Start-ups up need to hone their strategies in order to survive the Reserve Bank’s latest interest rate rise, according to small business lobbyist Peter Strong.
, the RBA raised official interest rates by 0.25% to 4.75%, sending the market into a frenzy.
Council of Small Business of Australia executive director Strong says small businesses in the retail sector will bear the brunt of the rate rise, ultimately hurting wholesalers and suppliers, local manufacturers and importers.
CommSec chief economist Craig James told the Herald Sun the rate rise will also affect consumer-driven businesses and the housing industry.
“Consumers remain super cautious about spending, and the lift in rates will give people even more reason to stay away from the shopping malls, real estate offices and car yards,” James says.
According to Australian Retailers Association executive director Russell Zimmerman, retailers need a freeze on interest rate rises in the lead-up to Christmas, which would allow them to recover from over a year of slow trade during the end-of-year holidays.
“When consumers have to deal with increased mortgage repayments in the few months before Christmas, it has a disastrous impact on retail trade during the festive season,” Zimmerman says.
Strong says if start-ups want to survive the Christmas period, they should seek advice and information from other businesses and closely monitor their cash flow. This is particularly important for start-ups in the retail sector.
“If people are getting into business [they should ask themselves], how do I take advantage of the changing face of retail?” Strong says.
“If they’re in a bricks-and-mortar shop, they [should] make it a destination that people want to come to for multiple reasons.”
“Don’t let a customer out the door unless you’ve already spoken to them and they know what products you’ve got.”
“I know other retailers who are very proactive and they’re taking their product out to the marketplace so you might find them turning up at events.”
“There’s also a lot of training around at the moment on the use of social media. I’d be going off to that training and seeing how I can use Twitter and Facebook to attract customers.”
“You need to have a presence in the virtual world to make sure people know where you are.”