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small businesses are getting slammed by the pandemic so what do you do if you're a small business owner with a lot of debt ted michaelis is here to discuss it starting right now [Music] this is debt free in 30. here's your host doug hoyes statistics canada says that there were 58 000 fewer active businesses in canada in september 2020 compared to september 2019. the canadian federation of independent businesses says that around a quarter of a million businesses could be at risk of shutting down and that's almost one in five out of every small businesses why well because business is hard ted michaelis is here to discuss that discuss this do those stats surprise you no it makes sense i mean there's so many people now that over the last 20 years the whole gig economy is built on people being in business for themselves the large companies employ people on contracts as subcontractors as uh independent service providers so none of those people really have jobs per se they are a business and that's a key point because when we mentioned people who own their own business you think of somebody who's got a shop and there's 12 people working there you're thinking about joe the plumber who's got a fleet of trucks and a bunch of guys but it's not it's not it's somebody who might be a jane the data analyst yeah that's she had a contract for 40 000 a year to work from home and no there's no work yeah and you know that you might be a courier driver there's all sorts of different things where you are are self-employed and i think about uber well there you go well yeah uber and lyft exactly those are are you are a self-employed person although we can we can argue about that and what makes business so hard i think to be why it's so hard to be self-employed is you have to do everything right so when you work for a big huge company if the computer doesn't work you call it they come and fix it but when you are on your own you're responsible for making the product or the service which probably is what you're good at that's why you went home in the first place but you're also now in charge of selling it which is a totally different ball game you got to keep all the records the accounting all that kind of stuff um staff that's all your department too and there's all kinds of government regulations you've never had to deal with but now you have to yeah you've got to make sure you're filling out your ehd form and your hst and your wsi pd7a on the 15th and that's right all these all these initials and so we get people coming in to see us all the time and they say yeah the government's after me because i didn't get my you know what you might call it filed on time right and i didn't even know i was supposed to file that i'm i'm a roofer i do a really great job at that and now i'm having they're assessing me interest and penalties and some kind of fine and all sorts of crap yeah so being in business is not easy right it's it's very difficult and because you're you're it you're the you're the last line of defense now since the pandemic started and we are recording this the final monday in january i don't know what the date is january first anniversary of the first case in canada there you go so that's that's something january 2021 as of now the federal government has provided more than a hundred billion dollars in support to businesses so i'm not talking about serb i'm talking about the canada emergency wage subsidy canada emergency business account rent subsidies and so on and yet here we are there are a lot of businesses that are still teetering or have closed why is that why was that not enough why is that not been enough so far well the problem with any kind of government support is that first how do you qualify for it so where do you set the parameters and they anticipated a short lockdown that just keeps getting extended and extended and extended and so if i'm a small business i've got no real cash reserves because i run a pretty tight ship i've got to make payroll next week which may just be paying myself and suddenly there's no cash flow well so i've got nothing to rely on i've got to go to this government support some of it was complicated to apply for well yeah so the stuff in the media for the people that were just on the serve which was the unemployment replacement well the business stuff is even more complicated and a lot of people don't realize that and and you and i have both helped a number of you know people we know apply for for these types of programs for the canada emergency wage subsidy you've got to calculate what your revenue is for different periods to make sure that there is a suitable decline you've got to add up all your payroll people who are employed not employed whatever and crunch all the numbers and for a lot of small businesses if i've only got one employee and i know one guy told me that he said you know what it's not even worth it i it's gonna cost more to have my accountant crunch all those numbers than to to do it myself you also made a really key point about cash reserves right so i think we have probably weathered this pandemic as well as any business has even though our volume is down somewhere between 30 and 50 since it started because fewer people need to go bankrupt if they're not working so our work has really dropped but we've been in business for 22 years right so we've had time to build up you know cash reserves technology well and as anyone would expect we don't carry a lot of debt that's right we're somewhat dead averse where there's there's nothing owing on our bank operating line so when the pandemic started we were able to say okay we can actually deploy our employees to home we were able to spend the money on more computers webcams microphones headsets all that kind of stuff nobody would call