The key to survival and growth this year is constant monitoring and adjustment. The environment we started with on 1 July 2014 is already quite different to where we are now, and it's important to keep an eye on top line growth as much as the growth of your bottom line. Keep your focus on increasing your market not just cost cutting to make the numbers look right.
Importers need to look at the price impact of the fluctuating currency on profit margins. Do you need to put your prices up or are there other strategies to mitigate the impact? It is important to understand that anything that impacts on your margins will have a magnified impact on net profit.
If you are not already doing it and your business is impacted by currency fluctuations - and this could be as simple as having all your software licensed from US providers, explore hedging options to protect against further falls in the dollar.
If you are using debt, there are numerous products from offset accounts to local currency overdrafts. But, don't try to be a currency trader. It's unlikely you will win. Business is tough enough without trying to make decisions in areas you are not experienced in. Even the pros get it wrong.
Exporters also need to consider their pricing. Can you hold your price and maintain margins or should you move your price to attract volume? Price, volume and margin are critical to work through when the currency is volatile.
2015 is shaping up to be a pivotal year for SMEs as digital disruption impacts business models across a lot of industries, influenced by rapid innovation and change in technology and a move to digital as a means of improving business performance.
SMEs need to strategically consider how digital disruption will impact their industry and business, what the competition is doing and how customers are responding to digital disruption. The challenge is to really understand how and when to capitalise and innovate in a way that allows them to take advantage of changes in their industry.
This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.