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Sole Proprietorship, Partnership, or Corporation?

Posted on November 25 2015 | Author: Philippe Piche

Organizing a new business can be challenging as entrepreneurs are faced with many options on how to start their business. Choosing whether to establish  a sole proprietorship, partnership, or corporation is a common challenge for start-ups. The decision can have a significant impact on the business management of risks and tax exposure.

It’s important to first understand the different types of business structures. This will help entrepreneurs select the most appropriate structure for their business needs.

Sole Proprietorship
A sole proprietorship represents the situation in which an individual holds all the legal rights and responsibilities of their business activities. As such, the owner personally assumes the risks of the business activities including legal action and tax liability. The owner is responsible to declare business net income or losses as part of their personal tax reporting. For a start-up business, personal income tax rates can be higher than small corporation tax rates but start-up business losses can be offset against the owner’s other income. And legally, since there is no distinction made between the business and the owner, the owner’s personal assets are at risk if the business is not successful.

A partnership is similar to a sole proprietorship for legal and tax purposes, except that the business’ net income/losses, liabilities, and management decisions are shared between two or more individuals. Its similarity to a sole proprietorship model makes it relatively easy and inexpensive for business to start-up and operate.  Because liabilities and taxes are shared between the partners, it is considered less risky for entrepreneurs. But this also means that the partners share in management decisions, and can therefore create difficulties if the partners do not have the same vision.

A corporation is recognized by law as a single entity, or in other words, recognized legally as a person.  This takes much of the risk away from the owner's personal liability, as the company itself is now responsible for its debts and taxes.  While incorporating can reduce personal risks and taxes for the owner, it is more expensive to set-up and administer.  

There are different types of corporations that can either be private or public type corporations.  Private corporations are most commonly used among start-ups and owned by few shareholders, including the founders.  Public corporations sell shares of the company to the public through listings in stock exchanges. Listing through a public stock exchange makes it easier to access the financial markets by selling “shares” in the company. However, filing and reporting requirements for a public corporation can be considerable and expensive, whereas privately held corporations do not have the same disclosure requirements.

When starting a business, knowing the advantages/disadvantages of the different types of organizations (sole proprietorship, partnerships and corporations) can make choosing the right one an easier task. The entrepreneur's own situation and initial business prospects will be important criteria to the type of structure selected. The legal structure of a business is an important decision and should be based on the entrepreneur's budget, revenue, profits, expenses, size, and industry.

The most common business structure for a start-up is a sole proprietorship, which makes up 73% of all new small businesses (the rest being partnerships and corporations). Many start-ups are on a tight budget and may not be able to afford the costs and management requirements of a partnership or corporation.

Philippe Piche
Program Assistant

References: http://www.canadabusiness.ca/eng/page/2853/
Photo Credit: pixabay.com 

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Are You Fit to Fly in the Field?

Posted on November 19 2015 | Author: Doug Knox

The proliferation of UAVs or Drones for both recreational and business usage is presenting some potentially difficult regulatory conditions to navigate. AAFC published a short note in the Agri-info Newsletter in May 2015.

You may need permission to fly.

You are responsible for flying your aircraft safely and legally. If you are using a UAV to support your agricultural operations, you may need to apply for a Transport Canada Special Flight Operations Certificate (SFOC). The process allows experts to review your specific situation and determine if extra precautions are needed.

If your unmanned aircraft weighs less than 25 kg, you may qualify for an exemption that would allow you to fly without a SFOC.

Agriculture Agri-Food Canada, Agri-info Newsletter, May 2015

I have supplemented the information with a slightly broader survey of the issues and risks of ignoring the regulatory scene.

IT World Canada addresses the regulations and provided some resources for UAV operations.

Transport Canada has published the current status and requirements for UAV flying.

Transport Canada Infographic for a quick assessment of how the regulations apply.

The Canadian Bar Association comments on the need for legal understanding of the UAV usage.

Legal firm, Fasken Martineau provides an overview of the regulations and their application.

Doug Knox
Vice-President, Technology

Photo Credit: Flickr


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Handling Consumer Mistrust

Posted on November 12 2015 | Author: Mary Dimou

Consumers are demanding transparency. The rise of the tech revolution has propagated a deluge of new information and new avenues to reach consumers. With advances in technology allowing information (of varying quality) to be readily available at a user’s fingertips, it’s no wonder that the nouveau consumer feels confident enough to make “informed” judgements on new innovation.

