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Rosalyn J. Cronin
Certified Management Accountant

Rosalyn Cronin is a Certified Management Accountant who loves to give people advice on becoming a Savvy Spender.

She has been counseling clients about personal money management for years, steering them away from potential disaster and helping grow a healthy attitude about money. “It is not about how much people earn; it is all about how they spend what they have” is her favorite tip.

What Will I Do with My Money? Part 2

Let's look at investing in a business as another option to make your money grow in these critical years leading up to retirement.

The first option is investing in your own business. A part-time business started today can lead into full-time if you are down-sized or your boss goes bankrupt. It can stay part-time and supplement pension and RRSP income. But being self-employed is not for everyone:

•  Are you boss material? Do you enjoy making decisions, providing direction for others, selling and marketing your services or product?

•  Are your spouse and family on side with your decision? Starting a business can create a strain on everyone, as the time is often stolen from family and social activities.

•  Do you have a passion for something that will translate into a profitable business? I had a client who loved crafts, decided to start a home-based business and within 3 years could no longer look at a silk flower without feeling ill. A hobby is not always the best vehicle for a product.

•  Will your passion pay off on the bottom line? If you love to take pictures, investigate the going rates for good photos. Few earn good money these days, unless you are snapping newborn twins of stars. Competition is stiff in the wedding and baby picture business, and requires long hours at odd times.

Hmmm, maybe investing in someone else's business makes more sense. Didn't the Trivial Pursuit investors make a fortune? The 34 people who backed the inventors of the game made millions, but that doesn't happen to all creative concepts.

•  Start with taking a look at how well you know the owners and their business acumen. Do they know have experience in the business? Are they honest people who have a passionate belief about what they can produce? Have they invested their own life savings in the company?

•  Make sure you have the paperwork in place. A handshake is great between friends, but when the cows come rolling in you want to make sure you get your share.

•  Are they willing to have your accountant take a look at the business plan? You want to have some sense of security that the plan is feasible and the risk is within your acceptable limits.

•  Are you investing money you will need to be able to survive over the next few years? When you get into a high risk situation, look at it as a gamble, and use money that will not materially affect your life and retirement.

Investing with a stranger can be profitable, or provide you with a tax break on your return for years – it's known as an ABIL (Allowable Business Investment Loss).

•  When you do invest in a company, make sure you buy shares or have a promissory note detailing interest and repayment, or you can lose your money and your tax write-off as well.

•  If you don't know the owner, know the person recommending the investment – whether your brother or a broker. Have they been successful in their choices in the past? What level of experience do they have? How much research has been done and by who?

•  Are you part of a group? Talk to the others and make sure you have done your due diligence.

How about buying a business and becoming an instant owner. One way to get off to a running start is to purchase an existing business. You avoid the challenge of finding customers, suppliers and staff, and have a regular cash stream from the first day.

•  Make sure you get lots of professional advice before you jump in. An accountant to review the financial statements – ones that have been prepared by a registered accountant – and check the true profitability of the company.

•  Try working with the company, or a similar one, to make sure you like the business. When you are the boss you will need to understand all aspects of the business if you want to be successful and KNOW that the staff will do their job well.

•  Again, check a list for self-employed attributes. Do you like making decisions? You will be the one expected to come up with answers to problems, future growth possibilities and staff issues.

Owning a business is more than putting your feet on the desk and telling others what to do. Unless you want your business to fail quickly, you need to start with research, develop a plan and pursue your goal with determination.

“An entrepreneur tends to bite off a little more than he can chew hoping he'll quickly learn how to chew it.”
- Roy Ash

As boomers age, there will be a gap between jobs and workers available to fill them. Small business, part-time consultants, service contractors are all possible solutions for those no longer interested in the stress of a full-time position, but wanting to be involved and see some extra income float in the door. If you have the attributes of a successful entrepreneur, what are you waiting for?

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