marketing and sales efforts. It’s easy to make assumptions when it comes to client profitability and use these assumptions to drive your sales and marketing efforts.

For example: Henry owns a construction company with 3 key target audiences – New developments, luxury home renovations, luxury home builds. He made the assumption that new developments are his ideal target audience as they are long-term contracts, their invoices run into the millions and they allow him to build and maintain a large team. Reviewing his true net revenue by target audience revealed that after labour costs, overtime, materials, project management costs, accounting, office management, legal fees and delays that this target audience wasn’t as profitable as he originally thought and that his renovation clients were actually more profitable on average.  

While there may be times when your assumptions are correct we always suggest trusting your numbers rather than your gut when making strategic marketing decisions.

2) Know Your Client Acquisition Costs  

How do you find your clients? What is your cost of advertising to each target audience? How many hours a week do you spend on marketing and sales? How long is your sales cycle? How much time does each marketing activity take? These are all questions you need to know the answers to so you can determine which clients are worth pursuing and which marketing efforts are the best ones for obtaining them.

For example:  Sally owns a yoga studio and to attract her ideal client she advertises on Instagram & Facebook, writes one blog a week and spends 2 hours a week networking. On average Sally brings in 6 new clients a week who purchase the introductory class offer which is $40 for the month. Out of the 26 new clients per month, only 5 continue on as annual members after the intro offer expires.

When Sally breaks down her time and costs and income it looks like this:

Social Media Advertising – $600 per month – Brings in 15 clients per month = $40 per lead

Writing a weekly blog – 10 hours per month x Sally’s rate of $60 per hour = $600 – Brings in 3 clients a month = $200 per lead

2 Hours of Networking – 8 hours per month x Sally’s rate of $60 per hour = $480 – brings in 8 clients a month = $80 per lead

Total marketing = $1680 per month

Total income from the months marketing efforts = $1040 for month one, $600 for month two

So for each month of marketing, it takes 2 months for the efforts to break even and the average cost per new lead acquisition is $65.

Sally dives deeper and realizes that the clients who are most likely to continue after the introductory offer are women in their 40’s who have back issues that she targets through her Facebook advertising and people she has built a personal connection with through networking.

Looking at the numbers Sally determines that writing her blog isn’t worth her time and puts that money into social media advertising. She spends more money targeting the demographic that is most likely to continue on an annual membership and as a result, triples her monthly leads. Her cost per lead is reduced significantly, her revenue has increased and she has saved herself 10 hours a month of writing tasks.

Without diving deeply into your marketing efforts and measuring the ROI of each effort you won’t be able to streamline and improve your marketing strategy and long term revenue.

 

3) Know Your Customer Lifetime Value (CLV)

It’s widely known thanks to Pareto principle that 20% of your customers generate 80% of your revenue. This is why knowing your CLV is so important. This metric is an easy calculation and essential number to know when reviewing your retention strategy and determining your future target audiences.

To calculate the lifetime value of a client simply add up the gross profit they have brought to your business over the course of their time as a client. In addition, it’s beneficial to note the length of time they have worked with/ purchased from you and if known how they found your business.

You can use this information to create target audience personas that are based on your most profitable clients for marketing purposes, to help with the creation of client appreciation campaigns, account development, and retention plans and to predict your future revenue.

For Example:

Jennifer owns an e-commerce business and spends a lot of money marketing her products on social media to attract new clients. Once Jennifer started measuring her CVL as a key metric she was able to determine which campaigns were the most profitable long-term, cut the campaigns that were only bringing in one-off clients and build stronger nurturing and retention campaigns to keep customers who were loyal to her store coming back, increasing her overall revenue.

In this new era of online marketing what was once thought of as a creative, whimsical industry filled with fun swag and events has turned into a data-driven almost scientific one that relies heavily on the bookkeeping and accounting industry.

