Morality and Business-Why your business needs strong Moral values

Full disclosure, I am Catholic, but this will not be a sermon or call to convert. I have the greatest respect for all religions that have a strong ethical and principled basis. Being involved in the business world I have come across many situations that were difficult for me personally as well as spiritually. I often had to carry out restructuring initiatives and projects that would “make us more competitive” only to see the lasting and damaging impacts on the communities and families in the area. When I first started out, I did not question or dig into the rationale or true cost of many of these decisions. Whether it was my naïve mindset at the time, or just my desire to drink the cool-aid and not rock the boat to keep my job, I wasn’t sure.

With age comes wisdom and the confidence to start asking questions. My Brother-in-Law was studying philosophy at the time when we were discussing the turmoil in Europe and America. He pointed out that no country or business is an island. What we do for the “good” of the business impacts everyone and has a profound impact on the rest of society. This is especially true today in the interconnected world we live in. Greed and the ever mounting pressure on companies to grow their businesses at any cost and at unreasonable and unsustainable metrics, has led to the turmoil we see today.  The great surge in outsourcing in the 90’s has led the U.S Economy to be primarily a buyer of goods, rather than a maker. The enormous displacement of workers has left cities, people and countries reeling in the aftermath.  Those very companies became hated,  former employees and vendors negatively impacted the very brand image and products that were being made by them. Some were vilified to the point of closing and never opening again. The “smart guys” are not always so smart.

What is the real cost of saving 50 cents per piece or increasing your margins by 5%, when the outcome could be unsafe product or terrible customer service that will impact the very people you displaced? I am not suggesting that we all become tree-hugging socialists and don’t make any money or reward ourselves for the risks we take. I am simply advocating that we take into account all parties including employees, customers and our communities at large when we make business decisions. These qualitative numbers are often the most overlooked numbers when analyzing business decisions. Great accountants take these into consideration as well.

Remember, what goes around comes around!

Your friend,

Rick Barbosa

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Unfortunately, the trend is not our friend-The awful truth

Many potential clients start a conversation with me  like this, ” My last accountant/bookkeeper didn’t know a damn thing and was never available.” My first question usually is where did you find them? 9 times out of 10 it was a referral from a family friend or someone they knew. The other question is how much are you paying them? This is where the conversation takes an awkward turn. When they realize they never took the time or effort to look at what they needed and skill set required , coupled with their unwillingness to pay more than a basic wage, then they usually get what they pay for.

Most small business bookkeepers tend to be glorified data entry clerks that know how to work a program. Accountants are professionals who dig deeper, prepare adequate and detailed documentation, and make sure the books are balanced and make sense. Many times the awful truth is that business owners don’t want someone who knows or is willing to enforce  ASPE/US GAAP/IFRS and CRA rulings. So they hire a bookkeeper who doesn’t ask questions. Little does that bookkeeper know that any information that is not in compliance with CRA policy gets linked to them and recorded in CRA’s database for follow up.

The moral of the story is, make sure you find the right accountant. They may cost more, but in the end they will do a better job and let you sleep at night.

 

Your Friend,

Rick Barbosa

 

 

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The Road to Prosperity : Step 5 Celebrate Success

You’ve done the hard work of taking responsibility for your own success, tracked everything, learned to pay yourself and finally started living below your means.  At this point you should have had some traction at paying off debt or accumulating some savings or both. It is equally as important to mark these wins as to achieve them. Celebrating milestones keeps you motivated and gives you something to look forward to. Enjoy a night out, nice meal or a weekend away with the family. You’ve earned it. Keep at it and you will start to celebrate more often and enjoy life rather than just living it.

Thanks for staying with me on the Road to Prosperity.

