Weak consumer confidence and what that means for your business
Interest rates in Australia have never been this low, and yet there is little excitement in the marketplace right now. Mortgage borrowers would usually be jumping for joy, and yet there is little buzz around the place. Consumer confidence is weak, and shows no signs of improving significantly in the near future.
Though there are differing opinions from the big banks over the current trend of consumer spending, NABs view (that seems to align with the RBA decisions of late) is that there is no real sign of growth in consumption as a result of tax and interest rate cuts.
"So far, stimulus provided by policy makers has had limited impact or has been unable to offset the countervailing headwinds faced by the household sector." (NAB Chief economist Alan Oster)
What does this mean for you?
It can be easy to play victim to the economic climate in which you are doing business. But, in a challenging marketplace where consumer confidence is weakened, and purse strings are pulled tight, what are you going to do about it?
You see, it might sound simple, and it is! You’ve got 2 choices – sit back and cross your fingers and toes, or do something about it.
We work with hundreds of businesses across different industries and I can tell you the number 1 thing that will kill a business quicker than anything else…….inaction.
‘Hope’ is not a strategy. Not a winning strategy.
Why do people employ a ‘sit back and hope’ strategy in their small business?
They are afraid of failure. Change means risking failure – but we agree that change is inevitable and that our current competitive advantage will never remain forever how it is right now…
So, either way we face failure, agreed?
If so, then do something about it!
3 critical steps to take in your business to adapting to the changing environment:
1. Get your head right – commit to change and acknowledging that what got you here is not what will get you where you want to be. Growth is a mindset and you need to be honest with yourself that you can be open to change.
2. Identify where change will have the greatest impact in your business – do this by asking questions of your best staff and your best clients.
a. Call your best clients (not just highest value but your best – do you know what your ‘best’ client looks like[SM1] ?) and ask them how you are doing – be unashamedly client centric. Ask what else you could do for them to help them on their journey, how you could do things better, what are their biggest frustrations or concerns today as it relates to your product – don’t assume you know what they want.
b. Sit down with your staff and ask “How are you?” – How are we going? What could we do better? Engage them in the direction of the business. Tell them where you want to take the business and where you think it should go – see what they say and ask them if they agree. If not, why not.
3. Execute – don’t wait for permission to take action. You won’t get it. Once you have some good insights (not just gut feel) from customers and staff on the future direction of your business, new products and services or just a new way of doing things, just do it. Take the first step to testing and be prepared to fail. Be sure to have feedback loops in place to review each change and adjust as needed.
You are only looking for the 1%er’s, you’re not looking to revolutionise your business overnight.
Take small but decisive steps to continue to grow and innovate in your business. Don’t do it on ‘gut feel’, speak to those people that make your business what it is – your best customers and staff – they will help you validate or generate ideas about where you need to go next.
As always, I also encourage you to keep educating yourself about upcoming consumer trends that others are noticing – it might spark your thoughts. Check out some of these websites for inspiration - visit Trendwatching, Springwise, Trendhunter or other similar sites.
Let us know how you go!
We know that life is lonely at the top and great support is not always available at a cost effective price for small businesses – visit The Business Academy by Nine Advisory to get step by step support (and accountability) to help you grow your business. Click the button to learn more.
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