Blog

Continuing our series on Statistics Canada’s The Daily publication, today we will be focusing on Canadian International Merchandise Trade.

What is it: This publication provides in Canadian dollars, the monthly trade in merchandise to and from Canada on a monthly basis.  Within the definition of “merchandise”, Statistics Canada includes agriculture and fishing, energy, automotive and forestry products, industrial goods and materials, machinery and equipment, and other consumer goods.

Canadian exports and imports are presented separately by month, by principal trading areas, and the above principal commodity groupings.

The data is seasonally adjusted, which is a process that removes the systematic ups and downs that occur throughout the year.

How it is used:

• Viewing trends in these data series can reveal a great deal about specific Canadian industries. For instance, trends in both imports and exports since 2007 show the dramatic impact of the global recession experience in late 2008 and the recovery.
• Sector specific trade information can be valuable for those companies providing goods and services within or to those industries. 
• It is important to keep in mind the impact the Canadian dollar’s value relative to the currencies of our trading partners has on trade in merchandise.  A high Canadian dollar can make Canadian goods less attractive to our international clients.
• Trade balance = exports – imports 
  • a trade deficit = exports < imports
  • a trade surplus = exports > imports

An example:

Your company provides consulting services largely to the auto sector in Ontario.  The sector was hit hard in 2008, and you’ve felt it in your bottom line. You’ve heard positive news reports, but are unsure whether it will translate into business for you. Reviewing the Canadian International Merchandise Trade publication, you can confirm that automotive product exports were up 34.5% year over year in August, and 44.8% year to date August, year over year.  There was a slight dip month over month from July to August 2010, due to trucks and motor vehicle parts.  Overall though, the future looks bright for the industry and your business.  Time to plan how you are going to capture a part of the recovery!

Where can I find more information on this series:

Statistics Canada produces the “Canadian International Merchandise Trade publication (Catalogue number 65-001-X) available at: http://www.statcan.gc.ca/pub/65-001-x/65-001-x2010008-eng.htm.

The most recent Daily publication of this series was on October 14, 2010.
Publication frequency: The catalogue is published on a quarterly basis and contains monthly data.

Cost: Free (pdf or HTML)

Electronic data series available? : Available through Cansim in tables 228-0001-228-0003, 228-0033, 228-0034, 228-0041-228-0043 and 228-0047-228-0057.  Go to http://cansim2.statcan.gc.ca/ and enter the table number.  There will be a charge for the data.

Continuing our series on Statistics Canada’s The Daily publication, today we will be focusing on the New Housing Price Index.

What is it:

The New Housing Price index is one of a group of capital expenditures price indices that Statistics Canada produces.  It measures the change in the price which new houses are initially sold.  Data is available for house and land together and separately.

• Specifications of the homes reported on are consistent across periods, controlling for other factors which could explain a price change.
• GST and HST are not included in the statistic.
• The data is not seasonally adjusted, which means Statistics Canada has not smoothed out any impact that regularly occurring events might have on prices, such as summer holidays, Christmas, etc.
• The statistic is expressed in terms of an index, which means the price is relative to a particular base year, in this case 1997 which receives a “base” value of 100.  All other values are relative to that point in time.

How it is used:

Like the consumer price index, the new housing price index shows the general price level for a given month, in a given location, but specifically focuses on new houses. To interpret it look at the statistic over time.  Is it rising or falling?  What is the percent increase month over month?  Year over year?

An increase in new house prices could indicate a recovery in the sector or a shortage of new housing stock. If you are in a business such as house construction or interior design changes in housing prices are important to consider. After analysing their movement along with the movement in other statistics such as mortgage rates, unemployment rates, GDP, etc, an appropriate response can then be incorporated into the short and long term strategic planning process for your business.

An example:

The new house price index (house and land) for Winnipeg rose from 192.1 to 192.8, a 0.4% increase from July to August 2010.  It also increased by 5.3% year over year in August. Looking further at the year over year trend for August we see that 5.3% is a bit of a rebound from 2009, which experienced slower growth of 1.6%, down from 2008’s value of 6.7%.  2009 was a tough year globally so it is good to see that an improvement is underway in Winnipeg’s housing market.  Confirming this trend through examining other statistics will then provide more certainty as to whether ramping up marketing and production is appropriate for businesses relating to new house construction.

