The change in Labor party leadership less than 100 days before the federal election has brought into sharp focus the need for SMEs to stop waiting for a silver bullet to fix the economic woes which might come with a change in government.
Experts say too many SMEs are holding off on making decisions about their companies, in the hope that if a Liberal Government is elected, this will signal greater investment in business and prompt entrepreneurs to do the same. But with the ousting of Prime Minister Julia Gillard by Kevin Rudd this week, some predict that political instability may continue into 2014, as any policy will take at least 12 months to be legislated and implemented.
“Many businesses have postponed major decisions in anticipation of September’s Federal election,” said Chris Gebhardt, the head of the business advisory focus group of mid-tier accounting and advisory firm William Buck, but with Rudd’s new position, the Liberals winning the election is no longer a foregone conclusion.
“If the Liberal party is voted in come September, SMEs might think government will start spending money. While the outcome should provide greater certainty, the election isn’t going to be a silver bullet for the economy nor will it bring about an immediate increase in consumer confidence.
“The Labor Party now has a better front man that will challenge Tony Abbot. If Gillard had retained her position, SMEs might have thought that the Liberals were a frontrunner to win. They have thought about progressing their businesses but now that Rudd is in, it will be a fight in September. SMEs will want to sit tight until the election before they make any decisions.”
Gebhardt said this is not the best move. “This is an overcautious strategy to enact. Things such as political instability are not things businesses can control. You shouldn’t wait for certain things to be enacted. When do things ever line up perfectly for you to make certain decisions?
“Businesses should take control of what is in their power. Whatever happens outside of that are things businesses just have to deal with using risk mitigation strategies.”
Political leadership races may not be in an SME’s control but cash flow management is.
“Analysing each profit (and loss) centre within the business will enable you to establish where you can find the greatest efficiencies.”
But in doing so, there is a chance that SMEs could view insurance as an unnecessary expense, making it challenging for brokers to retain customers.
“Brokers must be proactive in approaching clients and make it clear to them that money is tight but they can do certain things to make the client’s life easier. It might not be a cheaper price but the broker might be able to offer them a better policy at the same price.”