Planning for 2016 & beyond
With Easter now over and the financial year quickly coming to an end, I believe it is important for all business owners to now assess their current circumstance and plan for the remainder of 2016 and beyond.
The start of 2016 has seen some volatility in economic markets around the world, as well as in Australia. Low oil and resource prices, a falling stock market, terror attacks in Europe and political uncertainty in Australia with a federal election expected in early July 2016. This has meant many business owners have become worried about what “might” happen and what impact these negative messages could have on their business and future financial position.
With so many negative messages in the media it is often easy for business owners to get worried about the economic prospects for the remainder of 2016. The constant media commentary about the impending federal election and the political infighting by our politicians adds to this uncertainty. At present I remain optimistic that 2016 will be a good year for business owners and I base this belief on some positive economic signs about the Australian economy.
The Australian economy continues to grow at a slow and steady rate even though we have seen a major downtown in the resources sector over the past 12 months. Inflation remains low and interest rates are at a 50 year low, with the next predicted interest rate movement being down not up. Residential property prices have stabilised with additional housing construction reducing the pressure on future price increases for residential property in most Australian property markets.
Overall you could say the Australian economy is performing reasonably well, with the outlook for the remainder of 2016 being “slow and steady” growth, positive signs but nothing spectacular. What does this mean for small business owners, what do they need to do to make 2016 a positive and profitable year?
Business owners would be aware that in an economy that is only slowly growing, it is difficult to generate large sales or price increases. Most customers are aware of the slow economic conditions and have an expectation that prices will remain constant with little or no increases. They are happy to remain loyal and continue to buy, but are willing to look for alternatives if there is a sudden change in their buy price.
To maintain profitability with limited or no sales growth, business owners need to ensure they increase the efficiency of their business operation. They need to keep a tight control on their cost of operation so that they remain competitive and don’t lose any market share to their competitors. It is also important to be active in your marketing and customer service. Make sure you regularly keep in contact with your customers as if you don’t your competitors will!
Cost control and business efficiency are sometimes considered not sexy by business owners, but in these economic times I believe they should be top of mind for all business people. Remember small things sometimes provide big rewards.
For assistance with reviewing your business costs, give us a call on (02) 4962 2022 and talk with one of the Hamilton Taggart Business Advisors team.
Lastly, I would like to thank everybody for the positive messages and thoughts after my recent blogs concerning my health issues. My messages about looking after yourself and business leadership were very personal for me and the team at Hamilton Taggart Business Advisors.