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Good business habits 8 min read

10 good business habits to begin this year

Just as successful people have successful personal habits, business owners can set their company on course to thrive by consistently applying smart business practices – and adding new ones.

It’s that time of year again.

Words like goals, resolutions, and intention-setting are sliding into view. They might start off slow, but soon they’re flying at you faster than Santa’s sleigh heading back home to the North Pole at the wrap of the holiday season.

What do these words have in common?

You could argue their success is ultimately built on the development and maintenance of good habits. So, in that spirit, we asked some of our banking centre experts what they think business owners should start doing this year (if they aren’t already).

Here are 10 positive business practices to get you going. What would you add to the list? Tell us in the comments.

 

1. Keep current with investment opportunities – and this year think longer term when it comes to locking in your business-related funds

Investing can improve your business’ cash flow as well as support your future cash needs. That’s why, as part of your financial strategy, it pays to stay on top of ever-evolving investment opportunities.

What should you consider this year? While interest rates have certainly shot up over the past while, those increases won’t continue forever so don’t wait too long to act.

“It reminds me of Wheel of Fortune when the contestant knows the answer but continues to spin the wheel for more money,” says Sean Clark, Manager, Cash Management at CWB’s Markham Banking Centre. “It’s all about timing. In a rate environment like this there can be a temptation to wait and see if they’ll go higher. However, while you wait, you could be missing out on valuable interest. And if you wait too long, you could miss the boat on a great rate entirely.”

He suggests taking advantage of today’s strong GIC rates to help grow your business’ cash and, if you can, maximizing your returns by investing those funds for a longer time period.

 

5 ways investing can improve your business’ cash flow

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2. Map out your renewal or refinancing deadlines

Do you have a loan or mortgage coming due this year? Save some stress by refreshing yourself on your lending agreements so you’re not taken by surprise.

“Business owners should be aware if they have any credit facilities coming up for renewal or refinance this calendar year,” says Ani Modi, Senior Manager, Business Development at CWB’s Mississauga Banking Centre. “It’s recommended to plan and decide ahead during this ever-changing environment. It may also be worthwhile to have a conversation with your lender about any changes to lending guidelines and how they might impact your lending needs.”

Modi adds it never hurts to compile an information package in advance to give adequate runway to your lender. An information package will typically include documents like financial statements, tax returns (for business and personal), and personal net worth statements. For real estate transactions it would also include rent roll, an updated appraisal, environmental assessment reports, property tax statements, and lease agreements.

 

3. Brush up on your understanding of how to properly use your business funds

If you’re scratching your head on how to apply different types of business funding, reach out to your financial services partner for clarity or advice, says Trevor Palmer, AVP, Business Development at CWB’s Leduc Banking Centre.

“Lines of credit that are margined by inventory and/or receivables are not intended to be used for capital expenditures – they're for day-to-day operations. Term debt – or accumulated cash on hand – is what you should be using for your capital expenditures,” explains Palmer.

He adds that while confusion about using funds isn’t uncommon among business owners, it’s important to understand because it’s all-too-easy for a line of credit to become ‘locked-in’ if it’s not used properly. “Buying a long-term asset with short-term money – like a line of credit – hurts the balance sheet in the long run.”

 

4. Improve your recruitment and retention efforts with an employee financial wellness program   

Over 38 per cent of Canadians identify financial stress as the area that causes the most stress in their lives. For business owners, that includes current and prospective employees. Helping them reduce their money worries isn’t just a great way to show you’re a caring employer; it can also go a long way in attracting team members to your company and encouraging them to stay.

“A program like Wellness at Work, which combines a group savings program with financial literacy resources, can empower business owners to support their team not just in saving for their future, but in actually understanding their finances,” says CWB Wealth’s Hilmar Lemke, who specializes in advising businesses about group savings programs. "This is an effective way to help increase productivity and retention as well as have a positive impact on your employees’ overall financial health.”

 

Employee group savings programs can be a key strategic tool in recruitment & retention 

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5. Get into planning mode

While resolutions may be all the rage, the beginning of a new year is also an opportune time to revisit, refresh, or write your business and financial plans for the year, says Palmer.

