2024 is shaping up to be an 'interesting' year. The spectre of interest rates remaining higher for longer, geopolitical tensions and war, above average insolvencies and businesses closing down, customer spending reducing, and supply chain issues could result in one of the best years or worst years for your business.
It would be a bad year if your business is not capitalised properly, meaning having cash and capital to make your business more anti fragile. I generally recommend to my clients to work out their monthly costs to run the business, and then have about 3 months in cash, and 3 months in a working capital facility like an overdraft or line of credit. This makes your business stronger and gives you liquidity, and liquidity is optionality. Meaning, the more capital you have the more weight you have to negotiate with suppliers, can weather issues if customers pay late or go bust, and cover any unexpected costs.
We work with over 40 lenders from the major banks, to non-major banks, non-bank lenders and private lenders to suit all kinds of clients and requirements and can help you with any working capital needs you might have this year.
It could be a great year if your business is well capitalised and you can take advantage of the market and opportunities. If your competitors do not capitalise their business and fall over, you might be able to buy them and grow your business through an acquisition, or they might not be able to win contracts in your industry which opens up opportunities for you for new work.
In every crisis there is opportunity, and even if there is no crisis, having capital gives you options, and the more options you have the better chances you have of growing your business.
Here’s what’s making news in the early days of 2024:
Population set to pass 30m
Workplace law reforms
Job vacancies fall again
Five business incentives
Read more below.
The population will get significantly larger over the next decade, despite a steady decline in population growth, according to projections from the Centre for Population.
Australia’s population expanded by 2.4% in the 2022-23 financial year. However, that growth is expected to slow to 1.9% this financial year, 1.4% the year after and 1.2% by 2033-34, due to a marked decline in overseas migration.
Nevertheless, the population is expected to rise from 26.6 million in 2022-23 to 30.9 million in 2033-34.
Treasurer Jim Chalmers said understanding population trends was necessary to build a strong economy and a dynamic labour force.
“We recently released our Migration Strategy and we are taking considered and methodical steps to ensure Australia has a carefully calibrated migration system that works in our economic national interest,” he said.
“We are also working to improve the liveability of our cities, suburbs and regions including through significant investments in housing supply, a recalibration of the infrastructure pipeline, and substantial investments in Medicare and essential services.”
Several new workplace regulations came into effect on 15 December, including stronger protections against discrimination for employees experiencing family and domestic violence.
Under changes to the Fair Work Act as part of the new ‘Closing Loopholes’ laws, it's now unlawful for employers to take adverse action (including dismissal) against a current or potential future employee because they are or have been experiencing family and domestic violence.
There have also been changes to the redundancy rules. Generally, small businesses don't have to give redundancy pay to employees who are made redundant. However, businesses may now have to do so if, in the process of downsizing, they cross the threshold from non-small to small business.
Meanwhile, employees, unions and host employers can now apply to the Fair Work Commission for new types of orders relating to labour hire employees. When one of these types of orders applies, a labour hire employer must pay the employees they supplied to a host employer at least the same rate they’d receive under the host employer’s enterprise agreement (although exceptions apply).
Job vacancies have now fallen for six consecutive quarters, reflecting an easing of the labour market in favour of employers.
Vacancies reached a record 475,800 in the May 2022 quarter, according to the Australian Bureau of Statistics, but have steadily fallen since:
August 2022 = 461,100 vacancies
November 2022 = 454,100
February 2023 = 439,100
May 2023 = 426,900
August 2023 = 391,700
November 2023 = 388,800
Still, the number of vacancies in November was more than 50% higher than the 10-year average of 254,600 per quarter, which shows that the labour market remains tight.
The trend, though, is clear. The Reserve Bank’s plan to tame inflation by raising interest rates and pulling demand out of the economy is working: economic growth has been falling and unemployment has been edging higher.
That means the balance of power in the labour market has been shifting from employees to employers. As a result, annual wages growth – which steadily increased from 1.3% in 2020 to 4.0% in 2023 – is likely to be at or close to a peak.
Businesses that want to make the most out of 2024 can access a range of tax breaks, grants and support programs offered by the federal government.
The instant asset write‑off allows small businesses to claim an immediate deduction of up to $20,000 for the business portion of the cost of an asset in the financial year the asset is first used or installed ready for use. Eligible assets or upgrades will need to be first used or installed ready for use before 30 June 2024.
The Small Business Energy Incentive gives small businesses an additional 20% tax deduction on spending that supports electrification and more efficient use of energy.
Under the Industry Growth Program, your small business can be paired with an adviser who will provide tailored advice to support your commercialisation and/or growth project. Once you've received this advice, you may also be able to apply for:
Grants of $50,000 to $250,000 to support early-stage commercialisation projects
Grants of $100,000 to $5 million for commercialisation and growth projects
If you're feeling stressed, NewAccess for Small Business Owners provides six sessions of free mental health coaching for small business owners, while the Small Business Debt Helpline is a free service for small business owners in financial difficulty.