Cheng-Chung Yu, MBA, CPA, CA, CFA, CFP
Published in 2021
The importance of survival
There was a scene in the Forest Gump movie. The enemy’s airplanes were flying and bombing all over towards the direction of Forest Gump and his soldier companions. Forest, remembering his girlfriend’s wise and caring advice, started to run away from the bombing as fast as he could until he was all by himself, away from the battleground. The scene displays the characteristics of the protagonist Forest Gump: naïve, simple and sometimes somewhat silly to earn your laughs and love for the inspirational movie. Yet it also tells an important basic motto: you need to survive, plain and simple; or all else becomes history.
You need to bring your basic instinct and observe the same basic motto to survive in this Covid pandemic environment. Be safe and healthy, and everything else becomes secondary, whether it’s money, entertainment, hobbies or even work. There have been too many lives sacrificed unnecessarily as seen in the news and all around the globe, some unlucky, others ignorant and not recognizing the serious threat, or else just the self-pride and heroism having the running-away upper hand over the true reality. If nothing else, learn from the mistakes and pay respect to the many lives already lost, more than 2.5 million in fact to date. Once we pass through the dark tunnel one day, hopefully, all these sacrifices, inconvenience and restraints will all become minuscular eventually.
Re-assess the new environment
The Covid pandemic brings the need and opportunity to stop and think about where you were and where you are heading towards. Both the economy and the environment have changed and shifted, some parts more permanent than others. Part or a substantial portion of your income may have been lost, ranging anywhere from business, job, property or investment. Your spending priorities and allocations may be twisted and need to be adjusted, whether it’s from reduced traveling, working from home, no or reduced contacts with your broader family, friends, customers or even neighbours. Your shopping habits or channels may take some leaping changes, e.g., shopping online as opposed to shopping at the mall in person, deferring your large capital expenditure items, or stepping up to support more local businesses as opposed to the big-box stores. There may be somewhat of an exodus from the big metropolitan cities to the more rural and remote areas, with the property living, rental activities and real estate investments all quietly reflecting the changing shifts and dynamics in the related demand and supply of the real estate. Technologies, both as an enabler and the necessity, are rapidly changing as well, more drastically and in a larger global scale. You may be spending much more time at your own home with your family, while still having the need to be entertained, and to be active and healthy, physically, psychologically and emotionally. Efficiency and just-in-time supply yield to the more important priorities of safety and national interest. The macro environment has changed a lot. This requires you and your business to re-assess and adapt as well.
Government subsidies
The Canadian governments’ Covid response may arguably be somewhat slow or not decisive enough in preventing the Covid transmissions from invading into this northern country. However, the governmental Covid financial assistances are plenty and generous. The financial assistances may actually allow more people to stay home and reduce the Covid transmission cases during the time of this pandemic. The largest share of the financial assistances comes from the federal government. Some of the provincial governments also offer some targeted help particularly to the frontline health workers, senior homes, businesses, and children during the period of lockdown. Municipal governments’ assistance is limited, at best, more in the form of property tax deferrals, as they themselves are also in a bit of a cash crunch particularly in the public transit area. Below is a summary of the major direct financial assistance programs from the federal government. These programs typically require you to submit timely applications. There are also one-time enhancement pays in child benefits, senior benefits and GST credits that are granted without the need for you to submit the applications. Refer to the following for more information.
- Canada’s COVID-19 Economic Response Plan at https://www.canada.ca/en/department-finance/economic-response-plan/fiscal-summary.html.
- CRA and COVID-19 at
https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update.html?utm_campaign=not-applicable&utm_medium=vanity-url&utm_source=canada-ca_cra-coronavirus.
Businesses and organizations
- Canada Emergency Wage Subsidy (CEWS): offering up to 75% of wage subsidy with monthly revenue decline of at least 30%.
- Canada Emergency Business Account (CEBA): offering $60,000 interest-free loans with $20,000 forgivable.
- Temporary Wage Subsidy (TWS): offering 10% wage subsidy for the three months from March to June 2020.
