Get back to basics to navigate 2012

As we head into the new year, it seems every week brings another report that shakes business confidence, or at least makes us comb the data for some indication of how the rising dollar, crude oil supplies, tension in the Middle East, or the price of big screen TVs will affect our fortunes.

According to our latest MYOB Business Monitor, it is the things we can influence the least that are most worrisome for business owners as they plan for 2012.

Fuel prices have returned as our leading pressure point in 2012. Not surprisingly, those directly affected by the costs in primary industry, transport and logistics, are by far the most concerned about rising fuel costs. But over a third of business owners fear more pain at the pump and that is an indication of how little flexibility we have across the board in terms of transport costs in our business.

Another telling pain point is interest rates. It ranked number three in the Business Monitor after price margins and profitability. Although they are sitting at record lows - and all indications are that we won’t see any significant movement in the Official Cash Rate until at least late in the year - the spectre of rising interest rates continues to keep Kiwi business owners awake at night.

Interest rates are likely to be of major concern because many 'mum and dad' business owners fund or support their operations through personal equity. Any increase in the costs of their largest asset is likely to impact the bottom line of their business. Short term finance costs and even personal credit card rates are also likely to be a factor here - reflecting the sources smaller businesses in particular rely on to maintain liquidity.

While the uncontrollable factors continue to keep us worried, the good news is many more Kiwi business owners have taken charge of the things that they can influence - reducing their pressure on local operations. This is most marked in the fall of cashflow from Kiwi business owners’ top three pain points.

This is a great indication that local business owners have taken on the lessons of the recession and become far more adept at managing their credit processes. We also see business owners becoming better geared to manage short term fluctuations in trading conditions.

With what the ANZ recently called ‘grumpy growth’ likely to be the key characteristic of the economy in 2012, these signs of resilience and self-reliance are very important in the year ahead.

This year, I’m sure we will see many more pressures for which we can have little or no influence over how they affect our businesses. However, if Kiwi business owners are confident they can get the fundamentals right, there will also be plenty of positive news to look forward to in 2012. Although we are likely to be buffeted by a range of external pressures this year, if we can make the best of our own resources, our economy should remain on course for greater growth in 2013.