The US election will not simply affect political change in America. The ramifications of a Donald Trump presidency will be felt across the globe and reverberate all the way to Australia. So what might it mean for your small business?
From uncertainty over trade deals to fluctuations in the dollar, we are already feeling the impact from the election – and there are a number of ways it may affect start ups and small businesses.
The fall of the dollar
Donald Trump’s victory in the US election had immediate knock-on effects for the economy of many countries, Australia included.
During the election count, the Australian dollar fell by 1.5%. By late November, it had dropped to a five-month low. But US investors continue to spend, confident that Trump’s administration will boost government spending and cause a spike in inflation and interest rates.
Strategists at the National Australia Bank predict the Australian dollar might fall as low as US70 cents during 2017, creating problems for small businesses trying to tap into an international market.
Changes to trade restrictions
A shake-up of global trade agreements will also have wide-ranging implications for Australian businesses.
In interviews, Donald Trump has made it clear that he is not a fan of the North American Free Trade Agreement (NAFTA) and the World Trade Organisation, and may withdraw the US from both.
He has also indicated the possibility of imposing hefty tariffs on imported goods from China and Mexico, which has the potential to spark a trade war with the former. This would have a massive impact on the import and export trade around the world, and it could hit Australia particularly hard, thanks to our reliance on trade.
Traders spooked by uncertainty over foreign policy
As Trump is new to office, many investors are cautious about making decisions until the president-elect’s foreign policies and plans for the future become clearer.
If the US government encourages a rise in protectionism, smaller, more open economies will suffer in comparison to larger, more self-sufficient countries like America.
However, some are predicting a rebound in Australia’s dollar despite the uncertainty in the US. Goldman Sachs’ Australian Chief Economist predicts growth of 2.8% in 2017, thanks to the huge surge in coal and iron prices in recent months.
In a climate where paying invoices quickly and squaring up accounts on time is crucial, easy-to-use software like QuickBooks Online – which allows small businesses to manage their finances quickly and easily – will prove essential.
Be inspired by other small businesses that stayed the course despite tough situations by checking out the survival stories of three inspirational entrepreneurs.
To read more articles related to how to run your business, visit here.