Now is a great time to start-up: Economist

Now is a good time to start a business, despite the major structural changes needed in the Australian economy, according to a leading economist.

Dr Frank Gelber, chief economist at BIS Shrapnel, says that start-ups, especially in the business-to-business, property and software sectors, should prosper as conditions improve over the course of the next year.

“It depends on the industry, but overall a time of turmoil is a good time to launch a business,” says Gelber.

“There is a great big middle ground that hasn’t been impacted by the high dollar or the GFC. If you do your groundwork now, once we get past all the worries over sovereign risk and US debt, things will look very good for start-ups.”

There’s even hope for retailers, according to Gelber, despite comments this week by retail supremo Gerry Harvey that stores should prepare for the “worst Christmas of their lives.”

“Consumers spent big in the last decade, so retailers are now hooked on growth,” he says. “Retailers will still make money, there are high margins in retail, it’s just that consumers aren’t ‘buy buy buy’ anymore. They are saving, although that attitude will slowly change.”

Despite the upbeat assessment for start-ups, Gelber says that certain businesses, such as exporters, are struggling.

Perhaps more significantly, Gelber says in BIS Shrapnel’s Long Term Forecast 2011-2026 that the real concerns are the structural changes caused by the resources boom, along with the strength of the dollar.

“We need to prepare the economy for the end of the boom,” he says.

“We can’t expect any significant protection or government intervention in the operation of the market.”

“It’s all very well to point to the need for productivity, but it’s not that easy. People have been decrying the weakness of productivity growth this decade. They talk about it as if it comes automatically. It doesn’t. We have to earn it.”