Australian Economy 2020 Outlook

Driving growth

Interest rates look set to go lower, but will it be enough to break the consumer strike? How do regulators kick-start the country's stubbornly sluggish economy? A leading economist says the answer could be for the Government to get out of the way of small business in 2020. BetaShares's chief economist David Bassanese thinks the Government should focus more on supporting the nation's small businesses, rather than throwing money at households in the hope they will spend it. Despite record low interest rates and more than $5 billion in tax offsets pumped back to low and middle-income earners late last year, household spending has remained stubbornly low. "When you give money to households, you rely on them spending and not saving it. But households are telling us they don't want to do that. They're saving the tax cuts and the interest rate cuts,"Mr Bassanese says, pointing to high levels of household debt and a focus on paying down borrowings. "A far better solution, I think, is to have more productivity-enhancing reforms. Reduce regulation and red tape. "The compliance burden for taxes in Australia is very high by global standards. More pro-competition changes to the economy and an improved tax system would give businesses more of a competitive edge." The Business Council of Australia is running a campaign asking business owners to share personal stories of how excessive red tape or regulation has held their business back. The lobby group claims excessive regulation - in areas such as payroll tax, licensing, trading hours and approvals - costs the economy $176 million each year. Echoing these sentiments, Mr Bassanese says relieving some of the burden on small business could help drive employment growth, boosting wages and getting the economy out of a seemingly intractable catch-22 in 2020. "Consumer spending can't really fire until wages pick up, and wages can't pick up until the economy is firing. So, you need a circuit breaker to do that - something that can stimulate growth and push the employment rate up rather than down," he says. At present the unemployment rate is 5.2 per cent and expected to drift higher this year, while the RBA estimates it needs to fall to around 4.5 per cent to fire wage growth. "The underlying weakness with the economy is household income growth. That's been a feature for several years and it's finally caught up with households and they've decided to cut back their spending," Mr Bassanese says. Where wage growth will come from is the big question. Australia has had nearly three decades of recession-free growth driven by a mining boom and a property boom. "We don't have a replacement for either of those at the moment," he says. While economists don't believe Australia's enviable record is in danger, the grinding pace of growth is causing some to question whether more levers should be pulled to kick the economy up a gear in 2020. Next month the Reserve Bank is expected to deliver another interest rate cut, taking the cash rate to an unprecedented low of 0.5 per cent, with another cut mooted for May to 0.25 per cent. After that, RBA governor Philip Lowe has said quantitative easing could be an option to buy up bonds and push interest rates down. But economists are concerned monetary policy alone cannot fire economic growth, with many calling for fiscal stimulus from the Federal Government, urging tax cuts be brought forward along with infrastructure projects. Like his peers, Mr Bassanese is hopeful that - despite a laser focus on delivering a surplus - the Government may come to the party. One possibility is that weakness in the economy, combined with additional spending on the bushfire crisis, could undermine predictions for a slim surplus this year, leaving the door open for a spending boost. "If they can't deliver a surplus, they may turn a negative into a positive by undertaking more fiscal stimulus," he says. Another possible boost to the economy in 2020 may come from a significant fall in the Australian dollar as global growth recovers and US-China tensions ease. "I'm calling the Aussie dollar to fall to 62 cents next year," Mr Bassanese says. Others have pegged it around 65-70. A low dollar would be good news for exporters, along with the country's tourism sector and retailers located in tourism hot spots. Winners and losers With more of the same trends continuing in 2020 - low wages growth, low inflation, and unemployment drifting higher - business conditions will remain fairly stable. Retailing and businesses that rely on discretionary spending - restaurants and cinemas - will continue to feel the pinch. "The housing construction area is going through a downturn now which is likely to last through much of 2020." Mr Bassanese says. On the flip side, commercial and infrastructure construction looks set to remain strong and mining investment is beginning to pick up, which will benefit businesses servicing the mining industry. International Tourism could also be a bright spot in 2020, although the Australian Tourism Council has flagged concerns about how global media coverage of the bushfire crisis could impact the country's image overseas. Want Regular update signup for our Quarterly Newsletters

Data Security - Don't call us. We'll call you.