As an entrepreneur, your invention could be a revolutionary solution to assist in global issues such as the sustainability of our species or our environment. Inopportunely, this intended solution has the probability of intersecting with the plethora of great controversies in the life science sector, including genetic engineering (GE), genetic modified organisms (GMOs), vaccinations, animal welfare issues, antibiotics and many more.

For a select few businesses, providing transparency and reaching consumers will be an uphill battle. Although their numbers are few, the reality is some activists will seek to discredit your efforts irrespective of facts and evidence. Accepting early on that some of these individuals cannot be reached is essential. It will enable you to reallocate your efforts to the majority of consumers, the skeptics. Skeptics will seek your answers and should be viewed as an exceptional communications opportunity for your business. Immersion into the controversy will impact your business model. In this era, successful tech businesses must include appropriate education and communication efforts in their business planning.

The nature of this post is not to focus on any of the aforementioned controversial topics, but rather provide recommendations for educating and guiding your consumers through the labyrinth of available information.

 1.       Evaluating both viewpoints of the controversy carefully. Informing considering both polarized viewpoints increases your credibility to your audience. 
 2.       Collecting scientifically substantiated evidence. One of the greatest challenges that we are facing as an industry is the credibility of the knowledge being obtained. Recommend that your customers review various peer-reviewed articles, primary literature, as well as national government resources (.gov). Your role as an educator should also include assistance with the curation and dissemination of this information and translation of this knowledge to the general public.
 3.       Communicating in a palatable way. Consumers require easily digestible information. This knowledge transfer can often require creativity on your part. You may try providing examples that are relatable to their day-to-day life, in an easily understandable format such as an infographic or cartoon. For example, the recent statement regarding glyphosate as a carcinogen was based on the risk and hazard scale by WHO’s International Agency for Research on Cancer. Although glyphosate carries a carcinogenic risk, the associated hazard of glyphosate causing cancer is minimal (1). In fact, the amount of glyphosate required to produce these carcinogenic effects would be enormous! A similar day-to-day example could use driving. Driving is an inherent risk; however, driving in a snowstorm is an increased hazard.

Managing consumer mistrust is an essential task that has been under prioritized by tech businesses, especially in the Ag sector. Although potentially daunting and difficult, engaging and educating consumers has now become an integral function of any successful technology business. So get an early start!


Mary Dimou, M.Sc.
Sr. Analyst, Regulatory Affairs & Sustainability

(1) http://www.iarc.fr/en/media-centre/iarcnews/pdf/MonographVolume112.pdf  
Photo Credit: freedigitalphotos

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Investment in the Agri-Technologies Ecosystem

Posted on October 28 2015 | Author: Dave Smardon

I recently returned from a Global Investor Conference in Montreux, Switzerland. It was quite the eye-opener. Participating were large family offices, fund of fund organizations and institutional investors like pension funds and endowments. What was particularly noteworthy was the growing interest in agricultural technologies, food security, and water security. One could make the argument that up to 2 years ago, very few investment organizations were paying close attention to these areas.  Much has changed in a fairly short period of time and it is not hard to understand why.

One of the presentations at the conference was from the U.K. government. The U.K. is committing £70 million for the creation of the Agri-Tech Catalyst Fund and a further  £90 million targeting the support for creation and commercialization of agricultural innovation. The U. K. is not the only country that has trained its sights on agriculture. The Netherlands, France, Brazil, Ireland and New Zealand have each launched similar programs to support their own home grown agri-tech companies. Word on the street is that Germany will be next.  Add to this the fact that the European Economic Commission has designated agriculture, food, and water as key targets for their European programs to support research, development and commercialization. Countries like these are taking steps that they perceive will position them as future global leaders in the development and commercialization of new and innovative agriculture, food, and water technologies.  Some of this government funding must be matched with private capital and is often matched at conditions that are most favorable to the private investors. 

In the U.K., funds can be invested in new venture capital and private equity funds as long as there is a critical mass of private capital and the recipients are willing to establish a local U.K. office. No doubt they will be able to attract investment firms that see the U.K. as a viable source of capital, investment deals and a logical place for an office. Once again, New Zealand, Singapore, and others are taking the same approach. Offer up some capital, match it with the private sector, and domicile it locally. Admittedly, its not a bad strategy to build and grow your investment eco-system and benefit the targeted sector; agriculture.

