With the struggles of 2017 behind them, small businesses all over Australia are bracing themselves for another challenging year and they are not alone.
The global economic and political landscape is riddled with uncertainty and volatility and whilst much of this is of direct concern to big business, the ripples will be felt throughout the commercial community.
So, what are the main challenges small business owners will face in 2018?
1. Increased Competition
One of the biggest challenges to be faced is the arrival of one of the world’s retail behemoths – Amazon. Bigger than any of Australia’s domestic retailers, Amazon is set to bring increased completion to a broad range of small businesses, with electronics retailers among those who are likely to suffer most.
Finding ways to sustain demand will be one of the challenges small businesses face this year.
ALSO READ: 7 ways smaller brands can use Amazon launching into Australia as a big opportunity
2. Cash Flow
Cash flow is an ongoing battle for small businesses. In 2017, only around half of the small businesses in Australia reported that they had a positive cash flow and many of those who didn’t, conceded that trading at a loss was the primary factor for this.
To improve their cash flow situation, small businesses may need to rethink the strategic approach they are employing; the immediate turnaround of invoices and increased use of electronic payments may be among the tools they can call upon.
Where there is surplus capital in the business, owners should look to make it work harder and not remain dormant. Forex and other investment markets may provide an opportunity to profit from capital that would otherwise be left idle.
ALSO READ: How to manage cash flow and prepare a forecast
3. Internet Speeds
The NBN fixed broadband services are another area of concern for many small businesses, particularly those who involved in ecommerce. Online retailers, however, will not be the only ones whose business may be affected by slow Internet speeds, companies that rely heavily on sharing information and communications are also likely to feel the pain, especially at peak times when the speeds at their slowest.
Light at the end of the broadband tunnel may come in the form of the proposed government rules that will levy heavy fines on telecommunications companies if the migration to the NBN is not managed properly.
All the factors mentioned above combined are likely to impact small businesses ability to grow and if not, then certainly the rate at which they can grow.
Being able to scale a small business is extremely important. Especially in the first three years of trading. Businesses that are unable to grow make up a significant proportion of the 60% who fail during that time.
Healthy growth generally comes about due to an increase in demand for a product or service. Once demand shows sign up picking up, then some investment can be made in order to keep up with it and so it may be marketing that small businesses should look to if they want to scale –therein lies another potential challenge.
5. Facebook and Organic Reach
As and when Facebook rolls out split news feeds, the impact, on small businesses who use the platform as a cheap way to market themselves, could be substantial. Where the concept has been tested, just 6 countries to date, some media organisations saw their organic reach for posts drop by as much as 65%.
The idea is that users will have two news feeds, one for posts from family and friends and a second for professional posts, including marketing. Small businesses may find that they need to seek an alternative or pay to play.
So, it would seem that 2018 will bring fourth many challenges for small businesses, but those who endeavour to act proactively and who have contingency plans that will enable them to ride out any turbulence they should encounter will, no doubt, overcome and succeed.
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About the author:
Neil Buckland is a Leeds University Business School graduate and has been working in the Finance Industry for five years now. With a particular interest in Business and Tech related topics, he has been writing content for various publications since graduating. When he is not writing, you can find him on the pitch playing 5-a-side, reading or spending time with his better half, Katy.