A lot has been said and written about the demise of the Resources/Construction boom. Rio Tinto and BHP Billiton are regulating and keeping the price of iron ore low which is squeezing higher cost producers like Atlas Iron and FMG. In addition, OPEC is regulating the price of oil which is causing a massive price reduction.
Many people believe that the market is currently returning to “normal” market conditions where competition and customer service reign supreme, but the reality is that when the resources and construction sectors are in decline, it has a significant domino effect to many other businesses like feeder companies to the resources sector (e.g. maintenance contractors, transport companies, labour hire agencies, plant and equipment hire) which in turn, impacts the entire economy.
It is important to understand that commodity prices are cyclic and the economy will improve again. To a large extent, the rise and fall of commodity prices is out of our control, so we need to shift our focus onto what we can control in business, like our costs through greater efficiency, being more productive, and using technology and social media to add value to sell more products to existing clients.
Businesses need to do “more with less” in the current cycle by carefully assessing factors that affect their efficiencies and productivity. You can maintain the business you have, even if it is at a lower margin. So when the economy does turn, will your business be ready to capitalise?
Australia has become a smarter nation, developing a more efficient and productive economy with a global outlook. The rise of Cloud Based IT Business Systems and social media to market your business is an effective way to achieve better efficiency, productivity and ultimately, greater profitability.
What does your current business system look like? Are you utilising social media, and if so, how are you using it to market your business? What can your business do to help stimulate the Australian economy?