Expand your horizons

With natural disasters and nuclear crises grabbing all the media space, there is a tendency for small business to want to save cash, cut back growth and consolidate existing markets. This is a formula for stagnation and an over reaction to the offshore winds of fortune.

There has not been a better time to do the reverse and head for the lending desk of your favourite venture capital supplier. Believe it or not the green eye shadows are looking for good investments and prospects for sound business expansion. There is a lot of cash that is sitting on the sidelines for acquisitions and a backlog of IPOs that are interested in opportunities for business exits and productivity improvements.

The retail market has been particularly affected by the combination of climate change impacts on consumer sentiment and the talk of “great big new taxes” as customers pay down their debt, put aside the extra cup of coffee and spends more time at home waiting for the next disaster. This is all creating good prospects for the coming year for smart companies that extend their franchise, create effective customer relationship management systems and spend a little more on advertising to create new customer bases.

Mathew Corryn, the CBA executive General Manager for local business banking says, “Once consumer sentiment starts to change, we could see a fairly rapid pick-up. We earlier saw a lot of overdrafts used for short-term working capital but now people are looking longer term if they borrow”.

In this context it is interesting to note that Gary Morgan advises that consumer confidence has continued to improve (up 3.3pts to 118.8) as Australians gained confidence about their personal financial situation and prospects for the Australian economy over the next five years. Now 30% (up 3%) of Australians say they’re financially better off than this time last year and 40% (up 3%) expect Australia to have ‘good times economically’ over the next five years.

Chris Caton, Chief Economist for BT Financial Group says that with the economy at full employment and one sector expected to grow very strongly, there is probably another interest rate rise coming in the second half of the year. As the RBA is now unlikely to create business uncertainty by raising rate this financial year, we continue to be optimistic about SME prospects.

The next six months will see a surge of opportunity seeking entrepreneurs approaching associates and small and medium business lenders for capital to open new ventures that are innovative, creative and above all highly efficient.

Business advisors are being approached to recommend ways to make the most of a stable domestic economy and export opportunities. Higher input costs and the tight labour market make it a time critical decision to build the business investment rather than just pay down debt.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.