Data Security - Don't call us. We'll call you.

How the data explosion can help you find customers before they even know they're looking for you. Australia has reached peak smartphone, according to a recent survey that reports more than 90 per cent of adults have one. And what's more, we can't leave them alone - with many of us checking our screens more than 50 times a day. This device addiction, coupled with staggering amounts of personal information gathered by titans such as Facebook and Google, has created a wave of data business owners can ride all the way to the bank, marketing experts say. Ross Meadows, managing director of digital marketing agency Media Booth, says new techniques leveraging this data to micro-target consumers are incredibly powerful and cost effective. But many SME owners simply aren't aware of them. "When we go to a business, about 80 per cent of our job is actually educating them about what is possible," Mr Meadows says. Data surpassed oil as the world's most valuable resource in 2017, with good reason. "It's stupidly powerful and if businesses aren't using it, they're crazy," Mr Meadows says. One of the fastest-growing trends in data is using location information to target consumers through either geo-fencing or geo-targeting. These take advantage of the fact most phones not only log users' online profile and search habits (through Facebook and Google), but record their home address and track their physical movements through GPS or phone towers. Combining this data allows advertisers to target the right people (by age, gender and interests) at the right time (when they may be actively searching for your product) and in the right location (by where they live or have visited). While it sounds complex, Mr Meadows says it is actually an incredibly cost-effective way for SMEs to advertise, because they're only paying to reach an ideal demographic, rather than thousands of people who may not be interested. It's a laser focus, compared to an old-fashioned scatter gun approach. Used cleverly, these tools can help SMEs compete against larger companies with big budgets and better brand awareness. So, what is the difference between geo-fencing and geo-targeting and how can SMEs use them effectively? Geo-targeting This is the more personalised of the two tools and is used to find a 'look-alike audience' - that is, consumers who fit the same demographic profile of a business's existing customer base. (To gather this data businesses need to ensure they are using code such as Facebook pixel on their website.) The starting point is a location. Geo-targeting leverages the IP (Internet Protocol) address of phones and computers - so it targets people where they live. After selecting focus suburbs, the audience is refined according to data points such as age, gender, relationship status, interests and income (depending on how much data they have shared online), then ads are delivered via Facebook or Google to this select audience. This approach gets an extra boost from the fact people often find ads targeted to their interests (for example books, or home renovation) useful, rather than annoying. A recent Media Booth campaign aimed to find a look-alike audience to promote a new range of reading glasses for a large Sydney firm, Mr Meadows says. The company drilled down to a highly targeted demographic of potential customers and smashed the goal. "The campaign was supposed to run for two weeks but it got turned off after two days because they sold out," he says. It's important to note marketers never see an individual phone user's identity, with data profiles anonymised by providers. Geo-fencing By contrast, geo-fencing focuses purely on location - so where a consumer is, rather than who they are. It's a sphere where the most ingenious marketing is taking place. To geo-fence a zone, business owners draw a virtual ring around target areas on a digital map and push ads out to devices detected entering or leaving that defined area. The technique uses real-time GPS tracking data - often running in apps such as Google Maps - that have become so accurate, the latest iterations can pinpoint a user to within 30cm of their location. In the past, this technique has been used by small retail businesses, particularly cafes, to lasso local foot traffic. However, the increased accuracy of location data has spawned some more exciting guerilla marketing trends. In 2018, digital marketing agency Ansible launched the Dealer Stealer campaign for Hyundai which involved geo-fencing the address of rival car dealerships and pushing Hyundai ads to users' phones. It's the digital equivalent of running into a competitor's shop and handing out flyers. Geo-fencing is particularly effective because research indicates 82 per cent of consumers search products in-store before making a purchase - providing the perfect opportunity for your ad to be served. Mr Meadows says he also geo-fences trade shows to hit specific target markets. "I've got one coming up next month and I will geo-fence the entire thing because it's a small to medium business event. I will put a circle around the event and pump out ads," he says. At a recent event, Mr Meadows said attendance was 45,000 and data indicated his ads were pushed out to 38,000 users. "That's only 7,000 people who didn't actually see it. That's staggering numbers,'' he says. It's a cost-effective way to market to consumers who have already signalled an interest in your product or service, and the potential is boundless. Lawyers could geo-fence police stations, physiotherapists could focus on gyms, and pet shops or vets could target dog parks. Its use is limited, at present, only by imagination and the growing accuracy and scope of data.