To ensure that your small business continues to grow successfully you need to make sure you talk to your bookkeeper or accountant to solidify that your growth strategy makes sense and that your marketing spend is bringing you the right ROI.

5 Ways Retail Stores Can Become More Profitable.

Having a retail store is not easy especially in Vancouver. With increased property taxes hurting small businesses combined with the increase in online shopping, retailers need to stay savvy to survive the challenges they face.

Most people shy away from knowing their numbers but given that we are bookkeepers (aka number nerds) we get a first-hand picture of the numbers and they clearly show what works and what doesn’t work.

Here are our top 5 tips for making your retail store more profitable.

1. Invest In A FANTASTIC POS Machine

We aren’t just saying this because we love numbers. Investing in a great system such as Lightspeed  will allow you to monitor and understand your cost of goods sold (COGS) so you can discover what’s selling and what isn’t selling,

Additionally, you want to pick a good software that links directly to Quickbooks so you can save yourself a time and money when organizing your bookkeeping.

2. Become Focused With Your Advertising

Not everything in your store is going to be popular and sell. By having a strong POS system you can determine what your customers want and what they don’t want. Dedicate more shelf space to your top selling items and discontinue slow-moving inventory. Don’t be afraid to raise the price on your popular items, just make sure you stay competitive while doing so.

This is going to lead to my next point.

3. Limit discounts!

Discounts take from your profits so be smart about what you discount. Social media is filled with people promoting discounts and giveaways. Sometimes they make sense but you need to be strategic about your promotions. Over-promoting discounts and discounting items too regularly can teach people to wait until you have a sale to come in and purchase.

Put a promotions schedule in place and stick to it. Use it to move items that aren’t selling and show customer appreciation for your popular items. Bundling items can also be a good method to provide value without robbing yourself. But unless you are a major retailer or a have money to burn resist storewide sales and not having a strong promotions plan in place.

4. Know Your Numbers

“But mooommmmmmm I hate math” Too bad dear it’s for your own good!!! You NEED to know and understand your fixed vs variable costs so that you can make sure your profit margins are correct and enough to cover the cost of operating your business. Additionally, knowing this numbers will allow you to create a monthly cash flow budget to ensure that you have enough $$ to purchase inventory. It will also allow you to make savvy decisions when it comes to your vendors such as asking for bulk discounts and reducing the number of vendors you have.

If this all seems a bit much then hire a bookkeeper. If you are trying to cut costs then wash your own windows. Don’t skimp out on good bookkeeping and accounting. It could mean the difference between success and failure.  

 

5. Be Smart With Your Employees

Who you hire could make or break you. If you don’t have great staff customers won’t come back. Spend the time finding the right people and then invest in educating them on how to SELL if they don’t already come with the knowledge.

Also, remember that at the end of the day you are the boss and if you don’t run a tight ship everyone is out of a job. So only schedule employees when you need them. Create a schedule that works for you and your store with the top sellers getting the most hours.

Know your store’s conversion rate (how many customers enter the store compared to how many that buy things) then determine how you can improve the numbers. If you determine it’s a staff-related issue then address it immediately.

Running a retail business is never easy. Gone are the days when a storefront was enough and rent was low. Juggling online business as well as your store is challenging but if done well can also be very rewarding and set you up for a bright future.

If you need help understanding your numbers contact us today!

Xtreme-EffeX: Extremely creative and innovative design with impact

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As part of our Client of the Month series, we look at Xtreme-EffeX, top custom ironworks and fabrication biz with swag!

Imagine this: A beautiful four-story staircase with glass landings. You’re at the top floor, awestruck, as you glance down at the transparent tier and see the basement at the bottom of the house.

Xtreme-EffeX,  Custom Design and Fabrication, has been making projects like this a reality for residential and commercial properties in Vancouver and throughout North America since 2007.  In fact, they designed and built the swanky residential glass staircase mentioned in the first paragraph.

