Small businesses represent more than 96 percent of all businesses in Western Australia – making a contribution of almost $40 billion per year and as global growth has picked up, so has demand for WA’s commodities.
It is expected that export growth will continue to be the state’s most important economic engine over the next five years.
For small businesses involved in overseas trading, this could mean higher demand for your products, increased profits, diversified risks, lower production costs, an increased product lifespan and an exposure to new and innovative technologies and production processes.
A wider geographical spread would not only lessen the impact from local downturns or disasters but also create a base for increased revenues and therefore lower production costs as you produce higher quantities. If not online, consider developing a website and selling your products via the web to reach a broader customer base.
Confidence is translating well into employment growth. The number of people employed in WA has increased with the unemployment rate falling from 6.8% in March (an all-time high in 16 years), to 6.1% in July 2018.
As a small business you should be asking yourself the question, ‘How will this low unemployment affect my recruitment strategy?’ While employment growth is good news for people searching for work, it may be bad news for small businesses seeking top talent.
In such conditions existing talent would come at a premium. On top of the increased cost, you would also experience a decreased availability of labor, as competition for high-level talent intensifies and employee demands in deepen. This may be a difficult hurdle for small businesses without deep pockets or impressive catalogues of benefits. In such cases, outsourcing may be the solution to your hiring woes.
While most indicators may give generally positive signs, don’t expect the good old days.
Business investment has remained weak and is unlikely to return to boom time highs. Domestic demand (growing by a modest 0.2%, 2017-18) is still weak with retail and property taking a beating.
In regards to small businesses, these are some of the most stressful economic conditions to be operating in. The low demand means customers spend less on your goods and services, delivering a hard hit on the businesses’ bottom line. Negative cash-flow issues, difficulties in repaying debts and stifled growth are but the tip of the iceberg of the problems that may be faced.
As a small business, consider ways to reduce your costs of production, either by reducing wastages during the production process or rethinking your staffing strategies.
Taxes are another area where small businesses could afford to save some money. A reputable & experienced tax agent, could potentially save you more than you would expect, contributing to keep your business afloat during turbulent times.
These are the risks: a significant downturn in Chinese growth would weigh heavily on WA; an escalating trade war could undermine exports earnings and an increase in interest rates could undermine already weak consumption within the state.
All said, business confidence hit a seven-year high in the March 2018 quarter, with 75 per cent of WA businesses expecting the economy to improve or stay the same in the short term. With $103 billion worth of resource projects are estimated to be in the pipeline in the mining sector, things may be looking up in terms of domestic demand business investment.