The Top 4 Tips for Business in an Uncertain Economy
The merry-go-round of Australian Prime Ministers has continued with the recent appointment of Scott Morrison as the leader of the Liberal party. Leaving political opinions aside, it’s difficult to determine what impact this will have on small business owners.
That difficulty though is exactly the issue, as I see the biggest impact being one of uncertainty. In a volatile world economy, a slowing property market and with the tightening of lending policy by banks out of the royal commission, a clear lack of direction and leadership in our country only adds fuel to an already simmering flame.
Add to that the current upward pressure on interest rates at a time when property prices are coming down in many parts of the country, and it’s clear to see why small businesses could be facing an uncertain environment.
The impact uncertainty can have on both consumer and business is confidence. People and businesses may delay purchasing, investment or employment decisions, at a time when the government is looking for the contrary.
Here are my top four tips for business owners in an uncertain economy:
- Cash is king: Utilise strategies to maximize your cashflow. Don’t leave cash on the table in uncollected debtors, too much stock or unproductive processes. Review your debt and ensure it is structured to withstand changes in circumstances. Be sure to maintain good relationships and track record with your financiers as well. Maybe even consider options such as invoice factoring as another means to reduce risk and maximise cash.
- Review your business model: You don’t want to just survive but to thrive. Perform a SWOT analysis on your business and explore opportunities that you may be ignoring or mitigate threats or weaknesses before they have a real impact.
- Review your marketing strategy: By doing this you can open your business to new customers and growth at a time when people are looking for real value. This also supports the business with risk management in moving away from a reliance on your existing customer base.
- Audit your spending: Business will often have unnecessary expenses that they can easily cut and redeploy into areas that can help promote the growth of their business. Be sure to be strategic though in any cost cutting and take a long-term approach. Also, don’t be afraid to ask your suppliers for a discount or friendlier credit terms, especially if you have established a great track record.
Uncertain times also bring opportunity, so make sure you are able to capitalise on them in the future by positioning your business effectively now. After all, it may not be that long before we see not only another Prime Minister in power, but another party altogether.