Healthy, Wealthy and Wise for Small Business

Healthy, wealthy and business wise

Taking care of business begins with taking care of yourself. New Year is a time people traditionally focus on health, but a new campaign aims to help business owners recognise their personal health and business health are inextricably linked. The My Business Health portal, launched in December, is a collaboration between small business and mental health advocates to gather financial and wellbeing advice for SMEs in one place. The portal is hosted on the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) website. Ombudsman Kate Carnell says the portal addresses concerns common to SME owners, from cash flow to HR, alongside prevalent health issues such as anxiety and depression, because one often triggers the other. "Many small and family business owners may not be aware that the very worries that are keeping them up at night - be it cash flow, staff-related concerns or paying suppliers - can actually cause high levels of psychological distress. That can have a serious impact on both mental and physical health," she says. A recent MYOB report revealed 56 per cent of small business owners feel running their own business has caused them anxiety or depression, with most saying this is largely a result of worries about financials and cash flow. Ms Carnell says the launch was particularly timely, with the ongoing bush fire crisis impacting many regional small business owners. "In bushfire-ravaged communities, small businesses are under enormous pressure," Ms Carnell says. "Some of these small and family businesses have lost everything and for the ones who still have a premises to operate from, their usual summer trade has been heavily impacted. "Small business owners will be focused on getting back on their feet over coming months but I would encourage them to take a moment to consider their mental health and access the free resources on the My Business Health web portal to help them through this difficult time." Finding an appropriate work-life balance is often a major issue for small business owners, Ms Carnell says. Research indicates working more than 39 hours a week can have a significant impact on mental health. Meanwhile, more than one quarter of small business owners report clocking up in excess of 50 hours a week. Making time for personal relationships and spending time away from work can improve an SME owner's perspective on their business. "It is really, really important to keep some focus, some balance between your personal life and your business life. That involves taking a step back and thinking strategically about where you're going and what is the most appropriate way to go," Ms Carnell says. The web portal - prepared with input from Beyond Blue, EveryMind and small business owners - aims to help business owners get an overview of where they are at professionally and personally, with links to some fast assessment tools. An app that benchmarks a business's financial performance against others in the same industry. A five-minute survey that assesses personal wellbeing and a two-minute business stress test. The My Business Health portal allows SME owners to access practical information and links to a range of business and health resources under four categories. Cash Flow: Dealing with tax and debts, grow your business, financial fitness test, and accounting, budgets and cash flow. People Power: Staff solutions, business relationships, friends and family, build your networks, and health and safety. Business Toolbox: Take a business stress survey, get business advice from an expert, planning and registrations, marketing your products and services, and work-life balance. Recharge and Reach Out: Take a five-minute wellbeing check-up, reach out to a support service, listen to podcasts, get help, and plan for a mentally healthier business. The project strikes a chord for Ms Carnell, deputy chair of Beyond Blue and a former small business owner. "The tough thing about small business is, it's personal and it's pretty all encompassing," she says. "What I saw as a small business owner and a pharmacist was just how often mental health issues impacted on small business." SME owners have a habit of putting their own health last, to the detriment of their business. "Mental health issues happen in all walks of life but where the impact is even worse is in the small business owners' space. It can take down the whole business." she says. The My Business Health portal was established with support from a $3.7 million Small Business Mental Health funding package announced by the Federal Government in 2018 to address the needs of the nation's 2.2 million small business owners. As part of this ongoing program, Beyond Blue has also launched a guide for family, friends and financial advisors of small business owners to help support owners in distress. Often, a fellow business owner may be the first to notice an associate is struggling. The guide contains practical advice on how to broach the sometimes-tricky subject of mental health, along with what to do if their approach is rebuffed.

