Economic uncertainty at home and abroad means many small business owners are finding the current economic environment challenging. It’s not all doom and gloom however, as despite the economic uncertainty businesses in the Northern Rivers remain positive and in good shape. Most businesses are confident in their overall prospects over the next 12 months.
The main challenges small business owners are citing for their businesses over the next 12 months include: the continued uncertain economic conditions in Australia, unpredictable levels of consumer spending and competition from local businesses.
In the most recent NSW Business Chamber Business Conditions survey reported increasing operating costs particularly in the Accommodation and Food Services sectors, as a concern despite continued strong performance in sales revenue. While some businesses reported a slight fall in profits, the overall profit results were strong for the region.
The Business Conditions Survey indicated that labor demand remained strong in our region demonstrated by increased staff numbers, however capital expenditure remained subdued. Business costs and expansion priorities remained broadly in line with last year whilst the vast majority of respondents indicated that lowering costs by increasing efficiency and increasing sales was a priority for 2017. Businesses expect to achieve increased sales through better products, better marketing, and increased capacity.
A strong focus on cost reduction was reported with businesses working on controlling inefficient unproductive work practices, errors and wastage, finding cheaper suppliers, reducing operating costs, overheads and electricity. Other areas of focus include placing a greater emphasis on technology and reducing inventory.
Given the key challenges, many small businesses are looking at their options and are planning changes to their budgeting practices, particularly in the areas of marketing and communications, advertising and IT. When looking to minimise costs, it is also important for business to consider which areas are either driving or have the potential to drive growth.
Both small and medium businesses reported confidence in their ability to meet debt repayment obligations, with medium businesses more likely than small businesses to expect to be ahead in meeting their debt repayment obligations. Businesses of both sizes are adopting a variety of tactics now and in the future to manage the budget and spending in the current economic environment, by being debt smart and employing a range of tactics to manage debt repayments, in particular paying more than the minimum monthly repayment, making debt repayments a cash flow priority and paying down debt with the highest interest rate first.
Southern Cross Credit Union have been helping Northern Rivers businesses since 1966. Our business accounts are MYOB and Xero friendly, saving you time and money. For more information call 0476 813 595.