Thursday, October 11, 2018

What Influences Our Financial Decision-Making?



Are you looking for an intriguing topic?  You might find it in a report prepared by the staff of the Ontario Securities Commission. This detailed and elaborate study was conducted to better understand people’s behaviour when making decisions, primarily financial decisions.  The report elaborates on Behavioural Insights gleaned from psychology, economic and other research and had this to reveal in its executive summary.

There are numerous factors that influence the decisions that people make.  Behavioural insights (BI) recognizes this and, through a combination of psychology, economic and more recently other behavioural research, examines how people are often neither deliberate nor rational in their decisions in the way that traditional models, strategies and policies assume.

We need to ask ourselves these questions:  “Are we like this?  Are we really non-deliberate and irrational with our decisions?


Gaining a Better Understanding





The primary focus for this study was to offer consideration and clarity in the development of new government and regulators’ policies.  When policy makers are able to better understand people’s actions, choices, and thinking, they are more apt to design effective guidelines to protect them.   

This leads to another question: Do we believe we always make the best decisions for ourselves?”

To gain a better understanding of our own actions, choices, and thinking, we could create a flowchart. This method, which offers explanations for our “Yes” and “No” answers, may look like this.   



If the answer is “Yes”, I assume we may do the following to support our decisions. 

  • All the options would be weighed in favor of one direction or the other.  The costs are calculated.  The “what-if’s” are considered: “Can we afford to wait if we don’t do it now?”   Most importantly, have we considered whether this is the right decision for our family? Is this a “gamble” or a “sure thing”?  Here are some examples: moving to a different province, trading a less-than-a-year-old vehicle for a new one because of mechanical issues, or retiring now or waiting two more years to receive the full-retirement benefit.  



If the answer is “No”, I assume we would understand the impact of our decisions.  Perhaps we are not prepared to make the best decisions, when…

  • We are uncertain and a decision needs to be made. We likely could make the wrong choice.  We could also be forced to rely on someone’s expertise but we would need to trust their expertise. 


  • We are rushed and a decision needs to be made.  We might feel backed into a corner and cave into gut instincts. 


  • We are pressured and a decision needs to be made. A deal might be on the line.  Depending on our response the deal may be a “make” or “break” situation…a sale, a commitment, or a partnership agreement.  We may be forced into a “deal” or “no deal”.  


  • We are people pleasers and a decision needs to be made.  We are placed in the worst spot because we are inclined to avoid offending.  For example, we could do the irrational thing and jeopardize our credit by co-signing a loan for a family member.



And of course, we can always stand on middle ground by being indecisive.  This approach really doesn’t get us very far with our decisions.   We may know someone who does this; and we would rather not act or react in the same way.   

When we find ourselves making inappropriate decisions, then we may need to slow down and evaluate our reasons.    If the government and regulators are concerned about people’s behaviour; and experts are digging for explanations to examine and explain how consumers make decisions, then we also need to take notice of how we make decisions.  We need to evaluate…

How do we deliberately and rationally decide to buy a new vehicle or to retire?

How do we deliberately and rationally decide to change careers or build a new home?

How do we deliberately and rationally decide to ___________ (Fill in the blank with a decision you currently face.)


What affects our decisions today that were not present a year ago, a month ago, or even a day ago?


Making Reasonable and Logical Decisions




We may believe we behave rationally until hindsight tells us differently, like my idea for a U-Pick Raspberry Farm which was shared in the blog post, Deliberate Thinking.

Recently, someone pointed out that people often feel judged and criticized for their actions. This negative view could apply to a number of things they do and don’t do.

In all sincerity, we need to notice whether we habitually question others’ behaviour, especially when money is involved yet fail to look are our own shortcomings.

How can they afford to take an expensive holiday?

I can’t believe they traded their just-like-new vehicle for a newer one.

Why are they spending money on new appliances when there is nothing wrong with the ones they have?

From our vantage point, certain decisions may not appear rational.  There have been times as a financial planner, when I tried to convince people not to withdraw money from their Registered Retirement Savings Plan (RRSP) for other purposes than retirement.  No matter what I said, they were determined to do things their way.  Nothing would change their minds.

