Before I sat down to write my article for this issue of eTAG, I reviewed what I wrote about the Australian economy from earlier this year. I have realised that since that time a new phrase has entered the Australian economic and business landscape - "a two-speed economy".

A two-speed economy occurs when mining companies and businesses that service the sector experience high growth and record low levels of unemployment, while business outside such as retail, building and construction, manufacturing and export-based enterprises, struggle with falling income and rising costs.

Local and national business confidence surveys have highlighted these trends and consumers are hesitant to spend their cash, preferring instead to pay off debts or save their money.

I strongly believe that the current uneasiness surrounding the Federal Government isn’t helping the economic forecast for small business nationally and in the Hunter.

The carbon tax and the impact it will have on business, especially small business, continues to concern business owners. Rising costs are difficult to pass-on even in good times, but with a slowing economy it is near impossible to increase costs without affecting sales.

There has been some good news with interest rates remaining unchanged during 2011. The Reserve Bank continues to monitor the economy and predictions are for interest rates to remain on hold well into 2012.

Over the past three months, I have also seen a loosening in lending criteria by the four major banks as they start to chase more customers in small business. It is a long way from the pre-GFC lending rules of 2008, but all banks are starting to get more active in the business lending market.

So what does this mean for business owners now?

I believe all business owners will need to push hard on communication and marketing to their customers. Businesses that remain profitable will be those that are best at servicing their existing customers, while constantly monitoring operating costs and overheads.

Stay up to date with trends and changes in your financial position, so you can be proactive, and respond quickly to changes in profitability and cash flow.

Keep positive, and endeavour to spread a positive message to your customers, suppliers and especially your staff. Taggart Partners is here to help you make the most of this economic climate. We can quickly review your financial position and calculate your break even position. Our experienced team can also help you negotiate with your bank.

Remember, by keeping priorities right - staying positive, having good cash reserves and maintaining your customer focus – you can find opportunity in these uncertain times.