Stay the course

Despite all the talk of gloom and doom all the fundamentals are sound.

Glenn Stevens and Ben Bernanke will run a unity ticket that looks to the longer term rather than the short term, and bandaid monetary policies and our terms of trade for the next couple of years should keep business services growing for at least the next few years.

As European nations confirm that they intend to stay the course and protect the Euro, gold prices will decline, bond markets will pay higher dividends and house prices will stabilise.

But the next couple of months are going to test the staying power of smart companies as growth forecasts for China are dramatically reduced, Greek defaults depress the European market and the US political debt-lock brings that nation close to a repeat of the post-GFC levels of consumer confidence.

Local economies that lack a diverse industry base or skilled workforce are the most likely to be adversely affected by threats of a double-dip recession and by the impact on superannuation and investment accounts.

Companies that have very local markets may face long-term adjustment pressures.

While the process of economic recovery, surplus restoration and structural adjustment will be good for the nation in the next year it will be a time for smart companies to focus on superior service and sustainability

The most important next step for smart companies is to reconstruct sales and marketing efforts to reflect the demographic and geographic distribution of consumers.

There will be marked variations in the level of consumer confidence and willingness to purchase in different regions of the economy.

Some parts of WA and Qld will see significant increases in local activity while parts of NSW and SA will be under the pump.

That will exacerbate variations in housing prices, increase customer caution and will see a decline in banks’ willingness to lend without new property and asset valuations.

For Wayne Swan it means he will see a steady fall in revenue streams and pressure on his plan to get back to surplus.

For Andrew Robb it will be taken as an opportunity to push for a populist rate cut, massaging the Fair Work Act to drop penalty rates under the rubric of increasing labour market flexibility.

Hopefully the Tax and Job Forums will lead to an appreciation of the plight of small businesses that needs to see payroll tax barriers and reporting requirements reduced to give them the capacity to take on extra staff and expand into emerging markets.

Flow-ons from the talking down of the economy to sections of the conservative medium scale and intermediary supply chain sections of the economy will dampen consumer sentiment.

Companies cannot afford to be overstocked and under-financed at a time when our two-speed economy is threatening a national wage explosion and greater white collar demands for compensation for inflationary pressures.

A pre-Christmas downturn will test the resilience of consumer market small businesses that had hoped to make up for a couple of disastrous years.

Declines in the economic capacity of individuals and businesses will require cost cutting, inventory reduction and reconsideration of proposed capital expenditure.

Companies with a clear view of their value propositions and of their place in the value chain of their industry should stay the course and focus on significant growth potential in the first half of next year.

Major retailers are showing the way – looking for good sales staff and training casuals to know their stock and be in a position to use on-line information and in-store service to convert shoppers into customers during the holiday season.

All the evidence suggests that volatility in the Northern Hemisphere and political conflicts around the globe will lead to delayed consumption of major household items.

Quality assured business practices combined with a steady hand on the till will see smart companies grow as those without lines of credit make the day for insolvency commissars.

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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.