Rick Barbosa

 

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The Road to Prosperity: Step 4 Live Below your Means

Like my other posts, the 4th step on the “Road to Prosperity” is not new or a “Quick Fix” but instead is time-tested and wisdom from generations of prosperous families and individuals throughout the ages. All of us have heard stories of celebrities and lottery winners that have wound up broke and worse off from lack of proper money and lifestyle management. To a lessor extent, our neighbours that try to “keep up with the Jones” often find themselves up to their eyeballs in debt and stressed out.  A prime example here in Canada are those hoards of Hockey parents spending thousands of dollars each year on their children for fees, equipment and travel. Many say they are doing it for the kids, but if you’ve ever hung out with Hockey parents its more often than not about the social aspect of the group. Many parents don’t know what to do with themselves once the kids choose not to play sports anymore or simply outgrow or don’t make the cut any longer. Parents often come to me with stories of how they blew 50k or more on organized sports with nothing to show for it but a burnt out mini van and a large line of credit.

To truly build wealth we must look at not just what we are doing or making in our careers, but how we are living our lives. It’s easy for governments to print money because there is no individual accountability to pay it back. They just tack it on to future generations’ tax bill and carry on. You and I live in the real world where we have to balance what comes in with what goes out. If we’re spending more than we’re making trouble is not far behind. In these situations the main culprit is “Lifestyle”. Keeping up appearances and a façade can only go on so long. Better to have a smaller house, older car and better family cohesion than to worry about maintaining all of the above.

Learn to live well. Don’t worry about what everyone else has. Appreciate what you have.  Think about what you need versus what you want and watch your wealth grow.

Take care and till next Step,

Rick Barbosa

 

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The Road to Prosperity: Step 3 Pay Yourself

It’s not a secret, nor is it a new concept, but it is worth repeating, and it is extremely important if you ever want to build wealth and prosperity. After accepting responsibility for your future, tracking and budgeting your spending, the next logical step is to ensure that you treat yourself as an item on your budget. One of my clients asked me how do I pay myself??? Trying to keep things simple I said, treat yourself like a bill. You pay Hydro, Gas, Mortgage, so why not pay yourself. She immediately got the concept. She slotted “Savings” into her spreadsheet and began slowly putting away money each paycheque and was surprised how fast it started to add up.

Now there are different schools of thought on the order and importance savings plays in your budget so I will give you my view based on my own personal experience. During my crunch years (raising kids, paying the mortgage, high household debt) I made it a priority to pay my loans and mortgage off as quickly as I could. This meant that I put very little aside into savings, but still managed to save something each time. My reasoning was simple. I was going to get rid of the debt sooner and sacrifice now (social life, travel, entertainment) while the kids were young so I could enjoy life later. Some may opt to have a more balanced approach, while others are able to both save and pay off debt successfully at the same time. Whatever method you choose, so long as you remember to keep something aside for yourselves then things will work out. If you’re not saving, then ask yourself this question, “What do I have to show for all my hard work?”

Until next time.

Take Care.

Rick Barbosa

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The Road to Prosperity: Step 2 Know Your Numbers

If’ you’ve ever watched the show Dragon’s Den or Shark Tank in the U.S, the presentations that get thrown out quickly are ones where the individuals come there with no sense of where they are in terms of profitability or the worth of their company. This is essential in business and a necessity in our daily lives. Knowing where you stand financially is Step 2 on the Road to Prosperity after taking ownership for your future.  The best way to get started is to record all your “In’s and Out’s ” either on a spreadsheet or on paper. Use your bank statements and credit card receipts to determine your “Revenue-“i.e. Salary/Wages as “In’s” and detail your spending under various categories like House Hold, Automotive, and Maintenance with sub categories for more detailed purchases. What you are doing is understanding your spending and getting a feel for where your money is being spent. In today’s increasingly cashless society its easy to lose touch with your spending and how fast you are accumulating debt.

By tracking your expenses practically (not using cash in  jars!) from electronic records and matching them against what you are bringing in, you are inadvertently producing a key financial report. You are developing your own personal Income Statement or as some of us Old-School accountants like to call it your Profit and Loss (P/L). This becomes handy when looking for loans or a mortgage as your banker will be impressed with how well you know your monthly Cash Flow.  When you finish recording the months results you should see a positive number at the end, if you don’t you’re using borrowed money to sustain your current lifestyle. This is where debt is accumulated and becomes a burden and road block to your prosperity. You will need to be disciplined and patient at first, but if you keep at it, you will soon see trends and patterns that will help you understand and control your spending. I have worked with many clients who once thought they could never keep at it but grew to love their weekly ritual of planning their spending based on wages and upcoming bills. Staying in the “Black” or Positive becomes a great habit and helps you confidently manage your money instead of the money/debt managing you.