The brainchild of Ryan Ramsdale, Owner/ General Manager, who built Xtreme-EffeX out of his garage, has evolved into a flourishing retail and fabrication hub that connects businesses, homeowners and developers to the most cutting-edge design trends and products.

 

 

 

Photo: Ryan Ramsdale admits he does not have too many photos of himself. It is evident that his focus has always been on his family and business.

 

With Xtreme-EffeX inventive design-build process, the in-house design team creates unique, functional and durable products that FIT.

Their motto? “Customize rather than compromise. Because custom fits!”

It’s design with impact. With passion, precision and hands-on approach, it’s high-end work that exceeds expectations, going above and beyond with their out-of-the-box approach to realize your vision no matter how seemingly far-fetched or impossible.

Surely, it is no surprise the 10-year-old business has a five-star presence in the industry with access to the best products and materials on the market and the most skilled fabricators.

Whether it’s your outdoor living space that needs sprucing up or you are looking for a special installation project, or security solutions, Xtreme-EffeX is there to save the day, and make it a lot more awesome!

With no signs of slowing down, you’ve probably seen their eye-grabbing work at upscale restaurants, lottery show homes, and designer retail stores.

As part of our “Client of the Month” series, we caught up with Ramsdale on everything from life as a business owner to advice for new startups:

 

What motivated you to start your own business?

“The experience I gained through the industry and the drive to want to continually create custom products that my team and I can be proud of.”

What do you enjoy most about being a business owner?

“Through hard work, the freedom and ability to create a schedule that benefits me, and especially my family.”

 

What’s your favourite part about the fabrication industry?

“The ability to take raw materials and create functional items, using different processes and practices, to achieve what most people don’t see as possible.”

 

What’s your #1 motivator?

“My #1 motivator would definitely be my family. Working hard and developing a business that allows me the time to be there for and with my family.”

 

Describe your ‘a-ha’ moment

“Being able to confidently rely on my team to carry out the tasks that I would typically feel to be my responsibility. Releasing the control and being pleased with the results.”

 

What’s your vision for the business?

“To have self-sufficient business with a dedicated team of motivated fabricators and designers that consistently exceed the expectations of our customers and clients in every aspect.”

 

What advice do you have for other people who would like to start their own business?

“‘With dedication to your dream, you can spend a few years of your life like most people won’t, so that you can spend the rest of your life like most people can’t.'”

Anonymous quote

 

How do you achieve a work/ life balance?

“With the technology of today, it makes it very difficult to be able to turn work ‘off’. But it’s planning for tomorrow, today, then actually turning work OFF and enjoying what it is that we work so hard for.”

 

Who could benefit from your services?

“Home builders, home owners, architects, developers, or anyone with a design idea or concept that needs to be brought to life through our design/build process.”

 

Find Xtreme-EffeX online here and check out all the neat things they do on the daily to make living and work spaces way cooler!

 

Fix and flip: Three things you need to know about house-flipping in Vancouver

house flipping vancouver

I see a  beautiful, white 10-bedroom villa, with a long, spacious veranda that leads to a vineyard, overlooking a flowery hillside. The birds are playing in the field, chirping my favourite tune, with crops that are gently swaying in the warm summer breeze. Life is awesome. 

They say, “One person’s trash is another person’s treasure.”  When it comes to flipping houses, it comes down to this:

  1. Have a vision
  2. Be brave
  3. Sell for profit

What the flip?

It’s when you see that junky house or an apartment and envision something different in that space, be it new, shiny tile floors and a fresh coat of paint, or a complete and utter gutting of the space.

So you buy it, spice it up, and sell it for profit. Flipping easy, right?

Suddenly, that run-down house becomes a mansion and that dude refreshing himself with a cold beer in front of it turns into a swimming pool. At least in your imagination they do, for now…..