Where can I find more information on this series:

Statistics Canada produces the “Capital Expenditure Price Statistics publication (Catalogue number 62-007-X) available at: http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=62-007-X&lang=eng.

The most recent Daily publication of this series was on October 13, 2010.

Publication frequency: The catalogue is published on a quarterly basis and contains monthly data.

Cost: Free

Electronic data series available: Available through Cansim table 327-0005.  Go to http://cansim2.statcan.gc.ca/ and enter the table number.  There will be a charge for the data.

Summer is over, the leaves are turning, and it’s time to return to regular blogging! 

I thought I’d reach for my inner economist and write a series on one of Statistics Canada’s premier products: The Daily.  In this series, I plan to give a user friendly interpretation of some of the information provided in this publication, and more importantly give insights on how to apply this information to your everyday business life.  After all, your tax dollars pay for it – you might as well get some use out of it!

The Daily can be accessed from the following page on the Statistics Canada website: http://www.statcan.gc.ca/dai-quo/index-eng.htm.  It is published every Monday – Friday, except holidays at 8:30am Eastern time.

Voltaire wrote “Le mieux est l’ennemi du bien”, or “perfect is the enemy of done”.

Have you ever been so overwhelmed by the enormity of a project that you are too paralyzed to even start? More often than not, we are bombarded by tasks and projects from all areas of our lives. It is those who have the ability to prioritize and then begin chipping away who will be successful in the end.

Is the end in sight?

To further confuse the matter, it’s rare that a project has a clearly defined endpoint. So when to deliver the goods? If perfection is your goal, the recipient of your amazing creation may not live to see the unveiling. Your product or service is of no use to anyone if it doesn’t exist, so whom is perfection serving?  If it is functional, roll it out. 

The value in “good enough”

Most things in life are iterative, and thus offer revenue opportunities related to each additional unit of value you provide.  This isn’t a new concept. There are many examples of companies who follow a strategy of continuous improvement:

• Microsoft rolls out new versions of its Windows, Office and other products;
• Apple make a big splash about its annual rollouts of new versions of its iPod, iPhone and other products;
• Car dealers offer new model years with varying amounts of differentiation.

After all, a product that can’t be improved is likely obsolete or easily copied. Why not continue to grow your business by offering your clients your commitment to continuous improvement?

Voltaire offered us a way to succeed in this crazy busy world we live in.  He told us that the road to perfection is a journey; one that requires stops along the way.

A couple of weeks ago I went camping. I haven’t camped in over 2 decades, so I needed a tent.  After checking a couple of placed on line, I decided to go with the Mountain Equipment Co-op Wanderer 4.  The tent was thoughtfully constructed with a full fly and lots of useful features. But it wasn’t until the last night of the camping experience when a deluge struck that I realized just how important quality was to me.  Despite being stuck in a tent during an extremely heavy rainstorm, we were dry.  The tent outperformed my expectations.  Looking back, the other cheaper tents I saw wouldn’t have performed under those conditions.

Cheney Window and Door is another example of quality and service.  When it came time to replace the windows and doors in our home, we were thrilled with the quality of their product, but more important was the service we received.  The installer was second to none; he took a great deal of care and added some extra touches along the way.  The owner also offered some great renovation advice, and pointed us in the direction of our next successful venture, soffit and facia.

Now this provider was a long-time installer who was preparing to retire, but because Cheney gave us the recommendation, he took our job.  Again, we delighted with the entire experience. 

The final exterior improvement on our list was paint. I knew that it would be tough to find someone who met my standards, having done my share of painting.  A friend had recently had some work done by a painter who came highly recommended to her, so I took a chance.  His work was amazing.

Pricing for Quality

Could I have paid less for these services? Yes.  But I opted for quality, and in the end with a job well done, I was further ahead.  Will I shout these companies’ praises from the rooftops?  You bet!

In a world where all too often we are disappointed by the quality of the goods and services we purchase, it is nice to know that excellence still exists.  This fact provides an opportunity for businesses: customers are willing to pay for quality and great service.  But make sure that you deliver, because bad news travels fast.  My neighbours thought they were buying and paying for quality and service but instead received a nightmare.  I won’t be contacting that company for their services any time soon.

Whether you are an employee, business owner or consultant your reputation matters.  Despite its importance, it isn’t entirely under our control.

