Why SMEs must be trend hunters

It’s fascinating how the political rhetoric around the Australian economy has changed in the space of a few months.

It’s not that long since Treasurer Wayne Swan made the “patchwork economy” the centrepiece of his Budget speech and talked about why the Government needed to spread the wealth into the postcodes of Australia that had missed out on the benefits of the resources boom.

Since the Budget was handed down in early May, the patchwork economy has severely frayed. In fact, it’s now looking decidedly moth eaten, with job losses – such as those we’ve seen from Qantas, BlueScope Steel, OneSteel and Westpac – falling through the holes.

The phrase “patchwork economy” has now been replaced with “structural change”, with Industry Minister Kim Carr leading the charge to paint the woes created by the soaring Australian dollar and poor global growth as “the biggest structural change” in living memory.

I think the term “structural change” has been chosen very deliberately, because it does suggest that this is the sort of thing even a government is powerless to stop.

We should expect to hear a lot more of this phrase in the coming weeks and months.

The question for SME entrepreneurs right now is: How do you manage your business through this sort of structural change?

But there is a more important question to consider: How do you get in front of structural changes to ensure you don’t become like BlueScope or Qantas, forced to slash jobs and restructure to stay alive?

The key is spotting trends and acting on them, whether they be economic trends (such as the rise of Australia’s commodities sector and the way it would drag the dollar higher) or sectoral trends (which differ in each industry).

Smaller businesses have a distinct advantage here. They can be nimble and flexible. They can experiment by adding products or services to their range in a small, controlled way.

And they can get the jump in larger businesses have consistently proven are slow to react to clear trends.

For example, BlueScope’s decision not to replicate the strategy of Australian rival OneSteel and buy coal and iron ore mines to feed its steel business was a bad misreading of where the commodities market was going.

Similarly, the fact that many large retailers are only now launching their eCommerce sites – RCG Corporation and Super Retail Group are two that have only just announced their intentions to build eCommerce sites in recent days – highlights the opportunity for smart SMEs to grab a key foothold in a space before the big guys have even woken up.

Clearly, spotting and reading trends is not easy and it’s far from an exact science. But this is as much about an attitude as anything else.

Are you an entrepreneur that has a set way of doing things and cocoons themselves from the wider economy?

Or are you always trying to read the trends in your economy and industry to spot opportunities and challenges and then acting on these trends?