Practical Ways to Strengthen Your Business in an Economic Downturn

Inflation, cost-of-living pressures, productivity headwinds and interest rates are reshaping the environment in which Australian businesses operate.

For business owners, the constant stream of economic commentary can be distracting, and at times, overwhelming.

Resilient businesses focus on what they can control. By acting early, owners can protect cash flow and position the business for sustainable growth when conditions improve. Step back from the day-to-day and make time to review these ten areas.

Ten areas to review

1. Review cash flow regularly. Forecast receipts and payments, identify avoidable costs, and review the pricing and terms of your lending facilities. A reliable cash-flow forecast gives you the visibility to act early rather than react under pressure.
2. Prioritise profitable work. Direct time, people and capital towards the customers, products and services that generate sustainable margins. More sales do not necessarily mean more profit.
3. Protect working capital. Maintain enough cash to meet wages, suppliers, tax, superannuation and other essential operating costs before committing to non-essential spending.
4. Tighten invoicing and debtor management. Review payment terms, invoice promptly and follow up overdue accounts consistently. Make it easy for customers to pay by offering suitable payment options.
5. Review PAYG instalments. If your expected tax position has changed, you may be able to vary your PAYG instalments. Seek advice before doing so: if varied instalments are less than 85% of the tax payable on your instalment income, general interest charge, and in some circumstances, penalties may apply.
6. Keep lodgments up to date. Continue to lodge activity statements and meet other ATO reporting obligations on time, even if you cannot pay the full amount by the due date. Contact the ATO early if you are experiencing financial difficulty. 
7. Consider an ATO payment plan. If you cannot pay a tax debt in full, you may be eligible to pay by instalments. Interest may continue to accrue, so seek advice and choose the shortest realistic repayment period.
8. Assess the instant asset write-off. Eligible small businesses using the simplified depreciation rules can claim an immediate deduction for the business portion of eligible assets costing less than $20,000. The threshold applies per asset, and exclusions and other conditions may apply, so confirm eligibility before investing.
9. Review the treatment of business losses. A tax loss can generally be carried forward and claimed in a future year. Sole traders and individual partners may be able to offset a current-year business loss against other assessable income if they meet the relevant conditions. Ask your advisor how the rules apply to your structure and circumstances.
10. Invest selectively in digital capability. Choose technology that improves productivity, strengthens reporting or makes the business more adaptable. Focus on measurable benefits rather than technology for its own sake.

An economic downturn can expose weaknesses, but it can also create the discipline needed to build a stronger business. Share your findings with a trusted advisor, identify the highest-impact actions and assign clear responsibilities and timeframes. Small, decisive changes now can improve resilience today and create options for tomorrow.

Want to know more about how Bentleys can help you?

Make a time for a chat with us today. We’re here to help you get where you want to be. Read more: Insightful Business Advisory Services | Bentleys Australia NZ

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.