So as I return home to Canada, I cannot help but wonder where are we in this race. Historically, Canada has been a global leader in agriculture commodity production and our governments have funded an enormous amount of agricultural R&D.  But where are we with respect to our investment in agriculture, food and water technologies, and specifically as a catalyst in driving our investment eco-system. Canada’s agricultural revenues as a percentage of GDP rank way higher than many of the countries previously mentioned. And yet, we have no such focus on our agri-tech eco-system.  Furthermore, while other countries have recognized the dire need to attract investment capital into this sector and have developed aggressive programs to do so, Canada has not. This is worrisome!  If we are to maintain our leadership position in agriculture, we need to focus on agri-technology and implement programs that will position Canada as future leaders.

Dave Smardon
President & CEO

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Are you making the most of your team?

Posted on October 14 2015 | Author: Jessica Taylor

You aren’t unleashing the full potential of your team until they are collaborating.  Collaboration isn’t just another 21st century buzzword; it is an integral part of all successful teams. Collaboration in the workplace allows for new, innovative, and creative solutions to problems.

But how is effective collaboration achieved? How do we avoid working in silos with individual roles and responsibilities?

It is important to recognize that forced collaboration can actually prove to be more detrimental than no collaboration at all. Collaboration should be built into your company culture and processes. Consider the following as you work on fostering collaboration in your organization:

Clear, Open Communication
Management teams must clearly communicate their company goals and mission. When employees understand the bigger picture goals and how they impact their individual role, they will naturally identify areas of collaboration with other team members. It is also important that lines of communication are open and welcoming to ensure all members of the team feel comfortable to interact.

Recognition of Individual and Team Success
Historically, workplace recognition involved promotions, salary increases and bonuses. While all of these incentives can motivate employees, it is equally important that effort is acknowledged in alternative and less formal ways.  These types of recognition create a sense of comfort and confidence within a role and encourage employees to share their ideas and questions with others.

For example, creating interdisciplinary task forces or teams to strategize and provide solutions to ongoing issues, implementing employees’ ideas or having them take the lead on a project, activity or meeting are all ways to empower your workforce.  Be sure to emphasize individual successes as well and promote the benefits and outcomes of working as a team. This will empower the team with the confidence to engage with both internal and external stakeholders

Cohesion & Understanding
Everybody thinks differently, works differently and approaches problems from a different angle. Getting to know how each of your team members prefers to work and communicate enables you to work together efficiently. 

Where possible, include as many team members as possible in ongoing conversations. Not only does this allow you to get multiple perspectives, but it also demonstrates your understanding of your colleagues’ strengths. Frequent conversations around workflow and goals, both team and individual, helps the group stay on task and avoids duplication of effort. Another way to build cohesion is making time to learn about your colleagues’ roles and projects. This helps to create a better understanding of your workforce and allows you to identify ways you can collaborate.

Get together and talk. Hosting both formal and informal brainstorming sessions on a regular basis gets people thinking outside of the box and encourages creativity.  A sense of community and support goes a long way in encouraging people to work together.

Be open-minded. Don’t let your colleagues department, job title or educational background decide whether or not they should be involved in a conversation or project. Their ideas and experiences will provide valuable input.

Bridge Geographic Gaps
With employees situated in various locations locally or internationally, companies need to be flexible and creative in collaborative efforts. Making use of technologies such as online project management tools, document sharing, and instant messaging platforms allows even the most geographically dispersed teams to work together effectively. It is also important to include human interaction via videoconferences, phone calls and face-to-face interactions as often as possible. Water cooler conversations are few and far between with groups outside your office so you need to ensure that there are other open and active lines of communication.

These considerations aren’t just for the CEO or managers. As an employee, you are a member of a team. Empowering your colleagues to work together is important for the success of the company and your own professional goals. Not only will you reap the benefits of collaboration as you find unique, effective solutions for your own projects, you will also be participating in a dynamic process, a process that will increase company productivity and success.

Jessica Taylor
Senior Analyst, Food and Food Systems

Photo Credits: Flickr, Flickr

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Why your website needs to have a responsive design

Posted on October 01 2015 | Author: Jennifer Kalanda

In any market today, having and maintaining an online presence is practically mandatory.  There is also no shortage of elements to consider, but your company’s website will likely be the first thing your potential customers will see.  So, how will they see it?

Are you mobile-friendly?

Did you know Google now uses mobile-friendly criteria as a ranking signal? 

According to comScore, within Canada, USA and UK, 50% or more digital media time is spent on a mobile device.  As so many users are only accessing content through their smartphone or tablet, it is important to have a mobile-first mindset but to also remember that desktop is still very relevant.

Be more than mobile-friendly.

