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Challenges for Businesses in Australia Navigating External Factors

Updated: Jun 6, 2023

As business owners or business leaders in Australia, we face challenges while navigating the ever-changing landscape of our economy. Managing the impact of variables like rising inflation, uncertainty on interest rates and unemployment levels can often feel like an uphill battle. The challenges that come with running a business can be daunting, but understanding how you can respond will help ensure that your businesses and teams stay competitive in this environment. In this blog post, we will explore different approaches that businesses in Australia are implementing to address these factors.

Avila Consulting | Business Challenges

Overview of the Current Business Challenges in Australia

Running a business certainly has its challenges, and right now in Australia, there are a few key factors that are making things trickier than usual. Inflation, with a yearly increase of 6.8% according to the latest report by the Reserve Bank of Australia (annual to April’23QTR), and interest rates, currently standing at 4.10% (Jun’23), are fluctuating more than ever, significantly impacting companies' budgets and financial planning. Additionally, low unemployment rates, currently at 3.7% according to the Australian Bureau of Statistics (April’23), present a double-edged sword for businesses. While it indicates a healthy job market, finding skilled workers can be challenging, potentially hindering growth.

These factors, along with taxation, have been highlighted by business owners as some of the most important concerns for their businesses. In response, various actions have been identified, such as delaying investments, pushing for tax reforms, and reducing costs. Larger organizations also tend to incorporate these external factors into their strategic planning and risk management processes.

Exploring Different Approaches

While these factors can have a significant impact on business operations, I wanted to highlight three of the different approaches business leaders and organisations are taking:

1. Maintain Status Quo:

This would be the case of organisations or managers, when faced with uncontrollable factors, adopting a static approach. They firmly believe that certain external forces, such as inflation and interest rates, are beyond their control and, as a result, choose to remain unchanged. While this perspective offers a sense of initial stability, it can limit their ability to adapt and thrive in the future. An example of this approach would be an organisation that solely attributes its underperformance in sales or profitability to external factors without reviewing its strategy or tactics.

2. Defensive Approach:

Under this approach, you will find businesses that will acknowledge the impact of these external factors and focus on minimising their impact through cost-reduction measures. Actions such as delaying investments, reviewing the organizational structure, and divesting non-core areas of the business are some examples.

3.- Proactive Approach:

On the other hand, some businesses will acknowledge these external factors and work on minimising their impact through effective risk management practices. This includes staying informed about variations and forecast scenarios and being proactive in developing contingency plans in response to potential threats. On top of this, these organisations will proactively review their strategy and adapt it to increase and achieve their goals (ie. Sales or EBIT target). If consumption spending is declining, is there any chance to review different consumption occasions? Is there any segment or customer base that we haven’t explored before? Do we have the right mix of services in place? This approach is about reviewing the business opportunities through both cost and revenue lenses.

Remain Competitive and Grow

Despite the many challenges facing businesses today, there are still ways to remain competitive and achieve growth in the market. It is important to not only be mindful of external factors like inflation, interest rates, and employment but also examine how your business practices can be adapted. Having a well-defined strategy, setting targets, reviewing progress, and making adjustments when required are key to reaching your goals.

At Avila Consulting, we understand the complexities of running a business, and we are dedicated to helping organisations achieve their goals. Visit to learn more about how we can help your business grow.


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