us a small business anymore either though that's probably true so that's an interesting question as to what the definition of that is but yes you're right so you get to a certain size and hopefully you've got a bit of the wherewithal to do that that was not the case for a lot of people certainly if you were in the early stages of your business so what has happened with business bankruptcies since the pandemic started well just like personal bankruptcies when the pandemic started all insolvency activity basically came to a stop because the courts weren't enforcing any kind of orders the government wasn't trying to collect businesses were just like people so if nobody's pressuring you to deal with your debts you don't have to deal with your debts now that's all been trending upward because the world is learning how to deal with this pandemic courts are operating virtually the government is now calling people saying hey where's our hst return where's the the income tax from last year so things are starting to trend up and that's going to accelerate uh one as we get better at dealing with operating in a pandemic but two at some point they got to start collecting revenue again to pay back that hundred billion dollars they've kicked out to the world yeah and what we're seeing with canada revenue agency is that they are making phone calls but they're not really going hardcore collection so what they're doing right now is they're making a connection they're making sure that you know that they're out there they're reminding you you've got these obligations but they're not saying we're going to put a gun to your head yeah that's coming that's coming so it's yeah there's going to be a long slow ramp up probably so what are you seeing out there you and i spend all day on the phone or on video conference calls with people what are you seeing out there what's happening on the ground well so here's the issue with most of what we're going to call small businesses they have to deal with the public almost all of them are some kind of face-to-face business and if the public's not allowed to get out suddenly their revenues dried up there's no stream there are some winners out there there are some little businesses that wow this is the opportunity of a lifetime and they're taking advantage of it but by and large people are suffering because they have to deal with the public and they're not allowed to right and the winners well the losers are pretty obvious if you run a hair salon a restaurant a gym anything that is completely public-facing the the winners have been you know delivery companies if you've got the contract to deliver for amazon then you're you're literally busy seven days a week um you know big box stores have probably benefited while the the little guys have been closed right um even something like a flower shop uh there are a lot of flower shops that are actually doing better now because well i can't go visit grandma couldn't go to see her at christmas can't see her for a birthday why don't i send her some flowers um they're not doing much in the way of weddings but i guess there's some funeral activity so they've actually won they're all kinds of people sending flowers just to cheer themselves up yeah and so you know winners and losers obviously is happen so okay today we want to talk about small business and debt and so you made the comment that we're not really a small business anymore because we've got you know we still think we are yeah we think we are because well it's two guys who run it right i mean how much smaller can you get than that one guy yeah that would be it i guess that's mathematically exactly correct so let's start with the basics what there are two i guess three forms of corporate organization you could be a corporation a sole proprietorship or a partnership let's ignore partnership because that's basically just a sole proprietorship what's the difference between the two what do you typically see with a small business all right well so the best way to people get their head around the whole idea of a corporation is think that legally you're creating this separate entity that is your business so if you don't have a corporation you are your business so even if you you know i've got ted's lawn keeping service um i'm i'm ted so i'm the business i'm the one who's responsible for all the obligations all the debts all the government filings if i'm a corporation i've created this separate legal thing that is now legally responsible now the ridiculous part of that is of course there's always a person responsible for the corporation so it's uh that's really the next question then so i i totally get what you're saying a corporation is a separate legal entity it's like i've had a child that's separate separate from me right and so that corporation um if it owes money well i'm not responsible for it because it's a separate legal entity exactly but right in a lot of cases you are responsible for it so when do business debts become personal debts well so the the most obvious case is any time you sign for them so if you've guaranteed a debt for your corporation then you've probably said if my corporation can't pay i'll do it there's also various crown debts that you're automatically responsible for so as an officer director you're responsible for the companies hst collected and not paid for their corporate taxes um to some extent payroll i mean there's all sorts of legal obligations for directors of corporations but the ones we're focusing on right now are if you sign for something then you're probably responsible for it yeah and that's i think the key so if you're not sure if you're responsible personally or not well talk to your accountant talk to your lawyer the fancy word for it is deemed trust any money that you collect on behalf of the government that you're