One of the biggest challenges for small businesses this year will be the many unknowns out there – whether that’s the direction of interest rates and inflation or the global state of play.

However, they’ll also continue to encounter the chance opportunities that inevitably present themselves. It could be another shift in consumer sentiment, say, or a new gap in the market.

It’s all the more reason to approach the new year well informed.

That means looking at what’s going on in the economy – both locally and globally – and understanding how it might affect your sector. But it also comes down to knowing as much as possible about the state of your own business. In these early months of the new year, it’s worth taking the time to step back and assess your business performance – to decide what’s working, what’s not and, importantly, where you want to head next.

The bigger, brighter picture

Let’s start with some economic context for the year ahead. While there are signs of a slowing Australian and global economy, there’s also good reason for hope.

According to NAB’s economics team, inflation in Australia is coming back under control and we’re very close to the peak when it comes to interest rate rises.

Meanwhile, our labour market remains healthy and is likely to offer up more workers for those businesses in need as the year progresses.

Other good news is the prospect of more money in consumers’ pockets. With the Stage 3 tax cuts being introduced in July, whatever they end up looking like, they will increase most Australians’ spending power. It’s also anticipated that there will be further cost-of-living help in May’s Federal Budget, or possibly earlier.

That said, the various challenges won’t simply disappear. As NAB’s Chief Economist, Alan Oster, has pointed out, the retail and consumer sectors are still struggling (in line with ordinary Australians) and that will continue for a few more months at least before things begin to improve.

New customers for a new year

One bright spot is the prospect of more tourists.

In fact, NAB’s Senior International Economist, Gerard Burg, foresees the return of large-scale Chinese tourism, thanks to an improvement in the processing of passports and visas.

He also argues that the continued thawing of relations between Australia and China will result in improved opportunities for Australian firms in China in 2024.

The benefits of housekeeping

Whatever the situation, careful preparation and planning remain key if you want to do well in 2024.

Here are some ideas to get you going:

Follow the money: Now’s a good time to reconcile your books – to compare business accounts with bank statements – and better understand your cash flow. You might also want to consider whether your accounts receivables are in sync with your accounts payable and review your terms of payment. You’ll also want to take care of any outstanding payments – including your own to those all-important suppliers.

Be tax smart: To ensure you’re on the front foot come the end of the financial year, now’s the time to ask your accountant to project your tax liability so you can plan for any taxes well ahead of time.

Budgeting and forecasting: Whether your business is in a period of growth, transition or maintenance, budgeting and forecasting are great tools for mapping out the path to meet your financial goals. As part of this process, you should take into consideration any number of scenarios that may occur in 2024 and how these could impact your cash flow and what you can do to prepare.

Stay ahead of the game: The start of the year is also a time to look at ways to build additional buffers into your business model.

Focus on what you can control: Make sure you put your efforts into aspects of your business you can influence, like customer service and product quality. If you have some spare cash, consider investing in productivity-boosting technology like automation, AI or cloud computing. Keep in mind, though, that a digital offering isn’t everything – work out whether a bricks-and-mortar or online offering works best for you.

Reduce expenses: Make sure you’re on top of burgeoning costs. Energy Consumers Australia’s SME Retail Tariff Tracker Report shows electricity bills rose 8% for the typical SME between October 2022 and October 2023, and gas bills 12%. Review your energy needs and see if your business could benefit from rooftop solar and LED lighting, among other money-savers.

Protect yourself: Insurance might seem expensive just now, but it matters. You can mitigate the threat of a natural disaster, for example, by ensuring you have the necessary insurances in place.

Boost your cyber safety: The 2020 NAB Cyber Security Survey found that 6 in 10 Australian businesses had been victims of a cyber security incident in the past year, with fewer than 2 in 10 very confident they had the right controls in place. NAB’s Business Security Hub is a great place to start. It includes a free Security Toolkit and a series of webinars to keep you informed. Also keep an eye out for the government’s new Cyber Health Check and Cyber Resilience programs.