3 Easy Steps to Avoid Layoffs and Keep Your People on the Job!

Category:beauty and cosmetic | business services | Chemical

We will show you this on a specific example – John, owner of a print shop, employs 6 people and finds himself in a hard position of firing his people or find the money to avoid that.

1. Find the government funding

Government funding, available through SR&ED may help you get the resources your company needs to avoid laying people off – and survive the economic crisis all together. As I wrote in the previous article, $4 billion funding is available to Canadian Businesses.

How to get the funding?

SR&ED reimburses companies for shop-floor experimentation and development expenses. This includes modification/customization of equipment, overcoming technical challenges, meeting unique customer requests, and advancing in-house technical skills.

Up to 68% of qualified payroll expenses could be refunded.

A practical example:

John runs a print shop, with 6 employees. His payroll expense for the fiscal year ending in 2008 was $250,000 (including himself).
During that year, a large client approached John, with a unique request to re-print some art work on a special type of silk.
The order required physical modifications to the printer, finding the right type of ink – and the right temperature (exact specifications and how to do all of that were previously unknown), and several other challenges were encountered on the way.

2. Work with an experienced SR&ED consultant

Working with a SR&ED consultant, John realized that:

$50,000 of his payroll was dedicated to this client – and the development of the process.
$20,000 was spent on various types of ink and other materials – used in the experimentation and development work.
The consultant indicated that 68% of the payroll and 41% of the materials expenses should be reimbursed, and prepared a detailed application, describing what was done, when and how. Together with an expert financial advisor, who prepared the financial part the application was made.

4 months after the claim was submitted by the SR&ED consultant, John received two cheques from the government (Federal and Provincial) for the total amount of: $42,200.

3. Avoid layoffs and invest in the next development project!

Happy about the unexpected funding, John was able to retain an employee he was about to let go. The slow season, and the ability to apply for the funding again next year, lead John to think – about his next development project – after all, staying on top of technology, and developing new skills is the only way modern business can survive and remain competitive, and this is precisely what SR&ED is all about!