- Rent subsidies: including Canada Emergency Commercial Rent Assistance (CECRA) and Canada Emergency Rent Subsidy (CERS).
- Support for specific industry sectors: such as oil and gas, air transportation, and culture, farming, fishery, and food supply, etc.
- Liquidity support and capital relief: such as Business Credit Availability Program (BCAP), and other credit and liquidity support through the Bank of Canada, CMHC and commercial lenders, etc.
Individuals
- Canada Emergency Response Benefit (CERB) and Canada Recovery Benefit (CRB): about $2,000 monthly assistance for an eligible person not working.
- Canada Emergency Student Benefit (CESB): about $1,250 monthly for the four months from May to August 2020.
Strategies and Alternatives
Survival is most critical during this time of crisis. The Chinese put crisis and opportunity as a combined term together, meaning that there is always an opportunity in disguise hidden right behind the crisis. It all depends on how you handle the crisis, and your ability turn the crisis into an opportunity for you ahead. You want to ensure you, your family and your business all remain healthy, physically, financially and mentally. Below are some strategies and alternatives you can consider.
- Assess and plan out your financial resources and restructure your business and financial plans, as needed. If you have adequate financial resources, you could also consider alternatives such as early retirement, working part-time, etc. On the flip side, you may find yourself having more time to do other things that you may enjoy more, while focusing a bit more on financial planning and investment management.
- Conduct an industry and business assessment. Will your goods or services continue to be in demand during and after Covid? Do you need to modify your business model in light of the new environment with less physical contacting and more remote technology?
- Look into other alternative and synergetic revenue sources. Right-size your business as you need, and examine business synergies with others and explore vertical and horizontal integration possibilities. Can you market and sell online, or tap into other social marketing channels and programs? Can you service your clients or deliver your goods to your customers beyond the traditional, fixed brick-and-mortar location?
- Cost cutting and control: If your revenue generation decreases or even stops during the Covid pandemic, you’d also need to examine your cost structure and cost components to stop the loss and bleeding.
- Customer still priority: Keep in mind your customers remain your priority whether during or after the pandemic. Your customers will remember how well or poorly you treated them during the crisis. What are your competitive advantages? Are you leading and competing on quality, cost or uniqueness?
- Take advantage of the new and emerging technologies. Learn, adapt and adopt cloud computing and storage capabilities. For example, many of our business clients have started to use the productive cloud accounting software of QBO (QuickBooks Online). Gone are those old days with bank reconciliations and laboursome year-end processes of manual shoebox tidying and entry inputting. One client even boasted that his company broke its records in completing its financial statements and filing its yearly corporate tax returns within just a month after the company’s fiscal year-end. With cloud accounting, your accounting can be done in real time, anytime and anywhere.
Final Words
The first step and the priority will always be to survive and prosper on your own. Take a hard look at the new environment, and assess what you and your business need to change, adapt and succeed. The governmental financial assistance should be only ancillary, transitional and temporary. For whatever assistance programs that require your applications, be sure to take timely actions to study and apply, while observing and respecting the application eligibility criteria and guidelines. Seek professional help if needed.
In today’s digital age, information and internet-of-things may be abundant and everywhere. Nonetheless, the responsibility remains with you to prepare, research and discern what in front of you is information, mis-information or even harmful information. Likewise, social messaging and networking could be helpful to you, but in some extremes could also be addictive, distracting and even harmful to you. Many may still remember not too long ago some vehicle drivers even lost their lives as they were paying more attention to their cell phone devices than the wheels and the roads.
Covid is a once-in-a-lifetime experience for many of us. Many believe the destruction and disruption to be unprecedented and even surpassing the scale and severity of the world wars. What is worse is that, with Covid, this time we have been fighting with an invisible enemy. It is really heart-breaking to hear in the news that so many lives and families are destroyed every day. The world, environment, politics, economics, and trends are all changing at a very fast pace. What has not changed is that there will always be constant changes in our life and business. What remains constant is your determination to survive, your capability to adapt and your knowledge to succeed.