The scapegoat

Maybe you are an employee in search of a new challenge. You move on your new job and in doing so you become the scapegoat for problems at the old one. It can be one of the most frustrating, helpless situations.

Or perhaps you are an external consultant. After accepting what seemed like an interesting contract, you discover that you’ve been hired to “prove” an unpopular course of action is appropriate; deflecting criticism from the management team. The added bonus being that if the recommended option doesn’t work out – it’s your fault. 

For service providers whose product is largely intangible, reputation is one of their most important assets.  However, the quality and achievement of their projects’ goals are subject to opinion.  With the qualitative nature of their vocation – reputation can be at risk.

Managing your reputation

While we can’t control what is said about us, we can take measures to improve it.

1. Before starting a contract, take the time to meet with the client and determine their goals. Develop meaningful, quantifiable indicators and milestones that will clearly demonstrate the client’s objective has been achieved.
2. Strive to deserve a positive reputation.  Always do your best to provide a quality product that meets the client’s needs.
3. Put yourself in their shoes.  How do you feel when a co-worker leaves or a consultant moves on?    All sorts of emotions from loss to thankfulness can be in the mix.  Keep in mind that these emotions are in play, and be ready to respond to them with sensitivity. Assure them that you are moving on to new challenges, not running from a bad situation. Point out the positive aspects of the job or contract that you’ve enjoyed, things you’ve learned, and positive memories that you will carry with you.
4. Before leaving, ensure the transition is seamless.  Document your work, put your files in order, and offer to train your replacement.
5. Request a wrap up meeting where you request feedback from the client and confirm that the contract goals have been met.

Confirm in your client’s, coworkers’ or boss’ mind that you achieved their goal and you did a good job.  And keep in touch.  After all, these are folks you shared time with and perhaps a few laughs along the way.  Besides maintaining some valued relationships, it might even mean repeat business down the line.

Further to our earlier post “Accounting for Changes to GAAP for Canadian Private Companies“, the Canadian Institute of Chartered Accountants (CICA) has now released its guide to the new Private Enterprise GAAP.  Resources, FAQs and other information about the new standards can be found here. The CICA’s guide is also available here.  Note that when you save this guide, it has an .aspx extention which is hard to open.  Simply change this extention to .pdf and the file will open as a regular PDF file.

Happy accounting!

Perhaps inspired by the recent healthcare debate south of the border, the economics department at TD has decided to turn its attention to healthcare in Ontario.   Last Thursday, they released a 34 page treatise called “Charting a Path to Sustainable Healthcare in Ontario” which included ten recommendations to “to restrain cost growth without compromising quality of care”.

Unfortunately the fine folks at TD Economics have missed the mark.  Having more than a few years of healthcare experience under my belt, I’d like to comment on some of their assertions.

Firstly, I disagree that this report contains new ideas.  I would also question their assertion that their recommedations could be implemented in a 1-5 year time line.  Anyone who has worked in the Ontario healthcare sector knows that change happens VERY slowly.

I do however whole heartedly agree that the “current governance structure for the province’s hospitals should also be looked at.” I would start with the Local Health Integration Networks (LHINs). 

The report also encourages an expanded private presence in Ontario’s healthcare sector, yet they also recommend that physician compensation be shifted towards salaried remuneration.  Pharmacies are also largely private; yet curbing generic drug costs has been a momentous struggle for the province.  Is more private sector influence the answer?

I’d like to address six of the ten proposals for reform in the report.  (The remaining four are already being addressed by the Ministry.)

1. Expand information technology use in the system.

• The report points to a relative lack of electronic records in physician offices as impacting health system performance.  However, electronic health records created by a physician are the physician’s private property, and not subject to Ministry performance evaluation.  The billing information obtained by OHIP when a physician requests payment is limited to OHIP #, tombstone information, billing code and perhaps a diagnosis.  Electronic health records in hospitals already exist, and are used for analysis by hospitals and the Ministry of Health and Long-term Care (MOHLTC).
• An increase in data collected is only worthwhile if the information created is material, and results in improved quality and/or decreased cost.  Case in point, how many people have hospitals hired to collect wait time data, none of whom contribute to front line care?  Wait time designated surgeries have crowded out other types of surgeries.  Stories of patients driving themselves to their own cataract operations signal that supply outweighs demand.
• Another example is the recent expansion of the Ontario Healthcare Reporting Standards (OHRS) to include the nursing home sector.  Is this increase in the detail of their reporting, which will require hiring more office staff going to yield better frontline healthcare? If the expansion of OHRS in the hospital sector is any indication, I’d say no. 

