Building On Solid Ground

“Make Sure Your Business Is Designed For Likely Future Events”

I remember back ten plus years ago having some conversations about the low Canadian Dollar and what was likely in store for Canadians in the near and longer term future.

One American friend held the opinion that Canada should just give up its currency and adopt the U.S. greenback instead.

Another Canadian friend warned about manufacturing complacency setting in with a lower dollar and that Canadian companies needed to become more cost competitive for when the dollar inevitably started moving the other way.

And as a former Winnipeg resident who was on the scene when the Jets left town, unable to complete in the NHL having to pay player salaries in U.S. dollars, its more than interesting to see things come full circle in the hockey world. Go Jets Go!

Ok, so what’s my point?

Simply that with everything going on in the global economy right now, its only a matter of time before interest rates go up.

Business financing rates are about as low as they can get and have been that way for quite some time.

But of course, predicting the magical time when rates will start to climb and stay up IS impossible and who ever gets that one right should be buying lots of lottery tickets as well to cash in on their luck.

Just like the change in the dollar, so will follow interest rates.

When you are at one end of the spectrum, its only a matter of time that you start to move back towards the middle and perhaps beyond.

That’s the way things work… That’s the way they always have worked and will work.

So, as a business owner today, are you getting prepared for a higher cost of capital and potentially higher sustained levels of energy costs?

You do this not knowing when you’re going to be impacted by these inevitable changes, but do it nonetheless because its going to be part of long term survival and prosperity.

Just like people who got accustomed to the easy access to commercial credit from WWII to about 2007 when the recession hit and made the process for securing capital that much more difficult, and just like when much of the Canadian manufacturing sector was set up on the basis of a $0.75 dollar, a certain degree of apathy has set in about interest rates due once again to a lack of meaningful movement over an extended period of time.

Everything right now is pointing to global interest rates going up.

When that’s going to happen could be months or years…your guess is as good as mine.

But this isn’t about if, its about when.

So asĀ  a business owner, are you getting your financial house in order and balance sheet in shape to take advantage of the opportunities that always come about due to material shifts and changes in the market, or are you going to be one of the vanquished that did not pay attention to signs?

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About the Author Brent Finlay