Where will your business be in ‘09?
Aaron Lavell from WMS Accountants gives a snapshot of the sectors likely to perform and those that have been caught out by the credit crunch
The stragglers
1. Most retail businesses.
2. Any industries dependent on bank funding without very strong balance sheets – we are observing many ‘accidental developers’ and geared developers being placed into survival mode due to the shrinking number of financiers in the market and the conservative approach of those still in the game. Notwithstanding base rates have some down, the banks are using the cost of funding excuse to increase margins significantly.
3. Many financial advisory groups whose income is linked to funds under management – large reductions in 2009 and risk of clients flocking back to security of cash.
4. Consultants to industries above which are struggling – eg consultants to building industry unless well diversified client base of majors or beneficiary of government spending in infrastructure etc to stimulate the economy.
5. Importers as the Australian dollar has come off significantly in last 12 months.
6. Commercial property sector following market loss of appetite post Centro etc and weak outlook for commercial rents.
The performers
1. Wellness-based businesses as consumers place a greater reliance on health.
2. ‘Green’ businesses with strong points of differentiation and low overheads.
3. Insolvency operators and corporate work out specialists – in difficult times, these skills are highly sought after in the market place.
4. Affordable aged care offerings – demographics have not changed and still a large demand for manufactured homes, retirement villages and supported living. Buyers will be more selective and quality expected to rise to top.
5. Those in a position to participate in the Federal Government’s infrastructure spending stimulus package – eg road builders, some property and all the associated industries.
6. Litigation lawyers as people seek to escape contractual obligations because of the change in economic circumstances.
7. ‘Vulture’ funds acquiring assets at distressed prices – not just property but trading businesses as well.
8. Those that will benefit from the flight to quality as companies seek out those best able to help them in the coming months. Second tier service providers with a reputation of quality will benefit from two directions - from larger clients deserting the high cost first tier firms without sacrificing the high end level of advice and assistance to which they have become accustomed and demand, and from clients of smaller firms that do not have the grunt and cannot provide quality advice to shepherd them through these troubled times.
9. Exporters as the Australian dollar has come off significantly in last 12 months.
)