Simply having a mobile version of your company’s website may not make your company more accessible or generate more business.  Mobile sites are essentially created as separate websites, which are often stripped down, or different from the content offered on the desktop version.  This can result in high bounce rates.  Google may even then interpret high bounce rates as a sign that a website isn’t offering relevant content to users and could lead to a drop in rankings.

Responsive website design.

Responsive web design is a method of design using intelligent coding which helps a website determine what kind of device it is being viewed on and then alter itself to fit to the screen size without any distortion. 

Responsive design ensures the best viewing experience across a wide range of devices, from mobile phones to tablet devices to desktop computers.  This design method increases the ease of reading and navigation with minimum scrolling and resizing.   This also ensures consistency for the user when viewing a website from one device to another.  Sites designed exclusively for mobile devices don’t offer the advanced navigational techniques found in traditional desktop websites.  

Google likes it.

As a website owner, it should be your goal to keep both your customers and Google happy.   A responsive web design means your website only has one URL which enables Google to easily index a website’s content within your domain.  This means that it can improve a site’s Search Engine Optimization (SEO) results.  

Time and money are precious.

A responsive website ensures the best use of your time, since it does not have to be spent on content creation for two versions of a website.   Managing multiple versions of a site also increases development, support and maintenance overheads. 

Generate new business.

If your customer encounters a problem with your site on their preferred device, it is likely you could lose that potential business.  Enhancing a users journey and experience will increase conversion rates and ultimately improve sales.

According to Google’s Think Insights on Mobile, 51% of smartphone users have purchased from a company/brand other than the one they intended to because the information provided was useful.  And when a brand’s mobile site or app makes it easy for a smartphone user to find answers, 69% of those users are more likely to actually buy from them.

Success with social media.

If your site is responsive you can build social shares for just one URL and when the site does get shared, wherever the link is viewed – whether on a mobile, tablet or on desktop – all of the content will be clear and easy to navigate.  Social shares impact SEO, having multiple versions of the same page dilutes the impact of any shares.


Jennifer Kalanda
Marketing Manager

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Is your Business Innovative?

Posted on September 16 2015 | Author: Britney Hess


Have you considered an innovative business model?

What is innovation?

First, let’s define creativity. According to the Merriam-Webster dictionary, creativity is the ability to think of new ideas. Innovation, on the other hand, is putting that creative idea into action. Innovation may be disruptive, meaning it changes an entire market. Or, innovation can sustain an existing market by improving on the current offerings. 

Where does innovation come from in a business?

There are many potential sources of innovation. The innovation may be driven by the manufacturer of a product. In this case, there may be a more efficient process for creating the same product, or a new ability to manufacture a disruptive product. Innovation can also be driven by the end-user. In this case, the business may receive feedback from the end-user based on the value delivered to the customer.

What is a business model approach to innovation?

An innovative business model should take into account both the manufacturer and the end-user, as well as all of the other components in a typical business model. There are several business model templates available to help visualize how the components will affect one another. The components of a typical business model template include: value proposition, business activities, resources, channels, relationships with customers and partners, revenue streams, and cost structure (check out The Business Model Canvas by Alex Osterwalder for a commonly used business model). It’s important to think about how all of the parts fit together, and how a change in one area may affect other areas.

Create your own innovative business model

It can be helpful to understand the typical business model in your industry or sector. Do research on both smaller competitors and larger corporations. You may want to look at industries that are using, or have used, a similar business model in the past. This can give you a jumping-off point for some creative ideas. Once you have come up with your innovative model it can be beneficial to carry out some small-scale tests to ensure the creative idea is truly an actionable innovation. It’s also helpful to talk with industry experts to ensure you have a plan that makes sense in action!

Bioenterprise works with innovative businesses relating to agri-technology. We routinely look into the business models common to the specific sectors within agriculture to help our clients best understand what is already out there, and how they can modify it.


Britney Hess
Junior Analyst

Business Model Canvas:

Innovative Business Models:

Photo: https://pixabay.com


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The Importance of a Social Media Policy in your Business

Posted on August 27 2015 | Author: Bethany Witvoet

Earlier this summer I was tasked with creating a social media policy. While doing so, I learned a lot about how important it is to have one in your business.

While browsing news headlines, I found a ton of stories related to social media and the workplace. A few years back, Virgin Atlantic fired 13 employees for posting disloyal content on Facebook that criticized Virgin’s safety standards and offended it’s passengers.  Similarly, an employee was fired from the Broofield Zoo very recently because of a racist post on Facebook taken place at work and in her uniform.