then going to give them you're personally responsible for that so hst or gst would be the obvious example employee source deductions would be the obvious example um corporate taxes are not a personal obligation because you didn't hold the money um and then give it to them it was it was taxed on what you earned obviously the business is responsible for it and and then the obvious one as you said anything you signed for right small business loans company credit cards all that sort of stuff the lease on your company premises it's very common for the landlord to say okay i know you've got this company one two three four six oh canada inc but i'm making you sign personally as well so okay what happens then if i'm operating a business and it was doing okay before covet and you know maybe it wasn't making billions of dollars but i was i was getting by and then covet hits and now i'm struggling what should i do what's the thought process you would go through on that so the most important question always regardless of cove it is is my business viable can i actually make a living at this business so what kovit has done is added an extra element to that question can i survive long enough while i'm shut down that i can be viable again or am i actually viable during the pandemic you got to know if it's worth staying in business and that's a hard question it's a very hard question we've been asking that question of all of our clients who operate a business for you know 20 some years and it's hard because you you are the business right and it's hard to separate yourself from it so for example someone comes in to see me and i say so do you think your business is viable oh yeah you know look at look at all the sales i'm making right yeah but look at all the expenses you're incurring to make those sales and if the flip side of that is how much could you be earning if you were just working for somebody else that was doing those sales right and there have been many times where i've said to someone you know what if you got a job at walmart as a greeter making 14 an hour you would actually be making more money yeah it's not how much money comes in it's how much money is left over small business owners hate that question because one of the reasons you're in business for yourself is because you're in business for yourself and so there's an element of i want to do this i can do this yeah and i don't want to work for someone else which is kind of why we started hois michael as we we were not good employees we have big egos and like to do it our own way right and this whole question about business viability so okay when the pandemic is over when i'm able to get back to normal operations will my business be viable whether it was viable before or not is one issue if it wasn't viable before it's probably not going to be viable now but will it be viable again so for example will customers return right so you operate um you know ted's landscaping business i think you said let's call it talk about yep you you cut people's lawns well last summer they were all stuck at home so they all just cut their own lawn right because i got time and you know what it got me some exercise i got to get out and some of those people now are going to keep doing it because they realize they like doing it exactly right so will those customers come back a restaurant well you know we all like going to a restaurant with our friends and everything but for the last you know year that's been virtually impossible other than take out so a lot of people have learned to cook yeah what's that old saying how many weeks do you have to do something before a habit becomes a yeah it becomes the new thing it's something like i don't know 10 times 15 times three weeks whatever it's certainly worth two years now yeah we're pretty much at a year and so you know what okay i have to go to the grocery store you know once a week whatever but now that i've bought the fancy pan and the other thing and the thing and the thing and the thing right you know what it's actually not hugely more inconvenient to be cooking at home than to get in my car drive to the restaurant wait for half an hour or whatever um haircuts oh yeah i mean people watching on video will see that i have not had a haircut for a while or other things i've shaved or shaved perhaps and you know what a lot of people have you know bought the clippers and i was like well you know what i can sort of hack away out of myself everyone else is wearing long hair anyways so nobody's really offended by it will we all go back to the same schedule at the hair place or not i don't know so you really got to ask yourself how will things be different another big example is people are working from home right so if you operate the little uh coffee stand under the big office tower how long is it going to be before people come back you know it's it's not going to be quick so okay let's assume you've gone through the thought process and you know whether the business is well let's say the business isn't viable right i've decided that you know what i'm too far in the hole and even when things get back to normal they won't be back to normal what then are my options what's the thought process i should be going through so if the business isn't viable what am i going to do with it so the short answer is i guess you should be closing well do you just block the doors and be done with it or do you try to sell it to somebody do you have to try to restructure and deal with what's there so there's you have to look at what am i going to do with this thing that isn't worth keeping so let's ass yeah if it's not viable then you can no longer be there there's no point well it's if it's not viable then there's no argument to keep it open right now that's just a strategy how do i close it so okay the first thing would