Swiss Lessons in Canadian Business

 

What follows are my most important lessons from 10 years of developing Canada's most efficient accounting solution.  With efficiency being defined as value created/time spent creating value.  The one most important rule is  consistently and intensely focusing on difficult hard-to-replicate skills that deliver value to people – day in day out.

 

Grüezi!

I am Christian Thut from Switzerland.

 

I am currently enjoying family life in Edmonton, Canada with my wife Yen and our two children: Anja and Niklaus.

 

Money is only a by product of being skilled at a craft vs. competitors that are so focused on making money that their short-term actions are destroying their long-term goals. Still, I can’t deny that the money I made gives me the time and ability to explore what I really want in life.

 

Merci vielmal (Swiss German for Thank-you) for taking the time to read this.



I was never destined to become a multi-millionaire.  It was only after I was bullied in school and my attempt to escape pushed me into mathematics and computers, programming BASIC with a Commodore VIC20 when I was 11 years old.

 

Throughout my life, I have enforced on myself a schedule that maximized focused skills and dedicated hours. In school, my classmates paid me to do their homework and projects thus giving me exponentially more practice than most.

 

From an early age, and until I die, I prioritized health and I, at 35 years old, can still bench press 300 lbs.

 

I always graduated at the top of my class throughout my schooling and earned a Bachelor of Science Degree in Pharmacy in 2003.  I developed mathematical optimization algorithms as a pharmacist to precisely correct volumes and rates of administration for intravenous medications. If I could do it again, I would recommend software or electrical engineering at an elite school (top 20) as an undergraduate degree or if its not elite school better off exhaustively learning code online or learning a trade. After my Master’s degree, I spent my time using the tools at my disposal – analytical math to try to solve problems. This exposure to quality experience gave me a substantial head start in the area of accounting and allowed me to start my career and later business at a much younger age than I might otherwise have been able to.

 

I began my career at the Swiss global company, Roche and then I worked for the Reformed Church Uster in Switzerland. Reuniting with the Protestant work ethic and virtues  was a refresher on my Swiss upbringing which emphasized discipline and responsibility.  When you have nothing, you must trade time for money while you learn useful skills.

 

At the age of 26, I had the lead accounting role at a $100 million company in Edmonton. It was here where I realized what a single person with the right skills is capable of. In the evenings and weekends my wife and I pursued our sideline accounting business.

I incorporated the firm in Canada’s largest hydrocarbon processing region in 2006, on the premise that Alberta’s mass affluent would be best served by Swiss innovation and exclusivity free of the inefficiencies inherent to other firms. My vision was to have the best accounting solution in Canada. I determined that the only way to reach this goal was to commit myself entirely to one activity: saving Canadian business owner’s money. Only a truly focused approach can enable an accounting solution to offer, believably and legitimately, a responsible, first-class service and a relationship of the same impeccable quality.

 

I worked 80 hours a week for the first 5 years of my career + business. This was enough time to work out for an hour everyday and go out one night a week max. This gave me better skills than my peers since I had twice as much work experience in the same time frame. It is hard to take it easy in your 20s and then pick it up in your 30s. It does not work because of brain plasticity and you risk developing bad habits.

 

focused skill x dedicated hours = success

 

In addition to all the time spent honing skills,minimum 60 hours/per in my 20s-  the other advantage is there was no time left over to burn the money. I embraced minimalism and strived to save 50-90% of all the money earned.

 

Advertising
When my sideline business made more than my job, I was ready to quit my career and focus on my business. I leased out an office space making sure that less than 6% of my gross monthly revenue would be spent on rent. Presence that comes with rent is one of the best advertising your money can buy and should be taken into account in determining the budget. The more inaccessible your location, the more you should spend buying web traffic. I spent as much as I could buying traffic. Margins decreased at one point but the only thing that matters is volume. I analyzed conversion rates and adjusted targeted demographics accordingly 30+ purchases for every 1,000 visitors meant I was on track. $10K spent on marketing/month resulted in $5K profit/month. Did I cut the marketing to increase margins? NO! I spent as much as I could until my business could afford to spend $10K/week and still profit $5K/week

 

I had vinyl decals advertising my accounting service installed on my coupe. It is one of the most cost effective forms of advertising. The more time you spend on the road, the more you should spend on vinyl vehicle lettering.

 

Earning, fun, and negative visualization – don’t spend time on anything else.

 

Until I elevated my life, I was surrounded by mediocrity: unhealthy, low-T drones who are failing at life by their own measure (not mine). But this is no excuse, because at least I knew what does not work: working 40 hours a week, spend life working under someone else, engaging in escapism (TV/media/vacation)  and their idea of risk is uncalculated trust in a mutual fund.  The solution do the opposite: work 80 hours a week for the first 3 years+get in shape+make a business+focus on making my own life so great that I don't need to take a vacation from it (no noise: TV and mass media) and invest the right way.  I gladly give up income to spend more time with kids and my have my wife home school my kids rather than outsource the most important thing in their lives  and risk them becoming trapped.

 

Most other accountants trade their time for money. Rather than trading my limited time for money from my customers, I INVESTED my time into building a system that will give me future economic benefits. Our clear and comprehensive year-end package, our efficient procedures leveraging technology and innovation all give on-going benefits that make up for our comparatively low-fees.

