It seems the cost of everything is increasing with freight, fuel and building being the most obvious. This has contributed to the annual inflation rate increasing to 3.5% in December and predictions of further increases.
Interest rates are widely predicted to increase and there are serious concerns how borrowers that entered the housing market at 2% will cope with 5% rates.
Throw in the uncertainty created by a federal election on 21st May and the polls predicting a change of government and the economic good times may face a hiccup.
A further and immediate threat to many small businesses (and their suppliers and employees) is the 50,000 warning letters recently sent to company directors by the ATO. Grant Thornton insolvency specialist, John McInerney, estimated this will trigger at least 10,000 insolvencies, and possibly 20,000 or more.
So, what should small business owners and investors do now?
Proactively manage debtors
Consider fixing loan interest rates
Organise access to cash or credit to take advantage of the bargains that will present.