be is there somebody else who might buy it from me or take it over from me for a dollar is there something in this business that has value a list of customers do i have a bunch of old inventory that somebody else can do something with uh do i have a skill set that somebody else will employ i just i just don't i can't do the rest of the business aspects of it yeah maybe i've got a good lease that my competitor would like to take over maybe there's some reason exactly so so yeah okay start by talking to potential you know acquirers competitors and maybe it's like i'll give you the business for free if you just you just take it over um what will or if you've got inventory you can sell for example maybe i can i can and you can liquidate complicating all of this right yeah because nobody's going to come look at your business it's and and if if things are off because of kovid your business will be undervalued anyway right which is why it may be well i'm locking the doors i'm handing the key to the landlord and i'm saying say bye so let's assume that my business is a corporation okay let's take the complicated version first so you already explained it a corporation is a separate legal entity right so if i'm closing my business does my corporation have to therefore go bankrupt no they're not the same thing closing the business is like um well so you literally let's use a physical example you close the doors tonight and you turn the lock and you put a sign up saying out of business and now it's what are you gonna do you're not gonna generate any new revenues you're presumably not generating any new expenses so that's not necessarily true and you only become bankrupt if you voluntarily say well i need relief from my debt so the business is going to declare bankruptcy which is a legal situation or if somebody comes along and tries to petition you into bankruptcy so bankruptcy only makes sense for a business if there's something in the business that people are going to fight over so for example let's say what's a good example i have a small car dealership and i didn't have an operating line of credit i just had 20 cars in inventory that's not really a small business but it fits our example here i close the business tomorrow what am i going to do with those 20 cars or the widgets machines that i used to make or all my lawn care equipment what's going to happen to those things well i can sell them off myself liquidate turn them into cash and try to deal with the company's obligations or debts or i can say well this stuff is worth ten thousand bucks and my business owes two hundred thousand so i'm going to put it into bankruptcy so that there's an organized way to deal with it or the a bank or somebody else could come along and say no no we're going to sue you and put you into bankruptcy so we can get our fair share of that money not much of that happens anymore no it's it's actually very rare and again the key point is a bankruptcy whether you're a person or a corporation it's to bring about the orderly distribution of whatever assets you've got and protect you from people doing stuff to you so in most cases okay i i'm operating a restaurant there is no assets or anything that anyone's going to buy from me no customer list nothing maybe they're all leaseholds owned by the the landlord there's no customers so i just say the landlord here you go here's the keys i'm not going through a bankruptcy right because a corporate bankruptcy costs money it does and at the end of the day it doesn't protect the owner from any of the risks that the owner already has and that's the part that lots of people don't understand they figured we bankrupt my corporation i'm safe well you're not because remember what we said you're responsible for anything that you signed so you probably guaranteed that lease the company leased the restaurant's location but you guaranteed the company would pay it so now the landlord can come after you personally there's all those government obligations we talked about so bankrupting the corporation almost never protects the owner in any kind of way whatsoever so it's almost always a waste of money yep and we could get into a more complicated discussion about a proposal for a corporation which could include a term that says hey the owner gets personally protected about receiverships and all sorts of other stuff but what's the point that's that's very complicated the key point is that yeah in most cases a business closes their doors and that's it and that's why they don't go bankrupt and i mean the media is constantly asking me this question you get asked all the time well why are business bankruptcies so low shouldn't they be skyrocketing well no you don't understand businesses close they shut their doors that's it there is no no you only bankrupt the company if there's something to fight over and usually if a business is closed it's because there's nothing left in the business it's already been liquidated right now what are the implications of secured creditors so if my in your example the car dealership didn't have an operating line well what if they did what if the all the cars in inventory were secured by the bank so almost all little car dealerships have what they call a an operating line on their inventory and so it's either scotia or td that's doing it they basically say whatever you got in inventory i as the bank have a right to take that inventory first to pay off your debt that's why i'm giving you this money so you can have inventory so you can sell the cars so secured debts are outside of bankruptcy law anyway they basically you've gone ahead beforehand and said if i can't pay you can have this thing mortgages are secured debts uh car loans car leases all sorts of stuff falls into this category yeah and in that case if the bank has a floor plan i think is