There are certainly a lot of challenges for 2015, including:
Digital Disruption – Two years ago, Deloitte Chartered Accountants produced a report, “Digital disruption – short-fuse, big bang?” This report predicted that six different industry groups, comprising:
- Retail;
- Arts and recreation;
- ICT and media;
- Finance;
- Business and professional service; and
- Real estate
would encounter 24% to 43% of revenue becoming “disrupted” over time.
“Disruption” doesn’t mean the revenue is gone. However, there will need to be new strategies, developed by the affected industry, on how to respond to changing market conditions.
Australian Economy – Last week, the Reserve Bank of Australia lowered the official interest rate to 2.25%, the lowest for many years. This is not a decision to assist borrowers. Instead, this is a reflection of the poor performance of the Australian economy.
Turbulence in Politics – Continuous “disputes” in the Australian government doesn’t help business confidence. The recent State election results in Queensland and Victoria highlight that electorates are becoming tougher to please. The uncertainty that is caused by the turbulence adds pressure to running businesses.
Chinese Market – Whilst the lower Australian dollar is welcome news for exporters to China, continuing uncertainty relative to the growth within the Chinese market, will cause ongoing concerns in Australia.
Currency Movements – The currency movements have been very good for exporters. However, this means higher prices for businesses that require imports for their business operations.
The economic forecasts for 2015 focus around the following:
- GDP growth – 3.2%
- Activity growth – 1.8% (this is down due to a lack of confidence and a reduction in resource prices, mainly because of less activity in China)
- CPI growth – approximately 2.7% (slipping back a little)
- Budget deficit – $35billion (not the decrease the government was planning)
- Interest rates will probably remain at around 2.25% for some time (a great opportunity to lock in these rates)
- Exchange rates – will probably settle at approximately 77cents US to an Australian dollar
Business operators need to be preparing their own forecasts for 2015 for revenue and costs, dissected into individual cost control centres, if possible, to gauge potential performance for this year.
Cashflow management continues to be very important. This includes the monitoring of debtors, work in progress, stock and capital expenditure.
If you would like to talk to us relative to preparing budgets and cashflow forecasts and preparing or updating your business plan for 2015, please don’t hesitate to contact us.