 

The aforementioned focus, dedicated hours, a lifetime of continuous learning/practice may sound like alot of work but it leads to a more satisfying life. The only way it is rewarding and sustainable is by maintaining balance and treating yourself reasonably. If everything about you is only average how can you expect your output to be anything but average? My customers demand the best from me, so I require nothing but the lifestyle I desire to fuel my performance. Dopamine and testosterone are powerful chemicals that make you faster and more accurate and identifying problems. I keep my levels elevated by being grateful and positive everyday.

 

Buy a juicer. Its hard to work as much as you need to work and be fit without juicing. Digesting food is tiring on the body, so juicing takes the work away from your body and delivers the nutrients more efficiently. People on the internet say juicing is bad blah blah you throw away the fiber, but you will still eat 2 good meals a day +  use a blender for the pre-washed mixed greens + frozen berries from Costco + protein powder.

 

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10-Steps to a multi-milion dollar company

 

  1. Sell a product or a service in the form of a product  that you know better than most and that people will pay for.
  2. Determine the addressable market. The addressable market for small business accounting in Alberta is worth anywhere between $448M-$1B dollars per year.  There are 165,792 business in Alberta that would at least pay minimum $225/mo. = $448M.  Our market  nationwide is $3B -$5B per year.
  3. Spend less than 8% of your gross monthly revenue on your business rent.
  4. 50% of your resources should be spent on delivering your product.  Simplify your business into a process (see our 5 step process to accounting). Be clear with what your customers can expect and say no to anything that falls outside your process.
  5. Train disciplined people to handle the process. Hire 2, work them like 4 and pay them like 3. Use pool-style retention bonuses.
  6. Until you are financially independent, 50% of your resources should be spent on sales.  Either use sales reps and logic to cater to the top 20% (like us) or emotion and buying traffic - adjusting for conversion rates to appeal to everyone else!
  7. Perfect your sales process - contact us for your specific metrics. Expand to other cities.
  8. Use your business account (bank/credit card) for expense transactions vs. cash or personal debit/credit cards. Send us your statements in 1 of 3 formats in order of preference: .csv, .pdf, paper statement.
  9. Aim to set aside 50-90% of all the money you collect. Focus on earning more so you are not miserable living off the rest. Do not leave surplus cash in your operating company- 1) Payoff your home 2) Make the minimum RESP contributions to get the government grant 3) Save cash in a holding company to invest in things that increase your productivity.
  10. Charge up front to create a positive cash-flow cycle.  No single customer should make up 15% of your income. 

 

12 Basic Tips

 

  1. Focused skill x dedicated hours = success
  2. Earning, fun, and negative visualization - don't spend time on anything else.
  3. Do not fall into the temptation of cheap credit and live within your means. Your house should not cost more than 4x your gross annual household income. In German, borrowing is 'schulden', the same word for sin.
  4. Be extremely focused and work systematically. Do not multi-task. Do things once and do it right. Downsizing and minimizing whenever you can will help with the focus. Trash all video games. Trash all personal social media if you are not using it to earn 6+figures! The cheapest things in life: social media, netflix, walmart, accountants will cost you the too much in terms of wasted time and money. Touch things/paper/email only once. Deal with it or trash it and do not look back.
  5. There is too much choice and we all suffer decision fatigue. Shop at Costco and if Costco does not have it-you probably don't need it. Embrace minimalism and bring focus and clarity to your life.
  6. Produce more than you consume. Concern yourself with delivering something useful and needed rather than making money and the latter will come easier!
  7. Consider purchasing capital assets prior to the end of your fiscal year to accelerate access to CCA. Talk to us about calculating your annual advertising budget. 
  8. Autonomy and not having to rely on a job will ultimately make you happy. Having expensive to-maintain items, like gas-guzzlers will take you further from autonomy and happiness. CRA's ceiling on passenger vehicles = $30,000 + GST.  These limits do not apply to SUVs, vans, and trucks that are used 90%+ to transport goods, passengers to earn income. These limits do not apply to a van/truck used 50% to earn income with a maximum of 3 seats. You should avoid borrowing money for acquiring vehicles. Your vehicle should cost less than 5% of your net worth and leasing+operating costs should not exceed 10% of your gross income.
  9. You may claim an annual shareholders meeting as long as its reasonable (ie. Banff, Las Vegas). In addition to this you are allowed to fully deduct all expenses related to attending 2 conventions per year. Other trips can be partially written off (prorated for personal component) if you can attribute business purposes to the trip. Keep notes/e-mails related to business meetings. You need at least 1 business appointment scheduled before you leave. Over 50% of the days on a trip must be for business. Your travel days and weekends in between workdays on Friday and Monday count as business. Travel to a destination on Thursday, have a meeting on Friday, stay the weekend, meet with customers on Monday and Tuesday, and Wednesday flying home is 7 business days. This allows for another 6 days at your destination as vacation and still expense your transportation expenses. For everyday that is business, you are able to deduct your lodging, meals, car rentals. So, if your entire trip includes 7 days of business and 6 extra personal days, you will be able to deduct your hotel for only the 7 business days.
  10. Buy residential real estate for improving your life first, rental income second, and capital appreciation third
  11. If you make a 20% down-payment you should consider a home less than 2.5x your gross annual household income. If you can make a down payment of at least 30% you could consider a home that costs up to 4x your gross annual household income. A condo is usually the least desirable - only if the alternatives simply do not suit you or if you have the resources to acquire a multi-unit property.
  12. Consider an income property only after you've paid off the mortgage on your residence. If you divide the net operating income from a rental property by the cost of the property you get the investment yield. From this value we can determine if it is economically viable to rent out the property or sell it. Having positive cash flow is not good enough to determine economical viability.
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