“If you don’t already, you should have accurate, up-to-date business projections in place. Things are always changing, and you don’t want to base your predications for the year on the way it’s always been,” he says.

He adds that planning will also allow you to spot – and give you time to thoughtfully solve for – issues that are still rumbling off in the distance, rather than waiting for them to come barreling down on you like a freight train. “If you don’t build in that breathing room, doing rushed, last-minute work can unfortunately lead to errors and problems that perhaps might’ve otherwise been avoided.”

 

Financial plans: aligning business with personal

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6. Don’t sit on your problems – talk to your external advisors before things go sideways

If you keep sweeping things under the rug, you’ll eventually trip over it.

“Get in the practice of talking to your external partners the moment a problem is identified – whether that’s your banker, insurance company, accountant, or lawyer,” says Palmer. “You’ll likely find they’re in a better position to help you if you’re proactive in getting in front of a problem rather than waiting for things to hit the fan.”

He uses rising interest rates as an example: knowing that interest rate risk is one of the biggest single factors in business financials, there’s no question that cash flow is going to be impacted. So, rather than simply bracing for an inevitable cash crunch, business owners should be regularly strategizing with their financial services partner to soften the blow.

 

Financial plans: Executing your plan & wealth management’s role on your expert team 

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7. Review your business credit score

Cultivating and maintaining a healthy credit score is a key building block in financial wellness – personally and in business. And while this three-digit number is an important reference point for credit and lending approval, making effective efforts to improve your score hinges on knowing where you’re at, says Modi.

“Business owners should check their business credit score at least every quarter. This will help to identify any surprises or challenges with making current loan payments. It will also provide a sense of the business’ financial health and the chances of getting another loan approved.”

Where to start with credit score monitoring? Dun & Bradstreet and Equifax are two service providers in this space.

 

Tips for understanding & improving your credit score

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8. Reduce your risk of cyber fraud

Logins and multi-factor authentication are the norm for protecting your information within online platforms and apps these days. And yes, juggling multiple passwords probably isn’t anyone’s idea of a good time, but effective password protection is critical to securing your personal data.

“No one wants a hundred different passwords, but no one wants to get hacked either,” says Juliana Cline, Cash Management Relationship Manager at CWB’s Mississauga Banking Centre. “Create a strong password and make sure you’re using different passwords for each of your logins. Setting a calendar reminder to frequently change your passwords can also be a helpful prompt.”

She adds that when someone emails or texts you a website link, first stop and think rather than mindlessly clicking – and, if you’re unsure of the link’s validity, call the source directly to verify it’s safe.

“Take a pause and look at things with a discerning eye. We’re all so busy and running at 100 miles an hour, but those couple of minutes may help you realize that no, Revenue Canada doesn’t take payment via gift cards, and no, your bank would never want you to text them your SIN number,” she says.

 

Top cyber security threats to businesses & how to protect against them  

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9. Invest in cyber security awareness training for your team

No matter the size of your company, cyber security is everyone’s business. That's why you’ll want to ensure your employees know what to look for, what to avoid, and what to do when it comes to their role in protecting the company – and themselves – from cyber security threats, says Cory Gould, VP & Chief Information Security Officer at CWB. 

“Coach your staff on how to spot and avoid cyber security threats and what it means to practice good security habits,” he says. “This will contribute to keeping your business safe.” 

These resources from the National Cybersecurity Alliance are a good place to start.

 

10. Leverage your social media accounts to better understand your customer

Are there any trends to your Instagram comments? What kinds of questions come through your Facebook direct messages? Do your LinkedIn ads get consistent reactions? A business’ social platforms can offer a virtual treasure trove of customer insights.

“Social media is a great way to research your customer base and gather important feedback on your services or products that can help you improve,” says Modi, who admits you’ll likely need to weed through the inevitable bots and trolls. “It can also support you in better communicating your offering to your customers and prospects, as well as increase your understanding of their needs. For example, if you’re receiving the same questions or requests over and over, is there an opportunity to include more information, or clearer information, on your website and other marketing materials? Is there an opportunity to expand your offering? Social media has a lot of value in helping you keep a current pulse on your customer.”