Is your businesses taking advantage of the positive market conditions?

Is your business ready for a strong April?

Business expansion and growth usually relies on a number of important factors. This could include anything from product prices, consumer demands or even market conditions. In fact, the latter plays an important role in how business leaders position themselves moving forward, shaping their decisions.

This is why it is critical for Australian business owners to understand how market conditions can have an impact on performance – both positively and negatively. For example, an enterprise can easily find itself in money problems if it's focusing on the wrong areas.

Relative cost competitiveness improvements

One recent report that highlighted the positive elements of the Australian business landscape is KPMG's Competitive Alternatives report. Published at the end of March, the study analyses 100 cities in 10 countries to determine what nations are performing the best in relation to business costs.

Australia, after finishing 8th in 2014, improved to 5th in 2016, behind the likes of Mexico, Canada and the Netherlands.

The report looked at 26 costs factors such as financing and taxation across the digital, R&D, corporate services and manufacturing industries.

There were several findings that allowed Australia to move up the rankings over the last 24 months. This included currency depreciation compared to the US dollar across all countries, decreasing utility costs and excess capacity in the labour market.

KPMG Chief Economist Brendan Rynne explained that these results pinpoint areas where Australia can become a business powerhouse in the future, ahead of Japan, the UK and France.

"Australia has a consistent middle ranking (5th) for competitiveness among three of the four sectors we considered – digital services, R&D and corporate services – but has higher costs in manufacturing due to high facility leasing and transportation costs," he said.

"This suggests Australian policymakers must play to our strengths and focus on those areas we do well in."

While business leaders need to invest within their means, it's pleasing to see that we are competitive on the international scene. This result, coupled with the most recent Roy Morgan Business Confidence survey, suggests the Australian economy is heading in the right direction heading into the crux of Q2.

Confidence continues to rise

According to Roy Morgan, business confidence in Australia rose an impressive 2.1 per cent in March, following the 3 per cent lift in February.

Based on the thoughts of over a thousand business leaders, more than half (52.7 per cent) believe the next 12 months will be produce good economic conditions for trade. A similar number state that business performance will increase over the same period.

Roy Morgan Research Executive Chairman Gary Morgan explained that this lift in confidence may have forced decisions in Canberra.

"The stabilisation of equity markets and gentle improvements in confidence – of both businesses and consumers – perhaps played a part in Turnbull's decision to bring the deadlock in the Senate to a head in mid-March," he said.

The impact of poor economic conditions

As most business leaders can appreciate, economic conditions can change as fast as the wind. This means that if your enterprise is caught in the wrong market at the wrong time, issues such as insolvency can crop up.

According to the Australian Financial Security Authority, the main reason for entering a business related personal insolvency was economic conditions – cited in more than 2,000 cases during the 2013/14 financial year. This reason was much higher than personal reasons (446), lack of capital (398) and excessive drawing (395).

Whether economic times are good or bad, the decisions that you make can severely impact long-term performance. If you find yourself in this position, it is recommended you talk to the expert team at Corporate Lifeline.

With experience in both personal and business insolvency, we can help establish smart plans to make the most of your industry conditions.