what they call it for the the cars in my car dealership well the bank's gonna say okay well we're taking the cars and we're gonna sell them right we don't care if the business goes bankrupt or not we are realizing on our security yeah i mean the most common form of security for banks is something called a gsa general security agreement and as soon as you close the business they then have a right to receivables cash inventory all sorts of stuff and that's another reason why bankruptcies just aren't that common for businesses because the bank's already got the right to everything of value yep here you go bank you you worry about it so that's the case of a corporation what if my business is not a corporation it's a sole proprietorship so think back to earlier in the in the show when we were saying if you're a sole proprietorship so i own ted's landscaping business it's not a company a corporation it's a company i own this business well there's no difference between the business and me so if the business has a debt i have the debt so i can't close me i can look at solutions for me which might be a personal bankruptcy or a personal proposal and those are worth talking about actually because unlike the corporation people will come after individuals and the only way to protect yourself from legal action is to get some sort of legal defense a proposal or a bankruptcy is an excellent legal defense when somebody's coming after you for debt so e so i operated a business as a sole proprietorship it was not a corporation i had to close down now i've got people coming after me and they're coming after you personally could be the government the landlord suppliers whatever that may then be necessary for me to personally do a personal bankruptcy or a consumer proposal to protect myself personally even though it was business debts right and in fact let's go back five minutes a corporation we said is just going to close but the the directors and owners are still liable for all sorts of debts it may be necessary for them to do a personal bankruptcy or proposal don't do it in the company do it personally because you got to protect yourself right which is why i mean we don't do corporate insolvencies but we do a lot of insolvencies for people who operated corporations or operated businesses and now need that personal protection that's right and so if you're in that situation while you give us a call we walk you through it my first question is going to be okay so are you working again are you doing something like what what's how are you just supporting yourself right so that becomes a a pretty key consideration so we talked about the worst case scenario which is i'm shutting my business down i i can't go on what if my business probably will be viable once the lockdown ends what then are my options going forward all right so you've decided that the business is viable once the world opens up again now the question is how do you get from here to there so if the business is going to remain closed for the next couple of months because the lockdown have you got access to credit have you got resources um have you got the ability to just suspend operations and open up open up again well let's talk about access to credit because that's that's a pretty big one so i had my business and perhaps i got uh i had an operating line like you said a gsa or a line of credit at the bank um and maybe i've had to draw on that line of credit during the lockdown because i've had to pay my landlord and keep the lights on even though my employees are laid off or whatever maybe i'm getting maxed out is the bank going to continue to advance me credit or is the bank going to say oh times are tough we're clawing back on that right so even though the customers might return if you don't have access to credit what about your suppliers right are they going to work with you because if you've got no cash coming in we assume that you're not paying them well if you're not paying them are they going to still be your suppliers in the future are they going to give you the opportunity to bridge that gap between what do i got to do now so that i can be viable after the pen because your suppliers have the same problem you do they've been closed down they've been cash flow constrained so can you go to your suppliers and say look i know i owe you a bunch of money from before i want to buy new product but it's going to be three months before i can pay you might be a difficult conversation maybe you have to go to different suppliers and when you go to different suppliers are they going to give you credit right off the bat yeah probably they want cod yeah cod because you're you're a brand new customer what about customers are they going to come back we already talked about that if they found other places they're all buying their stuff online right now right they've changed their spending patterns they've changed what they do so how do you get them back how do you get them back so there's some practical things to make sure that yes in fact your business is not only viable can can actually operate what about the debt then that i have that's associated with my business right well and so now it's you've got to carry it during the pandemic but now the new viable business in the future has got to be able to carry and deal with whatever you had to take on to get you there and so well okay we're still talking about sole proprietorships or businesses that aren't corporations although we can expand to that if you want maybe you need to do some kind of proposal or a bankruptcy just to get yourself a clean start so that your business will be viable in the future it's a lot easier to make a small business successful if it's not carrying a whole bunch of old debt for for mistakes you made in the past and in a lot of cases the owner has financed the