What does it take to change our minds?  We like to think we are right when it comes to making a decision. The right decision fits our circumstances and feels good. But I can attest there were times when I lacked the confidence to finalize a decision.  I opted to confer with someone who had more expertise. I was grateful for their opinion and help. Would you do the same? Do you trust a professional to help you?




Considering Possible Influencers





Whether we concur with the report that lays claim to how people are often neither deliberate nor rational in their decisions, this report gives us a reason to examine our behaviour involving money. I have observed that our behaviour is driven by many influencers. I would be interested in knowing if you can relate to these seven influencers.     



1. Emotions.  Good, bad, or otherwise.  There are times our decisions are based on fear.  When the markets tumbled in 2007 and 2008, some people were extremely fearful for their investments, especially their retirement funds.  They panicked and transferred their money from a balanced fund to a money market fund where they felt it would be safer.  They believed they were doing the right thing.  Others were afraid but chose to watch and wait for the market to recover.  They expected the value of their pension plan would return to normal.  They believed they were doing the right thing.  Their patience paid off.


2. Substantial Income. When we have a substantial income, we have the ability to spend beyond our basic needs.  We can afford to travel more, buy more, and give more.  We can lavishly spoil ourselves and others.  Our decision to do so is based on our inflow of income.  


3. Social Media.  Through our social media channels, we see what others own, what others do, and where others go. We are inclined to want to keep up with them.  The notion of missing out on what others have and do drives us to make decisions that might be contrary to the level of our income. This peer pressure devises ways for us to find the money even if we revert to using credit. 


4. Financial Products. Sometimes financial products, with their unique features and benefits, can influence our decisions because they seem like simple solutions. The best examples are:  loans set up at 0% for new vehicles, free payments periods for the first three months on appliances and furniture, or the all-inclusive mortgage loans for other purposes than for a new home purchase.  These loan products entice us.  In some cases, they distract us from making the right financial decision.


5. Time.  The practise of shopping around for the best deal doesn’t work if our time is on a budget.  We simply don’t have the time to investigate, probe, and assess whether our potential purchase is necessarily wise.  The need is great and our time is limited. This could be a deciding factor in making a rational decision.   


6. Education. When we come face-to-face with decisions that we don’t have the knowledge or expertise, we rely on experts to help us make the right one.  We need to trust the “sales person” whether we are selecting one mutual fund over another because of its past performance or one television instead of another because of its quality sound and picture.  Trusting someone else’s authority is an important contributor to the decision-making process.   


7. Past experiences.  Our present decisions can be based on our past experiences. We can run into a brick wall and realize we never want to face that situation ever again.  We elect to make smarter decisions based on our encounters.  The ideal example is being laid off because of a shortage of work in any particular industry.  It is never a matter of “if I get laid-off”, it’s a matter of “when I get laid-off”.  One has a tendency then to stockpile money into a savings account to be better prepared for the potential layoff from work.


Assessing Our Actions






Whether we focus on investment or insurance products, purchase our first home or retirement home, opt to travel or buy a new vehicle, money will be required. Over a lifetime we spend a significant amount of money.  Wayne Chirisa provides us with a thought-provoking view, “Money does not dictate your lifestyle, it’s what you do to get it and how you manage your finances that determines your lifestyle.” 

Based on this, what conclusions can you derive from your behaviour and decisions involving money? 

Are you a deliberate and rationale money manager?      



Thursday, September 27, 2018

Protection Worthy of Your Attention

A car was destroyed by the tornado that tore through the capital region Friday.  (Nicole Nivotny)




It can happen.

Horrific events can happen.  Any place! Anywhere! And any way!
The images of the violent storm which swept through the Ottawa and Gatineau regions last Friday depict massive destruction.  


Imagine one minute living life in peace and harmony; and then the next minute being tossed into a pool of chaos and devastation. The five simple words in this profound adage tell us a story:  “Life Can Turn on a Dime.” Life certainly changed for these people within a small space of time. 