Policies provide clear guidelines and support
Policies are the building blocks to any corporation. They provide structure and guidance to each and every employee.  

Social media is drastically changing the way individuals and organizations communicate. It’s important that employees who use social media, use it in a way that enhances the company’s prospects, or at least doesn’t diminish them.  A misinterpreted status update can easily generate complaints or damage the company’s reputation.

A social media guide clarifies standards of behaviour in which employees can use social media professionally and effectively.

Policies help manage risks
It is important to keep confidential company information protected. Therefore it is critical that clear guidelines are made about sharing private information online in order to mitigate risks involved with online activity.

Ensure that your social media policy includes that all confidential company information is never communicated or made publically or privately viewable on social media sites. Regardless of privacy settings, online information is accessible and can easily be placed in the wrong hands.

Policies protect company reputation
Users should always be careful discussing things they wouldn’t want their boss to see. Posting information that is disloyal could severely damage your company’s reputation (like those 13 employees at Virgin Atlantic). Setting clear guidelines against this is crucial in maintaining a good company reputation.

If there are no guidelines set in place against this, any posts by employees that harm the company’s reputation will be without consequence. In order to prevent the spread of disloyal information, guidelines must be set in place.

Policies assist with networking and awareness
Social media policies do not always have to be a long list of boring restriction. There is a lot of potential in using social media to your advantage.  

Social media is very important for building relationships with current and potential clients. It is an effective way to distribute marketing and communications, build an online brand and business profile, as well as stay connected with valued networks. It is also a great tool for employees to make useful connections, share ideas, and have discussions, whether it is work related or personal.

Illustrate ways in your social media policy for employees to use social media to their advantage whether it be for their personal social media use, or for company use.

Policies increase productivity
In the long run, policies actually increase productivity as issues are mitigated and therefore resulting in saved time.

Establishing a social media policy reduces lost time spent dealing with unauthorized usage or inappropriate behaviour online. Instead of dealing with the consequences of conflicts related to social media use, employees will be educated on your organization’s expectations for online professionalism and potential issues will be prevented.

And remember, no policy is alike
It is important to keep in mind that all policies need to be structured to perfectly fit your company.

Virgin Atlantic’s social media policy is different than Bioenterprise’s; Apple’s social media policy is different than McDonald’s. Your policy needs reflect your company’s business profile and online strategies in order to fulfill all of your company needs

Bethany Witvoet
Marketing and Events Assistant

Photo: Pixabay, Dilbert.com
References: http://mediabuzz.com.sg/asian-emarketing?catid=0&id=787


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Writing a Business Blog: The Why and How

Posted on August 12 2015 | Author: Natalya Smardon

I’m going to tell you exactly why blogging is a fundamental part of any business. It’s not a waste of time, it’s not difficult, and you don’t need to write one every single day. The benefits of blogging to improve a business are boundless, and here is why:

How to start: the daunting task ahead

“The first thing you need to decide when you build your blog is what you want to accomplish with it, and what it can do if successful.” –Rod Dawson

You don’t have to write like an expert, and you don’t need to ‘fluff up’ your writing to make it seem longer. Quality not quantity! Sometimes short and sweet is the way to go.

You want to make sure you have a point and get right to it. Whether it’s to inform readers about something, voice an opinion on a certain topic, or start a debate, you want to have a goal in mind.

This isn’t a diary entry or a personal blog; it’s a business blog. Be thoughtful of your vocabulary choices, tone of voice, and above all else - proofread. Nothing says amateur like having a post littered with spelling mistakes and grammatical errors. It is essential that you do not solely rely on spell-check, make sure you read through your blog at least twice and then, get a co-worker, family member, or unsuspecting passer-by to read through it. Doughnut bribes are most effective!

Know your audience

If you’re writing B2B, use jargon that shows you are an educated and seasoned member of the business world. If you’re writing B2C, convey information in a way that customers will understand. Remember; if you’re going to use humour then make sure it’s appropriate. As NASA says in their ‘One Hundred Rules for NASA Project Managers’ Rule #67: Some like a good joke, others only like a joke if they tell it.

The topic

I consider there to be two fundamental criteria when choosing a blog topic.

  1. Write about what you are passionate about.
  2. Write about what you know.

Usually the two come hand-in-hand. You want to write about something you really care about, because that passion will make writing easier and more influential. You also want to write about something that you have a fair bit of knowledge on, because it often takes years of accumulated knowledge and experience to show an expert opinion. This isn’t to say you shouldn’t explore new areas. In fact, researching for a blog is one of the best things you can do - just make sure you aren’t in over your head; and if you do decide to do research, add your sources.