2. Establish Commission on Quality and Value for Healthcare

• I was really surprised that a bank would make this recommendation! Giving the Ontario bureaucracy permission to study something is like giving them permission to breed.  At about $125k per analyst for salary and benefits, it is yet another expense that doesn’t contribute to front line care.  As the report points out, many arms-length bodies and academic research institutes exist in Ontario who have capable health researchers and policy analysts.  A commission is an unnecessary expenditure of tax dollars.

3. Alter the way doctors are compensated

• As mentioned earlier, the report’s recommendation to move physicians to salary and away from fee-for-service is contrary to its desire to increase the private sector presence in healthcare.  Physicians are private providers after all.  The authors are correct in pointing out that salary based service provision will lead to gaming of the system by physicians as pilot projects have indicated, and will require more data to monitor physician activity. This in turn will require additional bureaucracy and IT systems to create the data, thus reducing any gain to be had from the suggested changes.
• It seems that the report implies that a physician’s chosen care plan may not always be based on the patient’s best interest.   To imply that a physician would provide a service or perform a procedure on a patient that was for reasons other than appropriate patient care is a serious claim. One the Ontario Colleges of Physicians and Surgeons and Family Physicians are in place to determine and address.

4. Change approach of funding hospitals from a global budget system to one based on episode of care

• First.  Diagnosis-Related Groupings (DRGs), the U.S. acute care grouping methodology is not use in Canadian hospitals. Our equivalent is known as Case Mixed Groups (CMGs).  See the following link for a history on this point.
• Second. MOHLTC has recently announced a new hospital funding methodology to be rolled out April 2011.  While not episodic based, the new method is patient based and more sensitive to demographic and other factors faced by each hospital.
• A change to episodic-based funding would require the CMG methodology for acute inpatients, along with a host of other groupers that exist for ambulatory, chronic, rehab, and mental health patients, to be improved upon.  One reason would be that these measures do not currently adjust for the severity of a patient’s condition, and thus the hospital would not be accurately compensated for the episode of care. Also, these grouping methodologies are based on average actual historical performance, not on best practice, quality or efficiency. 
• Even with these improvements, setting up an episode-based payment system would be infinitely more difficult to accomplish than any system in the financial sector.  MOHLTC’s Assistant Deputy Minister Adalsteinn Brown is famous for his illustration of the complexity of MOHLTC data.  It demonstrates just how completely overwhelmed the Ministry is by the data it already has.  
• To further convert to episodic-based funding not only includes costly IT systems (the healthcare system is littered with failed IT projects), but additional labour as well – none of which will contribute directly to frontline care.

5. Establish pre-funding for drug coverage

• This proposal seems to have its incentives confused – It uses CPP as its structure of choice, which we contribute to and see as a good thing to collect on.  If a seniors’ drug plan were structured in a similar manner, would we want to live a longer, sicker life so we could get our money’s worth?

6. Incorporate a healthcare benefit tax into the income-tax structure.

• The report effectively talks itself out of this idea when the inequities and risks to individual health are considered.

While the document is a good primer on some of the issues facing the healthcare sector today, it amounts to what Charlie Munger referred to as “chauffer knowledge”.  I know from past experience as a senior economist that TD Economics is a fine group with a great deal of analytical smarts.  I think their talents could be more productively applied however to issues of a more financial nature – perhaps in tackling the (less complicated!) problems currently facing the Euro zone.

Remember the days of Atari and Coleco? You’d buy a game cartridge or a hand held game like Pac Man and play it, no more complicated than that. Since those days Sony among others has taken the next step in creating a new gaming experience for the user, in return for added revenue opportunities.

The internet and onboard memory offer an opportunity to further capitalize on gaming enthusiasts’ desire to answer the question “what if”.  Through its PlayStation Store, Sony offers additional outfits for characters; additional cars for your favourite racing game; and if you don’t have the time, skill, or interest in mastering each level of a game it’s no problem because for just $5.99 you can unlock those challenges and play your way through the game.