Finding My Business Niche

Finding Your Niche

An international business survey reveals the habits of highly-effective people. How do you rate?

The world seems obsessed with productivity at the moment. It may reflect the fact people have never had to contend with so many distractions. Even before they leave home, many workers feel overwhelmed: emails, Slack messages, WhatsApp, meeting reminders and voicemails. Phones and devices steadily ping with more throughout the day. Then there's the siren song of social media - Instagram, Facebook and Twitter - all designed to incorporate addiction loops to keep you coming back.

So how do people stay focussed and on task in an age of information overload? In an attempt to answer that question, Harvard Business Review surveyed nearly 20,000 readers around the world in 2019.

The three main findings were:

productivity is not linked to longer working hours (in fact, previous researchers have noted productivity declines sharply past 48 hours worked each week); older, more senior professionals reported higher levels of productivity (which may be linked to learning through experience that the key is working smarter, not longer); gender differences were not significant, although women reported higher focus on preparation-related tasks (preparing efficient meeting agendas and reviewing the next day's calendar to look for possible issues); while men had good systems for coping with high volumes of communications.

Researchers at Harvard Business Review scraped data from survey responses to identify routines most commonly referenced by productive people. From this, they compiled a list of effective work habits based around three key areas: maintaining clear objectives; managing information overload; and making communications efficient and responsive.

This is their advice to workers looking to boost their productivity.

Preparation: Revise your upcoming day's schedule the night before to identify priority tasks and note objectives for each appointment; Send detailed meeting agendas beforehand; Before writing anything lengthy, sketch an outline with a logical structure and word count to keep you focussed on moving forward;

Managing distraction Make a conscious effort to limit checking your phone screen to once an hour rather than every few minutes; Delegate tasks, when feasible, that are not key to your main objective; Leave gaps in your schedule to deal with unexpected problems; Scan messages for sender and subject and tackle by priority rather than chronology.

Communicating effectively Limit meetings to a maximum of 90 minutes, but the shorter the better. End each meeting by listing outcomes and next steps; Speakers should present with dot points rather than a prepared script; Respond immediately to communications from those important to you; Focus on learning from mistakes rather than allocating blame.

The big question is: can time spent reading about productivity be productive? Incorporate some of these goal-focussed habits into your day and it can be. Here are a few more to get you on track.

Retrain your brain Distraction can become a habit; a way of avoiding difficult tasks. But the more people give in to a quick email check or Facebook scroll, the shorter their attention span becomes. Another Harvard Business Review piece ( How to overcome your email distraction habit ) looks at how people can retrain their brains to expand their attention spans and become more productive.

Focus on what matters Italian philosopher and economist Vilfredo Pareto came up with the 80/20 principle back in the 1800s and it still influences the business world today. His observation was that 20 per cent of effort is often responsible for 80 per cent of results. His deceptively simple method to boost productivity was to work out what that 20 per cent is and focus on it. Read more on how to apply Pareto's Principle here.

Plan wisely Don't work longer, work smarter. Studies indicate productivity declines rapidly once workers clock up more than 48 hours in a week. Anything over 39 can have an impact on mental health. Be reasonable in what you expect to achieve each day. Try to organise your day so the most challenging tasks are in the morning when you are fresh and focussed. Schedule time throughout the day to check and respond to emails in blocks, rather than checking them compulsively. Like to talk to someone who can help contact Awesome for a Free Business Strategy Review

Please note we do not provide tax, legal or accounting advice. This article has been written for general informational purposes only and is not intended to provide, and should not be relied on, for tax, legal or accounting advice. We encourage you to consult your own tax, legal and accounting advisers before engaging in any transaction.

