Are you taking full advantage of your assets?

It is always a surprise to me to see business owners who are very successful in their chosen field make little mistakes that can be very costly in the long run. I would like to give a few examples of issues that can easily be fixed and offer that our advisors can help you find more of these types of issues.

1) Inefficient application of debt payments. An example of this is a client with 2 credit cards with a balance of $10,000 each and a minimum payment of $300. Having $11,000 to reduce this debt many would pay $5500 on each. This is absolutely not the correct strategy unless there are specific needs. Paying $5500 on each will result in you paying interest on the entire $20,000 of credit card debt (I know it's ridiculous but that is the way they work). If you paid one card off in full and applied $1000 to the other card (ideally the one with the lower interest rate) then you would be only paying interest on $10,000. That difference in high interest card rates can add up substantially over time- in this example almost $200 a month.

2) Allowing the bank to use your cash for free. An example is a business leaving cash assets in the bank chequing account instead of managing that money as an investment. It may be best applied against debt, stashed in higher interest bearing accounts or invested into stocks, funds or other investment products. Make your money work as hard as you do.

3) Spending too much on benefits, partnership insurances and other services. Shop those around and always get multiple quotes or use a broker who can do that comparison shopping for you.

4) Investing in good employees. This is intuitive to most people but many small businesses are taken over by employees on retirement of the owner. Treating good employees as potential successors can make a lot of sense.

Feel free to contact one of our financial advisors to have a conversation designed around your needs

Article written by Brian Rivers CFP