One popular PS3 game, “Little Big Planet”, which features a character known as “Sackboy” has 106 add-ons available; only a handful of which are free.  These add-ons are mostly costumes which your Sackboy can wear and virtual stickers which you can collect. These range from $0.99 – $2.99.  The more costly add-ons such as level packs at around $5.99 add extra levels to the game.

Cross promotion of games is pervasive throughout the PlayStation online store. The day ModNation Racers was released, the store offered a $1.99 ModNation Racers costume and stickers add-on pack for Little Big Planet!

Coming from a generation where buying the game cartridge meant that you owned the whole game, I can’t help but feel that this new generation is getting ripped off.   But in a way, it’s like being able to find out what happened next after a movie ends and perhaps even write the next chapter. 

Sony’s PlayStation systems are an example of what additional revenues can be achieved when you view a product not as an end result, as the beginning of a longer term relationship with its user.

What impression does your website make? Does it imply credibility and quality? Is it up to date?

It amazes me how many small businesses aren’t making their website work for them.  I find this particularly true of restaurants.  Websites are such an easy way to tell potential customers about your business.  If a customer drives by your restaurant or someone recommends it, they will probably want to check out the menu or location by visiting the website, only to fine that it either doesn’t have a website, it’s hard to find, or it isn’t up to date. 

Here are some handy tips to help customers find your site, and keep it current.

Seek inspiration from websites that you admire

Take a good look at your website and compare it to others in your industry, or websites you really like. Once you’ve found a few, look at their code to see how they achieved it.   To see the code, in MS Explorer click on “view”, “source”.  The key here is inspiration not plagiarism.  Make your website your own.

Keep true to your brand 

What colours and font styles have you chosen for your logo, signage, menus, etc?  They should be consistent across all mediums including your website to keep your brand consistent and easily recognized by your customers.

Meta data – a search engine’s best friend 

What is metadata?  Metadata is data about data.  It lets search engines such as Google, Yahoo and Bing understand what your website is about.  This is important because not everyone who is interested in your product or service will know your website address. You will want search engines to be able to display your website to those searching for it.

The key pieces of code you want at the top of your website’s home page are as follows, with examples from our website:

Webpage title:  The title is more than just metadata, in that it appears at the top of your web page.  This should be the name of your website, and the purpose of the page they are on. For example: <title>Economic Insights Consulting Inc.| Pricing Specialists</title>

Keywords:  These words are indexed and used by search engines and compared to search criteria entered by users.  For example, our keyword meta tag is: <meta content=”Pricing Strategies, Billing Strategies, Strategic Management Consulting, Management Accounting, Health Services Consulting, Canadian, Toronto, Oakville, Ontario, Economics”/>

Description:  This is the information provided about the website that is returned to the users.  Ours is as follows: <meta content=”Economic Insights Consulting Inc. is a Strategic Management Consultancy located in Oakville Ontario Canada which offers Pricing Strategies and Strategic Management Consulting Solutions.”/>

Let search engines know you exist

Don’t wait for search engine robots to find you, tell them where you’re at! Submit your site to Google and other search engines.  After all, you want potential customers to find you, right?  Here are the links to the pages that you can submit your web address to.  After a few days, the search engine will index your website and your customers will have an easier time finding you.

• Google
• Yahoo
• Bing (MSN)

There are also sites that will do the submission to multiple search engines for you.  Just do a search on “submit URL”.

Keep it current

Nothing says out of date like a copyright at the bottom of your website from 1999.  Updating this section of code is as simple as changing the year on an annual basis.  It is even simpler if you have a php footer file.  Click here for code that you’ll never have to revisit.

Resources

Web designers come from both coding and graphic design disciplines.  The following resources tell the website development story from both of these perspectives.

Clark, Andy. “Transcending CSS: the fine art of web design”, Berkley: New Riders, 2007.

Castro, Elizabeth. “HTML, XHTML & CSS Sixth Edition”, Berkley: Peach Pit Press, 2007.

Once you have a website, maintenance doesn’t take much time at all, but you do need a few pieces of software.

• An editor program.  Microsoft Expression Web 3 is about $110, if you have a licensed copy of Microsoft Office. A free trial is available as well.
• FTP software. This software will allow you to load your updated files from your computer to the external server where your web files reside.  Free FTP software is available at C-Net.

If tinkering with your website isn’t your cup of tea, by all means hire someone to maintain your site.  Now you know a few more ways to ensure your site is working for you.