business with their own credit cards yep their own line of credit so they actually have a lot of personal debt that isn't in the name of the business so yeah in a lot of cases it's like well i guess i'm going to personally do a consumer proposal to get rid of my debt right and then like you say i now don't have to take as much out of the business to finance my own debt um it's also not uncommon for the old corporation to just be shut down and okay i'm going to start a brand new corporation so that i can get a new lease so that i can you know that used to be a trick in the restaurant industry that actually it's applicable to more people you'd open a restaurant you'd spend a fortune on leaseholds it would look great but you couldn't pay for it so it would go broke but somebody else would reopen the restaurant they're now carrying less that than you were they probably go broke too i think it was the third or fourth time that they actually made a go of it yeah if you're the fifth person to occupy that premises all the kitchen equipment everything's paid for and so on so there's certainly restructuring that has to happen both on the personal and the corporate side again kind of beyond the scope of this show right there is one government support program we haven't talked about that i want to address and that is the canadi canada emergency business account the ceba it's from export development corporation but it's administered through cra and through your bank right it was a 40 000 loan which in december was increased to sixty thousand dollars if you pay it off in full by december 31st 2022 so you got two years then you get 25 forgiveness on the 40 000 loan or if it was a 60 000 loan 25 on the first 40k and 50 on the rest so if you got a 60 000 loan pay it off in full you only have to pay 40 000 back you get to keep you you get a grant in effect of 20 000 right 800 000 businesses have been approved for this 40 billion in funding that is is coming from the government this is for businesses so it can be a corporation or a sole proprietorship correct it ha you have to be contin intending to continue operations so if you're closing down then that's not what it's for you have to have a cra business number prior to march 1st 2020 meaning you were already an operating business you couldn't set up a new business and get the loan and you can't set up 10 new businesses to get 10 new loans and there were two ways to do it either through the payroll stream which in order to qualify last year you had to have payroll between 20 000 and a million and a half or the non-deferrable expense stream this would be for businesses that don't have payroll or had less less than 20 grand in payroll i won't go through the complicated how it all works right so i got this siebel loan i intended to continue and now i don't think i can pay it back right when you took the loan out everybody thought the lockdown would be three months now we're a year into this thing right so what are my options if i can't pay back my siba loan well let's start if you're a corporation one of the interesting things we discovered was that there are no personal guarantees on these corporate civil loans so the business closes and goes bust yeah that's it and so these are administered through your bank but the government is guaranteeing it so the bank is happy to lend the money because even if you don't pay the government back stops it so this is going to be fantastically profitable for the banks right because they have zero risk um and the government is obviously paying the interest during the interest-free period and and backstopping them for any loans so but yes based on and again check your own legal agreement on this don't be taking our see how many times you signed the contract right but the documents we have seen and we you know put some of them up on the screen there is no personal guarantee correct so if you got the loan through a corporation and the corporation can't pay and the corporation goes out of business well you're not personally on the hook for it because you didn't sign as a person if you signed it personally though right then this is that's as if you got a loan or a line of credit yourself because you did and so that means by the end of 2022 you've got to either pay it back or negotiate terms to start paying it back yeah and they do have terms if you don't pay it back by the end of 2022 okay interest starts accumulating but that means you're now paying back the full 40 or the full 60. well and so what's going to happen is in december of next year anybody that will qualify for a regular regular loan will apply for it so that they can pay off and get to take advantage of the the forgiveness portion but a lot of people aren't going to be able to qualify for that loan i mean they got this loan because the government guaranteed it they couldn't get it themselves that's when it's really going to be a problem yeah so our our phones will be ringing in the future even if they're not ringing now and just to be very clear here government debts are dischargeable in a bankruptcy or consumer proposal income taxes are source deductions hst all of those things are deductible um dischargeable dischargeable sorry yeah and so if you got the siebe loan and end up going bankrupt well then yes it will be wiped out if you personally got serb or got you owe taxes on the serb you received and can't pay it then yes that will also be dischargeable in a consumer proposal or a bankruptcy yeah one word of caution is that if you somehow obtained any of these benefits through its representation the bankruptcy rules won't apply but yeah so our example where you started 10 different businesses to get 10 different siba loans yeah you're probably going to get caught on that so okay that is a huge amount of information and i'm sure people