Another great addition to any blog is quotations. Quotes from famous authors, philosophers, from CEO’s, employees, news stations or anything relevant to your company, target audience and blog topic show your knowledge, dedication, and if you ask me - add a certain flare. If you can’t think of any inspiring quotes off the top of your head, use this online quote database!

Online platform for networking

Entrepreneurs can network at events and connect with others through LinkedIn, but when the opportunity to meet face-to-face is not available, a blog is a great way to network, gain contacts, and generate interest in your company. Blogs demonstrate your expertise, and give readers a chance to learn about your company and interests with a more personal touch that goes beyond the standard information found on website homepages.

Great PR tool

Blogs of course share your ideas, opinions, and insights, but can also be a place for press releases and company updates. Added a new member to your team? Opened more offices or changed location? Acquired a company or received investment? Blog about it.

Website Traffic

One of the key opportunities for gaining website traffic is through writing a blog. People want to know what you and your company think, and what you’re doing. A blog on your company website can be an ideal outlet for this information, as it can be linked and shared through your social media platforms and emails, bringing more readers back to your website.

Inbound traffic to your website enhances your search engine optimisation (SEO); the more people who visit and share your post (and therefore your website) the better your search ranking becomes. This means your site will appear in search results more often, and possibly, higher on the list. Enhanced SEO helps attract and convert more traffic into customers; talk about a low-cost marketing channel!

Don’t forget! Promote your content.
Having a blog is all well and good – if people read it. 20% of your time should be spent writing your blog, while 80% is for promoting it! Get on your Linkedin, Facebook, Twitter, and whatever else is at your disposal or send it out in an email or newsletter.

Engagement opportunity

Not only do people stay informed about your company’s activities through your blogs, but many have comment sections that allow for suggestions, affirmations, debates and general feedback. It’s a two-way street that helps readers engage with the author, and operates as a learning tool for the author as well. Blogging is a communication outlet for you, your peers, and most importantly, blogging gives you insight into your audience.

Mix up the type of content that you share

It’s not very entertaining to read a wall of information with no other media. Balance text with images, videos, or even sound clips! This will help to further engage your audience and hold their attention. You want them to read the entirety of the blog after all. Having headers and sub-headers is a great way to organize information. Another great hook is to have guest bloggers, who add a fresh voice to your site.

Maintaining a blog is a great engagement opportunity for learning, networking, connecting, marketing and branding! From start-ups to large corporations, business blogs are becoming a vital part of growth and success. Start your own blog today and begin to reap the benefits.

Natalya Smardon
Junior Projects Coordinator

Photo Credit: Flickr, Pixabay

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On-Hand Cash: The Hidden Value

Posted on July 29 2015 | Author: Paulo Mendes

Bootstrapped start-ups and SME’s have a different relationship with cash than a large multinational corporation.  Despite this fact, many small firms will have situations where cash has been generated without the need for it to be immediately spent on other aspects of the business.

The complacent firm would plainly place the cash in a chequing account and utilize it when needed. Yet, with some careful planning this excess cash can provide an extra flow of income.  If a company decides to invest the primary focus should be placed on answering the two following questions.

How long until the cash is needed for operational purposes? (Liquidity)

How much desired risk does the company want to place on the cash? (Risk)

If a person would prefer to avoid risk it may seem to be the logical approach to place cash in interest generating savings accounts, yet the majority of these accounts have microscopic rates of interest. These savings accounts can generate less than 0.1% of annual interest. Currently, these rates are below the inflation rate so in the big picture the cash should be indifferently placed between chequing and savings accounts.

To generate more cash it would be better to place in a low-risk money market investment or Canada Treasury Bond that can be withdrawn within less than years time. Other securities are available dependent on how long a company would prefer to hold their investment.

Some examples of short-term investment options are:

  • Short Term Bond Funds and Electronically Traded Funds (ETFs)
  • Certificate of Deposits
  • Money Market Accounts
  • Vanguard Short-Term Investment–Grade Fund

In terms of liquidity, many of the short-term investments are significantly less risky by design. Since debtors need to be distributing payments in a short period of time, the debtors tend to have less likelihood to default during the small time frame.

In general, if given the opportunity to invest cash for small periods of time, short-term investments are an ideal option despite not giving the returns that long-term investments provide. These actions allow a company to create value from assets the company has and with just a little bit of planning.

Paulo Mendes
Junior Financial Analyst Intern

Image credit: Getty Images

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