Maximising business trading profits in 2018 requires strategies that are strong and effective.
The world is 2018 sees a digital economy where innovation cycles grow faster and faster.
Businesses are expected to be lean, agile, and responsive to perpetually changing conditions.
While there are challenges in this field, there is also immense opportunity. Devising the right strategy here will not only create the conditions for strong profit today, but be a sturdy foundation for business tomorrow.
- Commit to your business model
Australian business in 2018 can no longer ‘think global, act local’. A generation ago Australian business could seek out new trade abroad confident there remained many markets to break in, and many stones left unturned. While this remains true today, the competition is far tougher. The digital economy has made doing global business seamless for all businesses, big and small.
For many businesses operating in this climate, it’s understandable the always changing nature of the market can be intimidating. Especially in a highly political era where issues like Brexit are will impact on the future of global trade. But it’s for this reason a clearly defined business model is essential to ensure your business can maximise profits in 2018.
The global economy delivers rapid evolution and innovation each year. Many nervous businesses try to build an operation that seeks to defend against this risk by always varying its strategy. But business is always at its best with a steady and strong plan for growth. A business that defines a clear plan, and commits to seeing it through will have a stronger foundation for growth long-term.
- Look to where you can go lean
Disruptors like Airbnb and Uber have found success for a reason. They’ve devised a business model that offers customers a terrific unique selling point while doing so at an economical price.
While the unique selling points of airbnb may be in accommodation, and Uber in transport, their ethos is something all businesses can seek to adopt when looking to maximise trading profits.
A clear-cut business plan is a cornerstone to maximise profits, but it should always be refined.
Like a big tree in the ground, its foundation should remain secure, but its branches pruned often.
In practice this means taking an approach to reviewing your business plan that prioritises ‘little and often’ over one big sweeping review annually. Building this practice into a regular part of your routine is a great way to not only maximise your profits now, but into the future.
- Discuss your port charges before your goods are shipped
Many professionals feel their expertise resides on land, and leave the shipping matters to others.
As a result, many businesses lose a lot of money each year on port charges, and often don’t know how much the charges will be until their ship arrives in port! But there is a way around this.
First, establish via a broker what a fair cost for your shipped goods would be. Then contact your exporter and ask them to confirm from there side what the costs for shipping would be. Do this before you place an order, so it leaves you room to negotiate if the costs are deemed too high.
And if you’re an importer? Reverse this process, and look to negotiate a fair deal with your buyer.
- Look to nations with free trade with Australia
Many nations in Asia have free trade agreements (FTA) with Australia, and more are expected to follow in future. The regional Trans Pacific Partnership and PACER deals also agreed upon, and set to be activated soon.
For Australian business looking to maximise trading profits, prioritizing trade with a FTA nation can maximise trading profits while keeping the costs for supplying goods and services the same.
The deals done in recent years with Japan, Korea, and China are particularly good for existing businesses to explore, as these economic giants now hold friendly FTAs with Australia.
- Establish whether you can obtain a tariff concession
If trading with a country that doesn’t have an FTA there are still ways to maximise your profits.
Look to identify if you are eligible for a tariff concession. While a tariff concession will not provide the reach of an FTA, it does allow certain businesses to receive a reduction in import costs.
And if you are exporting? Seek to discuss with your buyers any tariff concessions that may exist in their country. This can not only help you grow the volume of your trade, but is a really good gesture for building a strong working relationship with your buyer by looking out for their interests.
- Keep a keen eye on emerging markets
Right now Australian business is an immense period of change. For the first time in centuries, the 21st century is expected to see the most of the world’s economic power reside in Asia. This will see greater competition, but also opportunity for Aussie businesses wanting to grow trade.
Alongside Japan, China, and India, South Korea, Indonesia, and Thailand are growth markets.
Keeping a constant eye on growing economies is essential not only for exporting of goods and services, but importing too. Right now China is the economic powerhouse for low-cost manufacturing in Asia, but things are beginning to change. China is now seeking to shift to high-tech manufacturing, just as India, Indonesia, and Vietnam challenge the low-cost sector.
Monitoring these trends ensures you’ll identify opportunities, and navigate their challenges too.
- Monitor exchange rates
Transaction costs will always form a huge part of any businesses operations, and it’s here that trading profits can be maximised with a good strategy in place. Like keeping an eye on emerging markets, being vigilant about exchange rates can save a business a ton of money over time. There’s many ways to keep track of exchange rates, and good institutions to transact with.
CBA exchange rates are always a good starting point. The Commonwealth Bank has a global reach, and is a known name in global trade. This name recognition is always handy when it comes to dealing with new stakeholders and clients. If you also bank with the Commonwealth in Australia, it’s also good to ask them for a reduction in fees given your wide use of their services.