Life can change for anyone when they face an unexpected event.  Everything people work towards owning is shown in these photos. Houses. Cars. Household possessions. 

Once people are over the shock, their focus will turn to recovery.  How do you recover from something this catastrophic?  Hopefully, the answer is that they carried home insurance.

Global News answers this question, Does home insurance cover tornado damage?  “The Insurance Bureau of Canada (IBC) says that most home and business policies offer protection from wind and tornado damage, along with compensation for living expenses if there’s a mandatory evacuation order.”

Seeing and understanding the need for insurance is crucial.  Often people pick and choose what to insure.  In previous blogs, we discussed life insurance as well as disability and critical illness insurance.  Today in the aftermath of this tornado, our focus is on property insurance.  It all boils down to risk management.  You run a risk if you choose not to insure your possessions. The reality is without insurance your financial well-being can be severely impacted.  When disaster strikes, the conversation inside your head will go either in one direction or another. “Oh no!” or “Thank goodness!”

Insurance is not limited only to the need to cover natural disasters such as a flood, earthquake, or hurricane, which cause great damage or loss of life.  Insurance is necessary to cover against theft, fire, and accident.  Any of these events will cause your life to turn on a dime financially, mentally, and in some cases, physically.  The cautionary advice is to protect your family and yourself.  
   
Disasters like these can be a wake-up a call for everyone.  My husband and I recently did a complete overhaul on our property insurance.  We literally took the policy apart, examined the coverage, and made necessary changes with the help of our insurance agent. The question is: “When is the last time your insurance policy was reviewed?” Sometimes, insurance premiums can be lowered when you balance the amount of risk you can assume with the remainder covered by the insurance company. I always remember one insurance representative saying, “Some insurance is better than no insurance.”

Below is a checklist found in CIFP’s Financial Planning Practitioners Guide updated in 2017.  The information is of little value if it is not shared with you.  Presenting the information will provide you with a guideline to examine and review your policy with your insurance representative. 




Thursday, September 13, 2018

No One Likes A Trick Question





Trick questions are difficult to answer.  Some are next to impossible.  Often, it’s seniors who ponder over the trickiest question of all. 

“How long will I live … because if I knew I would give money to the grandchildren now when they need it most?”

A generous heart can be problematic.  In some cases, a generous heart trumps common sense.  People can easily fool themselves into believing they have enough money to meet their financial needs for a lifetime.  How do we measure a “lifetime”?  The reality is a magic formula doesn’t exist. We all know family and friends who are now centenarians, living beyond 100 years of age. And we also know of family and friends who died earlier than anticipated.

So the question stands. 

“How long will I live because if I knew I could do a better job of financial planning and preparing for the future?” 

Certain guidelines can settle a person’s anxious thoughts.  They may not be perfect but they’re helpful.

1.  The Probability of Survival.
CERTIFIED FINANCIAL PLANNER® professionals will often reference the Projection Assumption Guidelines published by Financial Planning Standard Council (FPSC). Within this document is the life expectancy table shown below.  This guide leans toward longer life expectancies to provide a more conservative approach in developing projections.  

 
2.  Health Condition.
We are generally the best ones to know and understand our health circumstances and lifestyle behaviours.  The general assessment is based on our diet and fitness habits. How well do we take care of our bodies and minds?   This information can provide an accurate guideline to determine our longevity. When we have regular appointments with our doctors and health practitioners, these professionals are in a position to provide an accurate valuation of our current health status.      

3. Parents’ Longevity.
Often our parents’ longevity can provide some insight into our own.  If both parents lived to 90 years of age, then the probability is likely the same for us.  Naturally, if they died prematurely, we may have reason to believe their work conditions and health care were not ideal.  

4. Other factors.
FPSC interestingly identifies other factors which contribute to our life expectancy.  These all matter: 
·       gender
·       smoker or non-smoker status
·       place of residence (example: province, country)
·       evidence of good health
·       wealth
·       being retired

A Logical Response
The heart of the matter is we need an answer to the trick question to determine how much to save to satisfy our need for an ideal retirement. Secondly, we need to decide how much money to keep for ourselves while we give the remainder away.