Cutting the Gap - How to maximize cash flow

Mind the Gap

Cutting the lag between money out and money in can save you thousands. Are you doing all you can to loosen the cash squeeze?

"You need to spend money to make money" the saying goes, but the real key to business success is cutting the gap in between.

Small businesses can often find themselves caught out by the delay between outlaying on suppliers and receiving payment from customers. The longer this cycle, the more cash a business needs to cover running expenses while money is tied up elsewhere.

But there's a lot that SME owners can do to cut the lag, with new technology making it easier to run a tight ship.

Invoice immediately Bill clients when work is completed, or your product or service is delivered, not at the end of the week, fortnight or month. It's a false economy to think going through invoices in batches is more efficient.

When a business takes a week or more to send an invoice, clients may presume they are in no hurry to get paid. Conversely, online payment company Due reports invoices issued the same day a job is completed are 1.5 times more likely to be paid on time.

Discount prompt payment Offer a discount to clients who choose to pay early, say within 14 days rather than 30. Or if you have shorter terms, make sure clients don't drift past the due day by offering on-time discounts. Follow-up with an automated text or email through systems such as Xero or MYOB when the discount period is about to lapse.

Make it easy Studies indicate procrastination, not lack of funds, is the reason many invoices are paid late. Businesses can avoid getting relegated to the ''I'll do this later'' pile by making their invoices as simple to understand as possible. That means no surprise costs a customer may need to query.

E-invoicing should be standard practice as it's cheaper and faster. Include as many payment options as possible, all with click-through links. Anything that requires a debtor to work harder - cutting and pasting account numbers, for example - risks them abandoning a task until later.

Cut stock Running a tight inventory ship can be a delicate balance. Slow-moving stock can be a killer but you need to have enough to hand to be responsive and reliable.

This is where software can make a dramatic difference to track and identify slow-moving products and changing sales cycles. There is a dizzying array of inventory management software. If you're unsure where to start, ask your accountant or talk to other SME owners at business networking events.

Dig into data Big data is becoming more and more accessible to small business owners. They've always had the information, the problem was they didn't have the time, skills or software, to analyse it. New tools are making it easier for SMEs to drill down into existing information.

The cost of paying an accountant or digital marketing expert to help set up systems to analyse trading data can more than pay for itself. For example, sales records can identify high-margin, high volume products or services - your profit drivers. Once a business has this, delving further into customer metrics can identify what types of person or business is the main buyer, allowing a business to pivot your marketing to focus on this client demographic. Facebook and Google Analytics are good starting points.

Consider shorter payment terms The past few years has seen a huge push by the Australian Small Business and Family Enterprise Ombudsman, along with the Federal Government and Business Council of Australia to highlight the hardship that long payment terms place on small businesses.

SMEs should consider leveraging goodwill to shorten payment terms. It is also worth checking whether clients have existing small business policies. A recent review found SMEs were unaware many large companies had special payment policies in place to fast-track payments to SME suppliers1.

Chase debt early Set a process for chasing overdue accounts promptly. Systems such as Xero can be set up to send reminder emails, for example at three days overdue or seven days overdue. After two weeks, experts recommend phoning to get a commitment to pay. Business Victoria has a range of escalating debt recovery templates from ''friendly reminder'' to ''final demand''.

Stretch your terms On the flipside, monitor your outgoings and make sure you aren't paying your invoices too promptly, sending money out the door before you need. Automated payment systems can schedule payments to maximise cash flow.

Focus on finance Review the finance you are using. If you run a line of credit, review it regularly to make sure the limits and terms are competitive and suitable for your business. Consider invoice finance if you need liquidity fast. Like to apply for a business loan - Contact Awesome Lending Solutions

1 Review of payment terms, times and practices, Australian Small Business and Family Enterprise Ombudsman, pp 8, March 2019.

Please note we do not provide tax, legal or accounting advice. This article has been written for general informational purposes only and is not intended to provide, and should not be relied on, for tax, legal or accounting advice. We encourage you to consult your own tax, legal and accounting advisers before engaging in any transaction.