When you get comfortable with your own Income Statement (Income-Expenses) the next step is easy. Knowing your Net Worth or developing your Own Balance Sheet is simple. If you’ve mastered Revenue (Wages, Salary) and Expenses (Bills) the Net Worth statement is made up of Assets and Liabilities. An asset is anything you own or have of value that can be sold easily. Liabilities are outstanding debts or loans often used to buy those assets.  Listing these in a spreadsheet or on regular paper and tracking their value month after month will show you how much progress you are making in becoming financially prosperous. Assets will include houses, cars, investments, chequing and savings accounts, while liabilities include mortgages, loans and credit card debt. The difference between total Assets minus total Liabilities is your Net Worth or Personal Equity.  This is where you get to keep score and employ strategies to boost your net worth month after month.  Knowing your numbers and keeping on top of your finances takes time. The more often you do it the faster and easier it gets. Anything worth having takes effort, the more effort you put in the more rewards you will reap.

Until the next step,

Take care

Rick Barbosa

 

 

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The Road to Prosperity: Step 1 Take Responsibility

responsibility2

Prosperity however you define it, either being happy, healthy or financial stable, all comes about by what I’ve learned is the first and most important step in getting there. Taking personal responsibility means you take ownership for your situation. Don’t wait around for someone else to make things happen, instead, realize that you and you alone are the one who needs to take steps if you want to be financially stable. Successful individuals all have this in common. Those who rose to the top or have great jobs realized that only they could get themselves there. It’s easy to be lazy and just do the bare minimum and get by in life and just pay the bills. Wouldn’t you rather have little to no debt, a paid off house, savings and better vacations with your family?  Taking responsibility or being “accountable” for your life is going to get you there. Don’t rely on employers, government agencies, friends, family etc… These as many of you know can be unpredictable and can lead you into a false sense of security.

The road to prosperity is not a quick one, it takes time, effort, focus and patience. But when you start seeing the results of your actions and how empowering responsibility for one’s success can be, you won’t look back.

Here are some “Areas of Responsibility” that you need to take ownership for.

  1. Education-Go as far and as financially feasible as you can. Make sure you are “investing” in the right career path
  2. Learn your job well or start your own. Being OK at something just doesn’t cut it anymore. Be Great at something.
  3. Learn about money. How to handle it and make it work for you. Don’t be its slave, be its master
  4. Take care of yourself and your family.
  5. Be an example for those around you. Help others like those who have helped you. We all depend on one another.

 

Thanks for taking the time to read this, and stay tuned for Step 2 on the Road to Prosperity.

 

Take care,

Rick Barbosa

 

 

 

 

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Welcome to my Blog…Finally

It’s been a long but educational process in finally putting together this web page. I originally started by hiring another firm to design my static page and then started to use AdWords to draw attention to my site. I had mixed results, but fate pointed me in the right direction. I was working with a client who had introduced me to WordPress. I was amazed by how simple it was to set up a page, add features and monitor traffic. After learning some basic HTML and Photoshop skills I finally set out to create my own page and blog.

When you do things yourself and learn to rely on yourself the rewards are twofold. First you get the benefit of increased knowledge and confidence, second you get the sense of control and accomplishment. My Blog will attempt to help the average person understand and control their finances, with the two goals of avoiding debt and building wealth. Money whether we like it or not is the great facilitator in life. It is the means by which pretty much all things get done. Understanding how to manage your finances ranks just below Health and Family. Money does not bring happiness but does facilitate it.

I hope that by bringing a fresh and non-biased or solicited approach to discussing money that in some small way I can help those who need it the most.

 

Take care

Rick Barbosa

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