With increasing numbers of households looking for work, and two million people saying that they are unemployed or underemployed, we are now in a state of suspended animation.
There is an avalanche of money sitting in the industrial sector waiting for the signal to spend and the re-emergence of real live bankers willing to visit small business rather than tapping their keyboard.
While more than half of all households tell Morgan Research that “now is a good time to buy”, only a third of them are confident that Australia’s economy will have a few years of ‘good times’ ahead. More Australians are less confident about Australia’s economy over the next 12 months, with 37% (up 4%) of Australians expecting ‘bad times’ economically over the next 12 months compared to 29% (unchanged) that expect ‘good times’.
Australians are less positive about their personal finances over the next 12 months; with 38% expecting to be ‘better off’ financially while 19% say they expect their family to be ‘worse off’ financially. Now 33% of Australians say their family is ‘better off’ financially compared to a year ago while 30% say their family is ‘worse off’ financially.
Case Western Reserve University Professor Scott Shane, one of the world’s leading experts on entrepreneurship, points out that the gap between funds needed for expansion and growth is because banks see small businesses and entrepreneurs as riskier. “They are being told to be more careful about their balance sheets and the creditworthiness of the borrowers,” says Shane.
Banks are now facing higher overseas borrowing costs and greater oversight by distant regulators who believe that small businesses have less collateral to back up their loans. They say that many small business owners had relied on home equity loans to finance their small businesses while the big end of town sits on capital until after the Euro crisis is resolved and the US has solved its fiscal crisis deadlock.
Bad credit decisions presumably in part led to the credit crunch of 2007 and 2008. The instability in the credit system worldwide has led to a loss of experienced senior bankers who had a personal understanding of the time it takes to build a business.
The lending desks are willing to back enterprise that has tangible collateral and at least three years of trading records but see start-ups in their development phase as a family responsibility rather than their own.
Another factor that leads to this state of suspended animation is the application of data mining, checks on social media and technological scanning by the lenders rather than face-to-face discussions with a real live banker. The same business intelligence that helps companies large and small manage everything from supply chains to revenue may soon help lenders judge credit risk, too.
Check out the latest tool for lenders accessing Canada’s largest commercial risk database. Some of the obvious benefits, the tool provider says, include:
Under these conditions, smart companies need to become very customer-focused and brand-oriented to get top of mind and top of the list of “must get” experiences in the pre-season sales promotion business.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.
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