Depending on how far the Australian sharemarket falls on Friday, the weekend newspapers could well spend a good deal of the weekend screaming about how many billions of dollars have been wiped off the value of the sharemarket.
Read these stories carefully and then put the newspapers down. Go and pick up your business plans and budgets for the next 12 months and ask yourself a crucial question: Have things REALLY changed for your business?
I am willing to bet the answer is a resounding “no”.
While I am not arguing the smart entrepreneurs should ignore the gyrations on the sharemarket – indeed, you need to keep a close eye on broader economic conditions at all times – you do need to keep this in perspective.
The global economic situation – particularly in Europe and the United States – is clearly weak, and that is making investors very nervous.
Every bit of economic news or pessimistic statements from an important government official will set overseas markets shooting up or, as is more likely right now, down sharply. And where the overseas markets go, the Australian market invariably follows.
But while these market movements will have an impact on business and consumer confidence, they do not change the fundamentals of the Australian economy.
Our interest rates remain low and stable and the RBA has plenty of room to cut if there is a downturn.
Our economy is tipped to grow at 1.8% this year and 3.3% next year by the International Monetary Fund, who are a little conservative when it comes to growth expectations.
Our mining sector is strong, our household sector is deleveraging, our property sector remains relatively robust, our Federal Budget is the envy of the world.
While economic conditions are patchy, people are still spending. Kathmandu and Oroton have both produced creditable results in the last week and yesterday RBA Governor Philip Lowe pointed out that while retail is struggling, services spending is holding up reasonably well.
Smart entrepreneurs should not let the market volatility sway them from their plans.
Target the right niches, keep your business leads, focus on turning leads into sales. Be alive to changes in consumer moods and behaviours.
Don’t ignore the sharemarket, but do try and see past it to look at what is happening in your niche.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