Here’s the bare bones of house/ apartment-flipping:

  1. Find cheap land/ apartment. Without a good deal, there will be no margin for profit once the renovations are complete and all the other fees are paid out.
  2. Don’t spend more than 40-50K. If you are flipping an apartment that is 500-800 square feet, you should not be spending more than 40-50K on the renovation before you sell or you won’t be able to sell it for a high enough price and you might lose money.
  3. Rent it, don’t sweat it. House-flipping is less popular in Vancouver than apartment-flipping. Developers and homeowners can usually make more money just buying and holding the land for 6-12 months or more while renting the house, and making a significant profit of the appreciation of the land.

Tip: Like anyone engaged in the intricate art of renoing, you will need a cool bookkeeper to manage your expenses, file your GST return and make sure your taxes are filed properly.

That’s where we come in.
We can definitely connect you with some kick-ass professionals in the industry, or just take on your books!
Happy house-flipping!

 

 

 

 

Avoid procrastination, after reading this

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Even The Number Cruncher, Allysia Lewis gets occasionally sidetracked by the internet……

Virtually everyone is prone to procrastination. A new Donald Trump meme can induce low-brow fun and hysteria even for the most focused cat person ….and put that important tax preparation on the back burner.

The Lady in Charge Teya was interviewed by the CBC about the topic of procrastination. This was fitting for two reasons:

A lot of people procrastinate about organizing their bookkeeping and taxes (even when the tax deadline April 30, 2016 is peeking like a creepy clown behind a wall). As a the owner of a bookkeeping company Teya’s job is to help business owners become more organized and meet their CRA submission deadlines.

As perpetual procasters, we have found that Teya has an impeccable ability to avoid distractions (such as social media) and get things done. (If we could nominate her for the “least likely to procrastinate” award, we would.)

You can get there, too–we all can! Stick to the following five tips to really increase your productivity.

1. Outsource

Starting a new business can be quite costly so it is common for business owners to take on the initial roll of “everything to everyone” in order to keep costs low.

Although this isn’t a bad way to start, as time goes on and the business grows this workload can begin to become unbearable. This is where the procrastination starts.

According to an article by Phyllis Lokki in the New York Times the larger your workload the more likely you are to become overwhelmed and start procrastinating.

This is why outsourcing certain tasks is really important. It allows you to reduce your workload, free up some of your time and focus on your strengths.

For example: Teya has outsourced writing this blog to me because she is so busy making sure your taxes are filed on time 🙂

2. Lists, lists, lists and more lists

Write everything down and prioritize your important tasks. It is easy to use small tasks as a method of procrastination because they give a false sense of productivity.

Think about the revenue each task will bring you and then prioritize accordingly.

For example: Vacuuming your bedroom floor, although necessary, will bring $0 to your business so it should be last of your list. Completing work for your client will bring in revenue so it should be a priority (you can then use this income to outsource your vacuuming)

3.Limit your social media usage

This is easier said than done, especially when social media is so prominent in most people lives.

Time your usage. Create a social media plan that allows you to fit your daily social media into 20 minutes per day and stick to it OR outsource your social media management to an employee or to a firm.

It is very easy to get caught in a social media vortex. All it takes is for you click on a one link and before you know it 2 hours have passed.

4. Make sure you take breaks

Breaks allow you to refresh your mind. There are several studies that reveal taking a break to eat your lunch or to go for a walk actually increases your productivity.

So stop eating at your desk and enjoy some fresh air.

5. Only check your emails twice a day

Emails are often a procrastinators drug of choice. Don’t get me wrong they are important. However,  it is easy to fall into the trap of checking them 300 times a day.

You need to limit the time you spend with your emails so that you can focus on other important tasks.

Most people are happy/ pleasantly surprised by a same day turnaround. So even if you only respond to emails once in the morning and once in the afternoon that is usually all you need to ensure positive feedback from your customers.

A great tip suggested by Timothy Ferriss author of The 4 Hour Work Week is to set up an email response that lets your clients know exactly when and on what day you check and respond to your emails so you can manage their expectations.