I’m starting up a fairly traditional bricks and mortar retail business. It seems that consumer trends are against me. Should I be worried?
There is not going to be a better time to start your business because the fall in consumer confidence in Australia is not a function of a slowing economy, but a function of the political abuse flying in Canberra following the announcement of the PMs plans for climate change.
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It is true that in terms of personal finances 34% (down 6% — and the lowest since May 2/3, 2009) of Australians expect their family to be ‘better off financially’ this time next year compared to 22% (up 5% — and the highest since May 2/3, 2009) that expect to be ‘worse off financially’.
However, Australians also say their family is ‘better off financially’ than a year ago compared to 31% (up 2%).
The NAB Business Confidence report for last month shows confidence was up in February, with a rise in confidence from +4 in January to +14 in February, meaning the optimists are easily outweighing the pessimists.
NAB says that there is still a two-tone economy with steep rises in consumer sentiment in the mining and recreation sectors and falls in sentiment in the rest of the country, especially in construction, manufacturing and retail.
What this means for your start-up is:
- You need to closely examine the industry prognosis for the business that you are entering.
- Then you need to revise both your business and marketing plans to prepare for the costs of entry and delays in
cashflow until the next financial year.
- Think about starting from your kitchen table until you have a steady stream of satisfied customers or hire office space if you are going into the service industries.
- Identify niche opportunities that have a high demand and a low number of competitors for the start-up period.
- Take into account that consumers are looking for quality and value this year as they pay down debt and spend more time at home.