10 Jan How to shield your small business from a downturn
Knowing your figures and keeping a lid on costs can help your small business survive challenging times.
In March 2017, Australia took the record for the longest period of uninterrupted economic growth in the developed world. But while business owners have enjoyed 26 years of good times, an Australian property market crash or international political instability could see consumers slamming shut their wallets and purses. Certainly, business owners don’t seem to expect the country to keep defying economic gravity indefinitely. According to a 2016 Vero report, Australian small business owners ranked an economic downturn second on a list of most concerning business risks.
Here’s some practical ways to prepare for a worst-case scenario.
Never get complacent
Knowing exactly how you’re positioned is key to ensuring you’re not blindsided by events, says Acceler8 founder Tanya Titman. Titman is an experienced accountant and small business coach who helped her clients navigate the GFC turbulence at the end of last decade. She advises staying abreast of the relevant financial figures for your business. “If you’ve got to start cutting back, you need to be across the details of your monthly and annual expenditure so you can see exactly where you can afford to do so,” Titman says.
While it may not be the happiest mindset to maintain, Titman suggests business owners constantly assume the worst could happen. “Operate like you’re heading into a crisis all the time,” Titman advises. “It keeps your business thinking sharper and will motivate you to make difficult decisions rather than allowing issues to fester. Plus, if you are ever forced to embrace austerity, you’ll cope much better, practically and psychologically.”
Keep your rental options open
Rent is typically one of a small business’s biggest fixed expenses. Despite the tempting discounts on offer, business owners should think twice about committing to long-term leases. It’s always good to have the option of moving to smaller, cheaper premises if revenues decline. Also, there are a burgeoning number of well-appointed but cheap co-working spaces springing up across Australia, such as wework, Fishburners, Hub Australia and Gravity.