The Reserve Bank of Australia (RBA) forecast suggests the domestic economy will remain stable into 2016 and low interest rates are set to continue.  This is likely to create some growth in consumption, which is good news for small to medium-sized enterprises (SMEs). However, continued competition in most industries means savvy business owners will need to remain focused to achieve growth in 2016.
RSM Australia has identified a number of key areas that SMEs should focus on in 2016:
- Review the products and services you sell and tailor your offering to appeal to changing market demands and needs. What’s working – keep doing that, what’s not working – stop doing that and what new products and services could you offer?
- Review pricing structures to ensure competitiveness and profitability. Put formal procedures in place to monitor and proactively respond to competitor pricing changes.
- Review stock levels to make sure you can satisfy customer demand for profitable product and service lines, and identify slow-moving stock that can be liquidated quickly to generate cash.
- Review sales, marketing and promotion plans and make sure they are optimised to help achieve the best results, not only during the holiday season but well into the new year. Ensure all staff are aware of the targets for each week and be proactive in addressing shortfalls.
- Review staffing plans and confirm acceptance of the rosters by all staff. For non-retail businesses, annual leave plans need to be balanced and finalised as early as possible to ensure the business continues to operate effectively.
- Review fraud and theft protection systems and ensure all staff are reminded of their responsibility to be vigilant as customer traffic increases and the pressures of Christmas expectations can motivate increased customer and staff theft.
- Review debtor lists and actively chase all overdue accounts. Any amount not collected by December 23 is unlikely to be collected until February or later.
- Review the use of finance products for effectiveness. Overdrafts, premium funding, lease facilities and cash flow funding products can all be excellent tools to help match a business’s cash supply with planned outlays, and may be especially useful in managing cash flow throughout the holiday season.
- Prepare for future trends. New and emerging technology helps smaller businesses streamline processes and transform sales processes from passive to proactive. SME owners who research the solutions available and choose the right one for their business needs will be ahead of the curve. Social and mobile technologies as well as cloud and big data are key areas for investment. Additionally, some technologies that were previously only available to large enterprises are now becoming more cost-effective, making them attractive to SMEs. These include cloud-based applications such as enterprise resource planning (ERP), customer relationship management (CRM), and even business intelligence tools. Such tools can rapidly improve operational decisions, making businesses more successful.
- Complete a business plan. RSM Australia’s 2015 thinkBIG survey revealed that 64 per cent of businesses surveyed in 2014 believed their businesses would grow in the next 12 months. The 2015 survey revealed that only 49 per cent of businesses actually achieved revenue growth. The important differentiator between companies that grew and those that didn’t was whether or not they completed a business plan. Of those companies that completed a business plan, 56 per cent achieved growth compared with 36 per cent of those that did not complete a business plan. In an uncertain economic climate, smaller businesses are often the ones to suffer first. Those that have a strong, well-considered business plan in place will find themselves more able to weather the storm.
For more information about this article, please contact your nearest RSM Office