Choosing an age from the chart that is higher than you believe to be true is far better than choosing a younger age. You would not want to live destitute because you have given away a sizable portion of your estate. 

My rule of thumb is we can be generous with a little of our wealth if we are absolutely certain we have an abundance.  But consider this:   Our financial situation can rapidly change within minutes.  Presently, we may be able to accurately calculate our annual lifestyle expenses.  But one sudden and severe health incident can dramatically increase these costs.      

Without a doubt, we have generous hearts. Common sense should rule. We need to be extremely cautious when we are seniors living on a fixed income in retirement. Seniors do not have an opportunity to earn employment income because we may no longer be physically able to work.  

The logical response: “Do not place ourselves in financial jeopardy.” When we pass away, the amount remaining in our estates may be passed on to our beneficiaries through our wills. 






Thursday, August 30, 2018

Advice That Never Grows Old






“The truth is that most of our current wealth is the result of diligent savings, not high returns.”

These words came from Lana Wong in an interview for MoneySense’ Guide to Retiring Wealthy.  “Save diligently” is advice which never grows old. 

Some things stick like glue.  Things you read or things people say become embedded in your memory.  Once in a while they mystically reappear.     

I remembered snippets from this publication, “How I planned my way to financial freedom”. When I found the book, June 19th, 2011, was scribbled at the bottom of the article’s last page.  At the top, I had written “very good, recommend”. 

The reason this article came to mind now is directly related to a financial plan I am currently creating for a couple. Everything Lana said in her interview applies to my couple’s situation.    My clients didn’t chase high returns.  They were following the same route directed by Lana.



Lana said, “All I did was make sure to take advantage of any pension plans or savings plans that my employers offered. I also maxed out my RRSP contributions every year.”   This works!  Lana said it did. I have seen the same results in my clients’ financial projections who diligently saved and minimized their debt over the years.  Now they are able to comfortably retire in their late fifties.   


There are many smart people, like Lana and her husband, Randy, who apply what they know they should do at a young age.  They follow through with their own advice.

Lana’s wisdom is profound. “My biggest motivation wasn’t becoming rich.  No, I started saving money because I was lazy.” 




When we recognize our weaknesses, we can take control of getting the ball rolling in the right direction.  Lana knew she had a war to fight against her weakness.  She developed a battle plan.  That was to simply start saving. 

She goes on to say, “I realized that if I saved just $50 a week when I was in my 20’s, then I’d never have to worry about money later on.  I figured I might even be able to retire early.”

Lana wasn’t sure she could retire early…she only thought she “might” be able to.   “Might” has a way of deterring many people.  When we are not entirely certain, reluctance fights against our best intentions.  We simply give up. “What’s the use! I can’t save… I just blow it.”  

We do ourselves a favor when we heed Lana and Randy’s advice.  They learned three important lessons which they willingly shared in the interview.

  • Set goals.
  • Always live below our means.
  • Train ourselves to be happy with what we have instead of always wanting more. 


I feel a personal connection to Lana.   She grew up in Moose Jaw, attended the University of Saskatchewan, and worked for a consulting company in Regina before moving to Vancouver when she was 31 years old.   You are not reading “How I planned my way to financial freedom” from a textbook on personal finances.  This story is personal. And personal stories are relatable.   By sharing Lana and Randy’s never-grow-old advice, I hope you will be motivated to create your own happily ever after retirement story. {To read the full article, click here.}

Thursday, August 16, 2018

Is Canola Lulling Us Into A False Sense of Security?





The colours of a blooming canola field are stunning. There’s no doubt, we live in canola country here in Saskatchewan.  Soon after harvest is complete, farmers will be able to calculate their profits for the year.  The importance of this practice is stated in the article “Is canola lulling us into a false sense of security” which appeared in the magazine, Farming for Tomorrow (Spring 2017 Edition).   

