With the Consumer Price Index (CPI) rising 7.3% over the twelve months to September 2022 and being tipped to peak at 8%, there are signs that we’ll continue to see the Reserve Bank of Australia (RBA) increase interest rates in the coming months. However, economists are generally tipping an easing in inflation and interest rates in the latter half of 2023.
Over the past few years, businesses have been dealing with increasing costs and managing uncertainty. This looks likely to continue into early 2023, however, with increased migration being approved, there should at least be some easing up of current labour shortages for businesses moving into 2023.
In Queensland, we also have a significant infrastructure spending program for Olympic games supporting jobs and local economy, so it’s not all doom and gloom.
In light of the above and following through on Advivo’s values to educate and empower, we have sourced 4 opinions from our industry partners that we believe are relevant to help business owners prepare for the year ahead:
The Lending Market – Troy Williamson – The Brokerage
Commercial lending is expected to tighten as risk appetite from major banks decreases amid rising interest rates and uncertainty in the property market. This will lead to higher equity contributions from borrowers and turnaround times from major banks increasing from current SLAs. Business conditions will be tough in FY23; however, this will bring opportunities for savvy investors in all sectors. Non-bank lenders will continue to emerge which will provide more competition in the long term. Being agile has never been more important to long-term business viability.
Marketing – Jane Toohey – Outsource2Us
2023 looks to be another interesting year in the world of marketing. Everyone is still very focused on social media, and I think the leaderboard will have some major changes during 2023. With video leading the content stakes, TikTok and Instagram Reels will be all the more important to improving engagement levels on social media. Consumers are connecting with brands utilising user-generated and company-generated content to showcase their products and services.
Digital advertising will become ever more competitive, with some CTRs (click through rates) pricing the whole approach out of the game for some. One of the only ways to get better engagement and conversion rates, with lower acquisition costs is constant tailoring of Ads and messages for each target audience. It will never be a set-and-forget advertising platform.
Social responsibility is gaining importance as consumers increasingly expect brands to be more transparent and take a stand. Businesses that take social responsibility (consider the environment, contribute to charities, and make a difference in their communities) will increase their chances of gaining new customers and keeping current ones.
Human Resources – David Reid – Business360
Last year’s major staffing topic, around flexible work requests, led to the workforce becoming disconnected and focusing on Life-Work balance, which became an issue of staff retention.
Many then faced challenges with attracting and keeping good staff, offering favourable benefits and a positive workplace culture, and moving the retention conversation away from being solely transactional and about “the money”.
To the point, a recent Talentpath survey found:
- 66% of respondents ranked culture in their top three attractors, and
- 38% also said culture was a significant factor in why they left their previous role.
Disconnection, employee behaviours unchecked and a lack of role validation to the big picture form the most common cultural defects in an organisation that causes people to leave. There may be company guidelines, even a set of values, but if I am not feeling them, seeing them, or hearing them…
The watch out for this coming year, with the new workplace norm of working remotely and without the same level of social interaction at work, will reveal itself in an increasing level of Mental Health issues, as are now becoming evident.
Mental Health will have an increased focus from Government Regulators, who in July 2022 have already released a Code of Practice called “Managing psychosocial hazards at work”.
“Not another thing”, I hear you say…
Employers will be increasingly expected to provide a psychologically safe workplace. Recent developments signal a future in which Australian employers will face criminal prosecution for failing to protect employee mental health adequately.
This means employers will need to consider mental well-being as part of a risk assessment and develop a stance through policies and procedures to protect people, provide support and a process for managing injury, grievances, and return to work, among other things.
Accounting and Finance – Chris Morris – Advivo Business Advisors and Accountants
We’ve seen many businesses benefit greatly from the current environment, and the big question is whether this will continue into 2023, with the predicted slowing of the economy.
From an accounting and business perspective, we’re seeing more business owners understand the importance of improved routine management reporting and the positive impact this can have on business decisions and planning.
It seems the uncertainty that business owners faced over the past few years has highlighted the importance of keeping up-to-date, accurate business records. This increases the speed of informed decision-making, allowing businesses to pivot and take advantage of opportunities as they arise.
Savvy business owners have been doing this for years however we’ve recently seen an uptake in the number of business owners who are moving towards a monthly service program for their ongoing accounting, business support and advice. We expect this trend will continue into 2023 meaning more business owners will be better positioned for informed, decisive action when opportunities arise.
In 2023, business owners should continue to assess technology solutions for their businesses. Routine business tasks should be automated as much as possible or eliminated where appropriate. There are constantly new solutions coming to the market for both old and new problems, and business owners should stay connected enough to be aware of such solutions as they arise.
Conclusion
Whilst the slowing of economic growth will increase uncertainty for some business owners, this can almost certainly be alleviated by keeping informed and up to-date as much as possible on matters affecting your business, which can create opportunities for your business.
We also have Stage 3 tax cuts to look forward to in 2024. This is part of the government’s income tax package, introduced and legislated in 2018 and 2019. Under the stage 3 tax cuts, the 37% tax bracket would cease, while the 32.5% bracket would drop to 30%.
If you would like more information on any of the above or would like to discuss your specific circumstances with any of our experts, please contact us now. Don’t delay because potential opportunities for your business may already be passing you by.
