The year 2016 was mostly positive for the Australian economy and its commercial sector. Since 2012, investors, industrialists and company owners across the territories have been enjoying the spoils of an extended period of prosperity fuelled by mining, gambling, tourism, and trade with emerging Asian nations.
It is probably safe to assume that 2017 will be another good year for major Australian businesses, at least for those that operate in the mining, casino, tourism, financial, and retail sectors. What will this mean for small business owners? Will they be able to prosper along with the big players, ride their coattails, struggle to keep up, or succumb to unreasonable competition?
Market analysts have good reasons to feel optimistic about the 2017 outlook for the small business community in Australia, but it is important to understand why this is the case and what could possibly work against this forecast.
The Global Financial Markets
The Australian Securities Exchange closed 2016 with a year-to-date increase of more than 300 points for its benchmark ASX 100 index, and early January trading suggested that this bullish trade is bound to continue. Over on Wall Street, the Dow Jones Industrial Average closed 2016 above the historic 10,000 points mark, and investors hoped to add even more value during the early days of the surprising Donald Trump presidency.
Economists from around the world are expecting to see Wall Street react positively to the prospect of a Trump administration, at least for the first quarter, and this will be mostly through speculation. On the night of the surreal American election, global markets tumbled as the Trump campaign accumulated votes against Hillary Clinton, who was virtually guaranteed to succeed President Barack Obama. The market collapse did not last long; once it became obvious that Trump had won against all odds, the markets rebounded very strongly.
Not long after election day in America, the United States Federal Reserve Bank issued a warning to institutional investors about volatility and overly promoting the markets through buying sprees: such actions would result in policy action by means of higher interest rates and other measures to cool down the markets.
The Trump administration will ostensibly present an economic stimulus plan that might result in bullish speculation, market volatility and inflation. The American Fed is prepared to put these fires out with interest rate increases and controls to keep the U.S. dollar from being overpriced. The Reserve Bank of Australia will be closely watching Wall Street and the U.S. Fed for these same signs, which may prompt adjustment of the cash rate as well as monetary policy to keep the Australian dollar from falling too far below the American greenback.
More Domestic Loans Available
In early January, an article published by the Sydney Morning Herald explained that major lenders such as ANZ Bank were in the process of reducing their lending operations in emerging Asian economies that are cooling down in terms of economic growth.
As a result of winding down on loans made in countries such as China, Indonesia and Vietnam. The repatriated funds will be integrated into domestic loan portfolios for commercial enterprises; this is good news for Australian small business owners who are looking to borrow funds for their operations in 2017.
A Call for Banking and Finance Reform
The first major economics article published by The Australian in 2017 gathered the opinions of major banking executives who believe finance reform should be enacted in the New Year to ensure that the Commonwealth can stay competitive through the end of the decade.
Former Treasury official Ken Henry, who is now chairman of National Australia Bank, stated that the wave of prosperity should not be limited to mining conglomerates and mega casino developers. He believes that small business owners should have an easier time growing their companies instead of having to navigate bureaucratic labyrinths.
More Support and Visibility in 2017
In Queensland, the Honourable Minister for Small Business Leeanne Enoch plans to once again organise Small Business Week in 2017.
According to statistics compiled by the Ministry, more than 400,000 small businesses fuel the Queensland economy with more than $100 million in revenue per year. The state's Office of Small Business will announce support programs for entrepreneurs and owners of small companies throughout during this year's weeklong celebration. Registrations open in January: (07) 3719 7270.
Technology: The Key to Australian Small Business
Compared to Europe, Asia and the Americas, Australia has been a bit shy in relation to technology adoption by small business owners. Things started to improve significantly in 2016 when tech startup Flirtey developed a drone that actually made the world's first legal and regulated pizza delivery in New Zealand. Flirtey is based in Sydney, and it was able to make a drone delivery before American giants Amazon and Google.
In 2017, Australian entrepreneurs should draw inspiration from companies such as Flirtey and use technology to their maximum advantage, particularly in lucrative segments such as e-commerce. To this extent, one opportunity that small businesses and micro companies could look into is drop shipping, which opens domestic and international markets for entrepreneurs who have a knack for retail. China is a major aspect of the supply chain in the drop shipping sector, and Australia happens to have a close trading relationship with the Asian giant.
What Australian small business owners need to keep in mind for 2017 is that technology is not something that they can simply adopt and allow it to run its course. In the case of drop shipping, for example, success comes from careful online marketing, analysis of consumer trends, and efficient customer service; all this can be accomplished through online platforms, but it takes perseverance.
A Message from the Prime Minister
In Queensland, the final opinion piece published in 2016 by The Sunday Mail was penned by Prime Minister Malcolm Turnbull, who delivered an inspiring message for his electorate in 2017.
It so happened that the Prime Minister specifically mentioned small business owners along with doctors and farmers whom he met between Christmas and New Year's Eve. He also mentioned the foiled terror plots and the economic uncertainty surmounted in 2016, and he called on the electorate to make the New Year a winning period for all.
In the end, the economic climate of 2017 could be very adequate for the Australian small business community, but it will not be as easy as it has been for the major mining and casino concerns. What company owners need to keep in mind is that the prosperity of the last few years will increasingly transform into a consumer-based economy, which means that there will be a greater need for goods, services and entertainment.
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