Paul Kuntz is the owner of Wheatland Financial and offers financial consulting and debt broker services.  Paul graciously agreed to share his article with me.  I believe his views are justifiable and provide a deeper understanding of our dependence on this profitable crop.  Here’s the question in need of an answer: “Is your farm built for long term sustainability? 

Paul is also a Certified Agricultural Farm Advisor through the Canadian Association of Farm Advisors (CAFA).   You can read Paul’s credentials here.  

Many things can lull us into a false sense of security. Let’s be sure our canola crop isn’t one of them.  Take a few minutes to determine whether the information applies to your farm operation.  





Is canola lulling us into a false sense of security?

As we get ready to plant our 2017 crop, I can guarantee that a good portion of seeded acres across Western Canada will be canola.   If you take a drive in July, there will be many yellow blooming fields. And why not, the crop has great technology put into it, there are great weed reduction systems, we have advanced fungicides to apply, our weather pattern provides the plant what it needs and the market wants our product. In the area where I am, we have three crushing plants close by that offer aggressive pricing, low basis levels and great delivery options. What is not to love?

The economics of this crop are hard to beat. Yields have been increasing at a rapid pace while pricing still remains strong. It is tough to find a crop that makes as much money as canola does. But how much can we grow on our farms? How often are we growing it? Are we making business decisions on poor agronomic practices?

I will put a caveat on this article: I am not an agrologist or plant scientist. My training and what I practice every day is the financial business of farms. So I am approaching this from a financial concern.

One of my clients had a discussion with me a few years ago right after harvest. Some new land had come available and he rented a complete section. You could actually farm it as a 640 acre block. It is a beautiful piece of land. He grew a canola crop that averaged 70 bushels/acre. In our area, that is huge. A 50 bushel crop is a great canola crop so 70 is unheard of. His discussion with me was not of optimism and great joy over the bumper crop he harvested, it was about rental rates.

You see there was a few quarters of land available in this area and the owners had done 1 year leases with some farmers. My client was a local producer but there were other parcels of land that were rented out to farms from quite a far distance away. These other farms would be considered very aggressive. My client had rented this land for $60/acre and was hoping to secure a long term lease at that rate. The other farmer had already made it know that they would be offering $100/acre.

At 70 bushels and prices over $10/bushel, there is no issue with paying $100/acre rent. All the numbers would be just fine. The problem is that we should not grow canola every year. We shouldn't grow it every second year. We should only grow it every third year. The growing conditions for the 70 bushel crop were also perfectly ideal. We should not expect that every year.

The problem is that whether my client wants to follow what is considered a proper rotation or not, the actions of the other farmer are forcing his hand. Rent in that area will rise because of profitable crops. If we took the economics of wheat and put that into the equation, no one would be rushing to rent land. But what happens if you have to grow some wheat for rotational purposes? The economics are already set out and you will lose money.

If you can grow a good crop of canola on most of your acres, you will be profitable. I do not have to conduct an analysis of your farm.  Based on my clients I know that an average canola crop will always pay the bills. So why don't we just grow it on every acre?

If you look to the real experts on growing canola, you will see that the recommendations given are not followed by producers. The Canola Council of Canada recommends to have at least one year, preferably two or three years of other crops in between canola crops. The reasons cited are to avoid diseases of Blackleg, Sclerotinia, and club root. But the article goes on to say that clubroot spores stay in your field for 7 years, so rotation does not help. Sclerotinina is windborne so with so much canola grown, rotation will not help prevent this either. So that leaves blackleg. But I thought all varieties are blackleg resistant? Well they are, but resistant to what strain of blackleg?

At a recent Pioneer Dupont grower meeting, they revealed that in almost every test plot there is blackleg. There is not enough to cause noticeable damage, but nonetheless, there was black leg there. So maybe we can't save our canola from blackleg just by planting the newest and best varieties.

Garth Hodges, vice president of marketing and business development with Bayer Crop Science told the Canola Council of Canada that short rotations are weakening the crop's ability to withstand pressure from clubroot, blackleg, weeds pests, and other challenges. He asked the question "How do we go back to some of the basics like saying we have to go into good crop rotation and be better at crop rotation?"

