Speaking to many of the wide variety of smart company owners and managers this week at the May Money Expo in Melbourne and Sydney, held by the Finance and Treasury Association, revealed a range of responses to emerging market trends.
These businesses ranged from a small convenience store owner who was planning to develop a commercial business bureau in the outer suburbs, a recently established online art gallery proprietor struggling to identify new marketing techniques, through to an investor who was looking to place millions of foreign funds in growing home and construction businesses ready to take advantage of government subsidies.
It may be that the Expo attracts self-confessed optimists and that the pessimists were still asleep under their doonas, but there can be no doubt that small and medium business believes that the worst of the GFC is over, that their banks are prepared to consider reasonable business plans and that now is the time to get out and capture business opportunities.
Despite all the stage managed angst about Government debt and the Swan/Tanner financial stimulus packages, all of these business operators indicated that they believed that taking out business loans for expansion was the only way in which they could achieve their goals. The real questions were about getting their value proposition clear, finding and keeping good sales staff and ways of talking with venture capital providers for the next stage of growth.
In this context it is instructive to look to the research provided by Michelle Levine and Gary Morgan in their fourth ‘State of the Nation Review’ .
It finds that small business is finding it tough to get the banks to lend money for cashflow and operations, but they are looking to find profitable lending operations as the economy picks up. Retail sales were not a good lead indicator as the real sign of things to come is the rapidly growing number of unemployed and underemployed.
Don’t be fooled into believing that everything is on the downward slide. Analysis supplied by Morgan Research into the level of consumer confidence in the first few months of this year shows that customers are increasing their expectations of good times ahead, especially the middle income households and pensioners. While the affluent employed have remained optimistic and ready to fly overseas to get business deals done.
According to the State of the Nation Report in the US and UK, the GFC’s most immediate effect is on housing and unemployment, due to bad loans and increased interest rates, as banks restrict credit or foreclose loans on both businesses and consumers.
In Australia, the most immediate impact of the GFC has been through the downturn in financial markets – which is assumed to impact consumers through the ‘Negative Wealth Effect’ or ‘Investor Stress’.
In late May, the weekly Roy Morgan Consumer Confidence Rating rose three points to 104.2. The consumer confidence rating is 7.1 points higher than a year ago (May 2008, 97.1), based on interviewing conducted last weekend, 23/24 May, 2009.
This rise has been driven by an increase in confidence amongst Australians about the short- and long-term future.
Gary Morgan says that the rating has returned to its level prior to the Rudd Government’s second Budget.
The conclusion to draw from the small drop and now small rise in the weekly Roy Morgan Consumer Confidence Rating is that although Wayne Swan’s Budget initially produced some worry amongst the community, its overall effect on Australian’s confidence has been negligible.
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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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.
