The global financial recession undoubtedly hit some parts of the world harder than others. Similarly, its effects are being felt to different extents around the Globe. While the United States’ economy is en route to recovery, but the pace of that recovery doesn’t seem to be picking up, China vacillates between stunted growth and more optimistic perspectives. Meanwhile, the land down-under is also facing its particular set of issues, which come with particular solutions. Recently, the Government announced it would fail to meet the self-imposed goal of a $1 billion budget surplus. It chose to implement several cost-cutting reforms aimed at saving money for the coming five years, much to the chagrin of various population segments, such as young parents, who found their second child government incentive slashed to $3,000. However, throughout this process of encouraging proactive economic development, Australia managed to maintain its top-wrung credit rating. Consumer confidence has finally increased to 100.6 and the property market is slowly but surely coming back on the right track. Not the same could be said of Australia’s retail sector, though.
Retail has been lagging down-under, as Aussies are becoming increasingly more cautious with their money. One possible solution to fixing the downsides of this conservative attitude came from Deloitte Private, whose representatives recently addressed a Parliamentary Committee. Deloitte advocated a refocus of investment into retail, which would take the industry’s attention away from increasing their share on the market, as well as from profit. If this might sound counter-intuitive at first, consider what they’re suggesting replaces them. According to the Deloitte report, forwarded to the Joint Committee on Corporations and Financial Services, businesses should dedicate more of their time on researching new products and services, implementing new business models and technologies, and better management of their supply chain.
By doing so, they would also implicitly educate the consumer as well. They would nurture a more trusting relationship with them, while also fostering the development of local economy. Such a business model seems naturally devised to favor small, up-and-coming ventures, such as start-ups and family businesses. This is the very same sector that stands to benefit most from trending information technology innovations, such as virtualization (eg, virtual offices), or short-term office rentals. A budding business, which is looking to cut overheads, can now rent serviced offices anywhere in Australia, giving their business a premium address with much less financial commitment. However, Deloitte explains, such improvements should not help business owners feel entitled to a larger piece of the market pie, nor to gear them toward the strictly competitive side of business.
According to stats cited by the consultancy company, 70 per cent of all Australian businesses are self-identified family businesses. Their best bet in wading across the currently troubled waters of a post-recession world is to focus more on the customer and less on power-plays, says Deloitte. This would, in turn, help render family-driven business ventures more productive and ensure their standing on the market for the longer term.
An interesting further point on the matter was expressed by consultancy company KPMG, which pointed out that Australia’s tax regime is currently making it much too difficult for businesses that run in the family to successfully transition from one generation to the next. Beyond the specific dynamics of any family, succession in Australia is a legally complicated affair. As such, another important aspect of encouraging the small, local, family-run business is to alter the legal framework in its favor. Otherwise, squabbles related to equity and asset ownership risk to drive a significant number of such ventures into the ground. Not only would this negatively affect the economy as it is, but it would also create a counter-productive business environment, in which families that are making forays into the realm of entrepreneurship for the first time would feel anything but supported.