Six Essential Actions to Help You Deal with Economic Uncertainty

In recent years, Australian small business owners have found themselves navigating a more Volatile, Uncertain, Complex, and Ambiguous (VUCA) world than ever before. Global events now have rapid and unpredictable local consequences, leaving many small businesses exposed to economic shocks beyond their control.

Trade disputes, shifting geopolitical alliances, inflationary pressures, climate-related events, and changing consumer behaviours all contribute to a business environment that is harder to predict and manage. while small businesses can’t control these external forces, they can take steps to build resilience and prepare for what’s ahead.

Take the ongoing trade tensions between the US and China as a case in point. Tariffs and retaliatory measures have not only disrupted supply chains globally but have also created opportunities for new trade relationships and local manufacturing solutions. Australian businesses, particularly those relying on international suppliers or exports, can feel the ripple effects quickly. 

For example 

• Rising costs of imported goods or components due to tariff increases.
• Delays in supply chains, affecting delivery times and customer satisfaction
• Shifting demand as global buyers seek alternative suppliers, opening new markets but also increasing competition. 

For some, this volatility presents risk. For others, it’s a chance to pivot and adapt in ways that strengthen their market position. 

Economic shocks can come from many directions, interest rate jumps, sudden cost increases, loss of a major client, or broader macroeconomic downturns. What makes small businesses particularly vulnerable is their limited buffer and narrower operating margins. That said, small businesses can often be more agile and adaptive than their larger counterparts – if they take the time to plan. 

Here are some practical steps that small business owners can take to better prepare: 

1. Think in Scenarios:
   Even a basic ‘what if’ exercise can help. What happens if your main supplier shuts down? What if your top client cuts their order in half? What if shipping costs double? Planning ahead helps reduce panic when something changes suddenly.
   
   
2. Diversify Where You Can:
   Whether it’s your supply chain, customer base, product offering, or even market geography – the more options you have, the less vulnerable you are to a single point of failure.
   
   
3. Strengthen Your Local Network:
   Recent disruptions have shown the value of local suppliers and partnerships. Building relationships close to home can improve responsiveness and reduce reliance on offshore inputs.
   
   
4. Watch Your Cashflow Closely:
   When uncertainty hits, liquidity is key. Build up reserves where possible and look for opportunities to reduce unnecessary expenditure without cutting into core capabilities. 
   
   
5. Leverage Technology:
   Having real-time data on stock, cashflow, and customer demand helps you make quicker decisions. Digital tools don’t need to be complex – even a good dashboard or online accounting system can make a difference.
   
   
6. Ask for Help Early:
   You don’t need to have all the answers. Speaking with a mentor or adviser can give you clarity, challenge assumptions, and help you move from reactive to strategic. SBMS mentors work with business owners every day to navigate these kinds of challenges.

Resilience isn't about being invulnerable; it’s about being prepared, adaptable, and informed. In a VUCA world, small businesses that proactively plan, diversify, and stay informed will be better equipped to manage disruptions and capitalise on new opportunities.

At SBMS, we support small business owners in strengthening their capabilities and confidence during times of change. Whether tackling challenges or identifying opportunities, our mentors are here to help.