Keith Downey, one of the researchers who created canola, is suggesting municipalities to use existing legislation to stop farmers from growing canola too often. He is concerned about only having three clubroot resistant genes and not being able to find new ones quick enough.

Hodges went on to say he is worried that growers assume that the industrial giants like Bayer Crop Science will simply develop new varieties and products that minimize the problem.  "It's hard to invent new chemistry" was Hodges comment.

So how bad are we doing? Are farmers really pushing the envelope? In Saskatchewan's canola growing capital, the north east, in 2015 46% of the acres were seeded to canola.  Almost half of the acres in that region are in canola. The quick math on those numbers show only one crop is being grown in between canola crops. Every second year is canola.

There isn't a farmer out there that wants to be unsustainable. Every producer wants to be able to make money today and grow great crops for years to come.  The current economics make it very difficult to make good rotation decisions.

Part of the problem is that the bad behavior is being rewarded. If you grew a great canola crop on a field that had canola on it two years ago, you will continue the practice. Producers are not seeing dramatic drops in yield when they push their rotation. If they did, they would change the practice immediately.
My fear is that I believe proper crop rotations can be compared to our health and nutrition. If you have one cigarette, you do not get lung cancer. If you eat a bacon cheeseburger with french fries, you don't have a heart attack. If you have a soft drink, you do not get diabetes. But the research shows that there is a direct link to all of those activities and the negative outcome. The same can be said about rotations. We all know there is a risk, but it is off in the future somewhere and the bills are due now.

Your seeding plans for 2017 will be set in stone by the time you read this. I want to challenge your financial crop numbers: Calculate your cost of production for your farm and run a crop scenario that has you growing canola every fourth year rather than every second or third year. Could you generate enough income to cover all of your costs? If you can, then your farm is built for long term sustainability. If you cannot, then maybe canola has lulled you into a false sense of security.

Thursday, August 2, 2018

So You Want to Start a Business




Uncover the Mixture of Uncertainty and Challenges

Do you ever wonder why we have difficulty answering our own questions when we are planning our future?   It’s likely the stakes are high, the risks are great, and fear of failure prevails.   

We may ask, “Which direction should we take?”

Uncertainty causes us to feel stuck. When we are unsure whether to embark on starting a business, a few indicators can help assess our skills to determine whether we are suitable for becoming the next entrepreneur.  We may believe our business can take off until we come face-to-face with obstacles and uncontrollable challenges. That old cliché, “When the rubber hits the road”, comes to bite us. The bite in those challenges may raise doubts in our capabilities and circumstances.    

This survey conducted by the RBC Royal Bank Small Business in 2005 shines a spotlight on the top five challenges experienced by business owners.  Those challenges then are most likely the same ones now. 

          1. Finding clients and developing your market (56%).
          2. Keeping a steady workload (37%).
          3. Working long hours (34%).
          4.  Keeping up with the competition (19%).
          5.  Finding qualified employees (16%).


Find a Clear-cut Recipe

Before determination sets you on the business path, let’s delve into helpful resources to pave the way and lead you to make the right decision.

Starting a business can feel both exciting and frightening. Finding the right balance is crucial.  We should always be mindful to feed the right emotion and starve the wrong emotion. The best way to combat our fears is to acknowledge and identify them.  Fears can be warnings worthy of our attention.  Preparation is the solution.  Some sure ways to determine our suitability for self-employment are: asking “What do I need to know?”,    hunting for information, and probing for honest answers to assess the prospect of being a small business owner.

A recipe for a successful business can be compared to the creation of a tasty dessert.   Both are based on the premise that the right ingredients are essential to be prosperous and enjoyable.  The methods in the preparation are as important as the ingredients. The ingredients have to be blended together in a cohesive manner.

  



Humor me and follow along with my trite comparison.

