Reports showing which direction the economy is headed are released almost everyday. Unfortunately nobody can influence whether these results will be negative or positive. However, you can reflect on how your business operates and make changes to ensure you survive any negative external factors.
In business, there are two components to success: there are the drivers you can control, and the drivers you can't.
I recently interviewed seven-times world surfing champion, Layne Beachley, and this drove home the message all business owners have to hear.
External developments and decisions that can affect a business are out there, but there are internal decisions — innovations and attitudes — that are more important.
In fact, upcoming decisions by the federal government should negatively affect the financial planning industry's revenue earning capacity. However, it will be the calibre of individual business's responses that could determine whether the result is negative or positive.
Recently, I was asked to highlight the external drivers of business that small and medium-size enterprises have to deal with.
The most recent NAB business survey revealed business confidence rose by 2.1 points to 15.8 in October and business conditions put on a big 8.6 points to 11.8, which was a 21-month high.
A week later another NAB survey showed SMEs were back in positive confidence mode, except for those in Western Australia and Queensland.
“There has been a concern in some segments of small business about access to finance and of course businesses were concerned about unemployment, so I think there is a great deal of anxiety because the SME sector is really the engine room of our economy,” said NAB's group executive of business banking Joseph Healy.
He pointed out that access to finance and uncertainty about how consumers will react to rising unemployment were the two major concerns of SMEs.
Meanwhile, the PricewaterhouseCoopers Private Business Barometer showed 25 per cent of businesses surveyed in August and September were cautious and believed there was no short-term prospect of growth.
Apart from economic growth, this survey said the key drivers were people, funding and the nature of competition.
It revealed only one in six businesses planned to hire staff but bank funding was even more important.
“The issue of funding remains the number one challenge for the sector and the biggest impediment to growth,” said PWC partner, Gregory Will.
Another challenge was the post-GFC drive to compete on price and this puts the spotlight on whether business is ready for the cost impost of higher interest rates.
Reinforcing the business view that not all operators are optimistic, this is what the latest Deloitte CFO Survey found: “61 per cent of CFOs anticipate economic recovery in the latter half of 2010.”
I know expectations and leading indicators all look really rosy but the real economy is not as convincing just yet. Talk of more interest rate rises could easily 'de-vibe' those small businesses not in retail and traveling well.
That's why some Layne Beachley good vibrations could be timely.
Beachley pointed out that when she won her first world title she was 26 years of age. The reason was that she changed. She 'innovated' by seeking help to get fitter and to do what she had to do to overcome what was holding her back — herself.
By Peter Switzer
