We live in a time of political and economic uncertainty. Exchange rates remain unstable, globalisation is under serious threat, and protectionism is becoming the norm in more and more countries.
It is one man - President Donald Trump - who embodies this feeling of chaos. He's been in power for nearly a year now, and has torn the status quo up in more ways than one. Businesses operate in a state where all it can take is just one 2am tweet from a powerful man to disrupt a whole industry or even economy.
It's not just US businesses that are affected. America is Australia's second-largest two-way trading partner in goods and services (worth $64.3 billion in 2016), the Department of Foreign Affairs and Trade reports, with exports to the USA valued at $12.4 billion in 2016. The US is also Australia's largest investor, accounting for 27 per cent of our total investments.
This means any US President that causes feelings of instability is going to severely affect Australian businesses. With the removal of the Trans-Pacific Partnership and a new emphasis on protectionist trade policy, it's unlikely that the US will remain so involved in Australia. So, what can businesses do to mitigate the potential for risk in the age of Trump?
1) Create plan A, B and C
In times of increased uncertainty, it's essential you ask yourself "what if?" What if exchange rates change? What if trade with the US decreases? You need to look at each aspect of your business and review potential scenarios, creating a plan that will help keep you stay afloat if any of these events do occur.
Businesses operating in agriculture, for example, need to be wary of the AUD/USD exchange rate. The Australian dollar reached over 0.8 USD in September, and it may soon reach those levels again. A higher AUD makes Australian produce more expensive and therefore less desirable. Businesses need to have a plan in place that takes this into account, either by lowering prices or choosing different markets to sell to.
2) Review your systems and processes
One thing that will anchor your business is having solid systems and processes in place. This means you won't have to spend time looking after the more mundane aspects of your business, and can instead focus on reducing risk and finding ways to grow.
Special focus should be given to accounting and tax software - IFRS standards are continually changing and you don't want to get caught short. Investing in cloud technology such as Xero will help to massively streamline your financial processes.
3) Remember your USPs and central vision
It doesn't matter how uncertain the economy is, if you've got a unique product that people truly desire, you're always going to manage to keep yourself afloat. So remember your central USPs and ensure they're being sufficiently marketed. Likewise, you should never forget your vision and purpose when business planning. This will anchor you and keep you on track even in the most tempestuous of moments.
One way to ensure your business is free of risk is to seek business advisory services. Alpin's advisers are all business owners, and have years of experience in making a company successful, no matter how uncertain the times are. For more information on how we can help you make deals, improve your performance and implement the right strategies, contact us today.