If you are looking for the ideal recipe for starting a business, look no further than to the website of Community Futures Saskatchewan which offers this guidebook, Starting a Business 101 (Canadian Edition).  Just like any recipe, you will discover whether you personally have the right ingredients for starting a business.   Simply answering the “To Be, Or Not to Be An Entrepreneur” quiz, comprised of 41 questions, will provide insight into your attributes and the confidence to proceed with your business idea.  


Acquire the Ultimate Ingredients

To condense the former list, the RBC Royal Bank emphasized a shorter version in their archived brochure (June, 2010).  You have to be willing, able, and above all passionate about forging ahead. Certainly some of these qualities may point out some personal weaknesses.  Recognize them and engage with someone who can complement your strengths and offset your weaknesses. This list of fourteen traits allows you to quickly assess yourself with a simple, “Yes” or “No.”

q Passionate about their work
q Someone who takes action
q Strong work ethic
q Strategic thinker
q Flexible
q Self-aware
q Able to ask for advice
q Resourceful
q A leader
q Creative
q Innovative
q Self-disciplined
q Financially disciplined
q A good communicator


Create an Effective Method

When we design an effective method, we will never have to guess.  We will know how we will begin and what things to investigate (market, competition, products and/or services). This task is achieved with the creation of a solid business plan.  Community Futures Saskatchewan provides a Business Plan Guide to create a winning plan for our business. It’s the roadmap to our success especially during the challenging times.   

Robert (Bob) Stocks, a business consultant and coach,  looks at a business plan in a different way.  He visualizes a business plan the same way you and I use the mirrors in our vehicles. The side and rear mirrors are always in sight. He claims, “If you move your side mirror to block your vision, you are blocking your visibility to the road. What would you be looking at--you would be looking at your past. Mirrors are representatives of the future and the past.”  Bob always recommends keeping our business plans current.  This means we should review our plan regularly and adjust it accordingly.


Add a Unique Touch

Another important consideration is to create a value proposition statement.  If you have heard the term, “elevator pitch or speech”, you’ll understand a value proportion statement is the same. By definition, an elevator pitch is a slang term used to describe a brief speech describing an idea for a product, service, or project. The name is derived from the view that the speech should be delivered in the short time period of an elevator ride, usually 20-60 seconds.

On the business front, value proposition statements have gained popularity in providing customers or clients with a clear perspective for the services and products offered.  I believe they help explain “why we do what we do”.

For example, when asked what I do, my response could be, “I create financial plans.” Some may think, “That’s boring.”  But if my response is “I am in the construction business.  I create financial roadmaps to help people understand where they are financially going and how to get there,” this may lead to more questions about how my work may help them.  I encourage you to reflect on how you provide value to others in terms of the services and products offered through your business.


Pay Attention to Specific Details

When I think about the people who didn’t do their homework, their stories did not end well.  One person believed a small city with an aging population had the potential for a men’s hair salon offering high-end haircuts and other exclusive services. He had misread the demographics, concluding that if the service was available, men would be willing to pay the higher price.  Another unfortunate incident occurred with a talented drywaller.  He had a strong market; his services were in high demand.  However, he encountered financial difficulties managing his business.  The business venture came to a halt when Canada Revenue Agency came to collect taxes owing on his business income.

The right ideas, products, and services may be waiting on the fringes for you to explore.  Perhaps you have something in mind.  Katelyn Lohr’s inspiring story is worth taking the time to watch.  Katelyn made an appearance on the Dragon's Den to pitch her toeless sock business. We can learn something from the questions the Dragons asked Katelyn and apply them to our business ventures.


Be Ready to Cook Up a Plan

Arming ourselves with valuable information is crucial.  Many believe all we have to do is work hard and our businesses will take off.  The guidebooks show how much “Business Stuff” we need to consider. To be honest, this stuff is too important to ignore. A great place to start is adopting the guidebooks as your own personal workbooks.   

A one-stop shopping centre generally offers everything we need.  When we are looking for a one-stop learning centre about starting a business, I recommend you stop here, Community Futures Saskatchewan for advice. The best part is the services are free for browsing, investigating, learning, and much more.  Take a peek for yourself.