listening or you know their heads are spinning so let's finish with practical advice advice people can actually use if you operate a small or medium-sized business and you're struggling with debt what's your advice okay first off you have to recognize the warning signs which means you've got to stay on top of this you've got to realize that cash is tight i'm having difficulty dealing with all of my ongoing obligations um the most common thing people do when money gets tight is they stop paying their government stuff because they're not calling you and reminding you every month to pay it um yeah and they can't you know stop the supply like your supplier can but we already talked about the fact that hst source deductions these are personal obligations of yours even if you are operating through a corporation that's right so they've got to be paid so if money is getting tight you need to talk to the first stage at least your accountant or somebody to realize am i going to get a point where i can't meet any of these obligations and then what am i going to do about it um the best way to do that is just to create well financial statements let's take put together a balance sheet this is where i'm at today i'm going to project this is where i'm going to be again can i get from here to there and survive if i'm going to be locked down for three more months and i've got three more months worth of rent payments to make can i actually do it so obviously a cash flow is important the balance sheet is the starting point what have i got what do i owe what do i own how can i actually pay for it going forward which brings us to the point we already hammered away at and we'll hammer away it again is your business viable and is it viable today is it viable six months from now when the pandemic's over and how do you get from here to there and i totally agree because i'm biased that you should be getting professional advice yeah i think talking to an accountant is a good idea they understand your business they can help you with cash flows that sort of thing talking to a lawyer probably not a bad idea depending on what you're planning to do as long as you watch afterwards okay there you go so sorry lawyers um well things like preferential payments for example and we're not going to get into what that is but you want to understand if i'm paying this guy and not paying that guy what are the impact um what are the implications of that right and then obviously understanding what you're personally liable for i think we we talked about that what about liquidating assets so let's say i've got an rsp well i could cash that in and fund my business is that a good idea or not yeah that's a really tough decision because rrsps are protected under the law and what you're doing is you're set exciting something for the future and so if you start cashing out your future to pay for today okay well what are you going to do in the future so it's risky you really want to get some good advice i'm not sure getting advice from your investment counselor is the kind of advice we're talking about here because they're going to say don't touch it that doesn't make any sense accountant lawyer somebody like you or myself who will give you an honest appraised love does it make sense to be sending more money after what you already spent yeah if i know that two months from now my business is gonna come back gangbusters and we're gonna be wickedly busy then okay maybe mortgaging my future by taking money out of my rsp is a good idea and remember you're getting hit with the taxes on that when you take it out so you take out a dollar you don't get to you don't get to keep a dollar so in that case okay maybe it's worth it but if your business is teetering and depleting your retirement savings so that you can close your business four months from now instead of today probably doesn't make sense and you're right if you file a bankruptcy or a consumer proposal under most circumstances your rrsp is protected you're not going to lose it and again that's why you get professional advice so we can actually explain how that all works so if you really think you're in trouble talk to somebody actually you know what if you suspect you're in trouble talk to somebody because if you suspect you are my guess is you are so yep and i think that's a great way to end it we are here um our staff aren't but uh we are available our whole team is available by phone by video and it doesn't cost anything to bounce an idea off us to ask them some questions right and in a lot of cases we'll say yeah you're good you know you don't have to worry about it do these two or three things but better to get the advice up front so you know what's going on that's right excellent ted thanks very much and uh thanks for being here as i said at the start running a business or being self-employed is difficult even during good times and it's certainly wickedly overwhelming now for a lot of people some businesses are going to survive some will actually thrive right but of course some are going to ultimately fail now more than ever you need to understand your options make a plan so if you're suffering with overwhelming debt as ted just said reach out to a licensed insolvency trustee or other professional who can understand all of your debt management options we've had a lot of contact from people over the last year who hear the podcast and fires emails put comments on youtube whatever and obviously you can track us down at hoyes.com h-o-y-e-s dot com and i would also like it if you would help me uh you know beat the youtube algorithm by liking subscribing and leaving a comment and by subscribing on your favorite podcast app if you are listening and not watching this that is our show for today thanks for listening until next week i'm doug hoyes that was debt free in 30. you