We are days away from an Obama victory in the US presidential race. What will change and how should SMEs prepare? COLIN BENJAMIN
By Colin Benjamin
We now have less than a week of sleeps until the change bandwagon hits the end of the line. Most Australians are anticipating Barack Obama will win a landslide win over the old man John McCain. But what differences can we expect as a result?
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Just as Labor tends to get elected when it has become essential to redress the labour-capital imbalance, the Obama machine will walk into the eye of the hurricane as funds continue to be shifted out of equities and into high-performing bonds and offshore investments.
The continuing slide in house prices in the United Sates will mean that the crisis will get worse after February, as US investors rush to get their capital out of the clutches of guaranteed banks. It will take a few months of sharemarket instability before Obama is able to build a foundation for renewed growth.
Looking to the coming year in Australia, it is clear that the regulators are just catching up with the messages that were apparent a year ago offshore. We are still in for a highly turbulent managed credit crunch for most of the remainder of this financial year, and SMEs must still go through the process of strategic redirection and retention of their best team members. (For more on this, see “Credit crisis and talent crunch the themes for 2008”.)
On a larger scale, we are not seeing the end of capitalism but the end of the “greed is good” mentality of the financial sector (although all of the players are desperately trying to keep up the market volatility so that they can still squeeze out the last of the big bonus handouts).
It is interesting to note that Kevin Rudd and Wayne Swan have talked about executive salaries, but they have failed to take into account the greed of “independent’ remunerations committees and have even offered unconditional guarantees to the bank bosses that are making a motsa at the expense of their impoverished mates in the managed funds sector.
Indeed, it’s a bit ironic that Swan is now citing the man who brought down the Berlin Wall, Mikhail Gorbachev, in support of the need to bolster the banks. Gorbachev correctly states that the crisis did not come out of the blue. All the warnings went unheeded.
He also points to the conditions under which all SMEs should be reviewing their plans for the next couple of years.
In the overseas market, make the most of the low Australian dollar and lock in longer term contracts for your products and services as value-added business operators turn to Aussie suppliers to replace links with European and increasingly risky South American suppliers. Find ways to build networks of agents and immigrant relationships that generate strong market entry pathways.
Look for domestic business opportunities that flow from the release of government funds into the economy. Look for capital works and development projects, community health and services programs, business development and training initiatives, and accessible housing, especially away from the main city strips.
The next year will see a growing superannuation crunch as finance minister Lindsay Tanner and Wayne Swan demand greater transparency and real accountability. As commentators have noted, we should be able to look forward to lower fees, consolidation of retail and industry funds, and new restrictions on the way self-managed super funds operate.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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