2019 is going to present its fair share of challenges for businesses in Australia after two very slow economic quarters that closed last year.
Figures for Q4 show that after a growth spurt at the start of 2018, Australia’s Gross Domestic product dropped to 2.8 percent and only grew by 0.3 percent in Q3 2018. Figures for Q4 have not yet been issued.
The ASBFEO 2018 report on Affordable Capital, found that many small business owners think that gaining access to finance through a business loan is either too difficult or too expensive.
Xero’s State of Lending Report suggests Australia’s small businesses would borrow as much as $80 billion over the next 12 months, if they could get the funding.
Put simply, with the economy slowing down, Australian businesses need to become more innovative, efficient and take smart decisions to remain competitive and relevant.
Positive cash flow is going to be more important than ever and data-driven decision making backed up by hard business insight reporting are also going to be critical if businesses are to do well.
As with everything though, opportunities can be found in challenging times. Here’s what’s in store for 2019.
Major challenges for businesses include being left behind
Hand-held devices are getting faster and more powerful and people most people are using them to make research decisions online before they purchase goods and services.
Every business needs to step up to the challenge and adjust to ever-changing tech. Consumers are becoming savvier and are using technology to find their perfect purchase.
Businesses need to be visible and they also need to evolve by developing apps to support their trade, service or goods. If you are not visible or appealing, then you have lost a ton of leads.
The same issue poses another challenge in that business owners must become smart, they must use business insights to see how their business is performing, where there is waste, where there opportunities for growth.
At Dexterous, we embrace technology and incorporate Business Insights Reporting into our accounting functions to help you make smarter decisions.
Business insights reporting gives you big data sorting through gender, age, time of purchase, and more to give you a complete profile customer patterns and how they engage with your business.
You can also harness the use of technology to free yourself from burdensome tasks such as bookkeeping, accounting functions, collections and invoicing so you can devote more time to learning to make your business grow.
Cash flow and late payments
Late payments and how it affects your cash flow is a critical factor in how a business can perform, or cannot perform, in today’s fast-paced competitive market.
Poor or negative cash flow can cause even profitable businesses to go bust. You should always establish how much cash your business needs to be able to trade normally for the next 30 days.
You should also stress test and check the reliability of your debtors and follow up, or get a third party collector service to chase up on outstanding debts.
Cloud accounting can also help you forecast your cashflow needs and find ways to discover it. Dexterous Group can help you manage your business’ cash flow to ensure that you are never short on a rainy day.
There are other positives. The government and big businesses have started a push to improve payment times for small businesses, including:
- The Australian Business Council’s voluntary 30-day payment to suppliers code
- ASBFEO inquiry into payment times with name and shame review for government departments
- Federal Government to follow the State government’s pledge to pay small business suppliers within 7 days.
Getting past the red tape
2019 is going to be the year where digital connectivity for small businesses changes from being an asset to a ‘must have’.
In 2019, the Single Touch Payroll system became mandatory for businesses with more than 20 employees. It is expected that the government will soon announce a decision to extend the system to smaller businesses.
Another challenge which will present itself is the launch of two-step authentication (2SA) for Australian businesses. This involves a two-step verification of interactions between businesses and their clients, whether they are logging into their systems or offering transactions through apps or on the internet.
While these measures are all positive, Xero reports that small to medium-sized business owners spend up to 11 hours per week on compliance alone. The amount spent on compliance by big business is exponentially higher due to economies of scale, salaries and in house teams.
This does give small businesses an edge if they outsource their compliance activities to third parties. Fixed scalable packages can offer great value for money.