Consumer confidence data released this week by ANZ for the short and medium term also confirms this. This is particularly relevant for businesses that rely on discretionary spending, like retail stores, cafes, and restaurants.

While these challenging times can feel daunting, it's important to remember that economic cycles are just that - cyclical. Just as discretionary spending feels tight, a brighter future awaits with the potential for lower interest rates and increased consumer spending.

The key to navigating this period lies in proactive management and a deep understanding of your business's financial benchmarks. 

But here's the good news: even during economic downturns, there's an opportunity for resilience and positioning the business for the upturn. 

Here are some key questions to consider, helping businesses to navigate this period and emerge stronger:

• Do You Know Your Numbers? This is crucial. Understand fixed costs, gross profit margins (on each product), and sales volume needed to cover expenses, loans, and taxes. 

• Cost or Value? Identify your competitive edge. Does the business compete on price or value? If it's value, ensure the marketing effectively communicates the benefits your product or service offers. If it competes on cost, review cost structures and negotiate with suppliers for better deals. 

• Are You Reaching Your Full Customer Base? Engage with and listen to existing customers. Is your market saturated, or are there geographical or online markets waiting to be explored? Consider using distributors or alternative sales channels to increase the market size. 

• Planning and Budgeting: A well-defined budget with close monitoring allows you to identify and address variances. Open communication with suppliers builds trust and strengthens your business relationships. Remember, good communication goes both ways – don't leave suppliers hanging.

• Strategic Thinking: Why do people choose your product over alternatives? How can you maintain visibility and stay top-of-mind for consumers? Is there an opportunity to pivot to another venture that you could operate in profitably? Is profitability able to be improved by offering enticing deals that capture or increase customer spending without sacrificing value?

Remember, you're not alone. Many businesses are facing similar challenges. By staying informed, being proactive, and seeking support when needed, you can weather this storm and come out stronger on the other side.

By focusing on good planning, cost management, communication, supplier relationships, and a strategic value proposition, you can navigate these challenging times and build a bridge to a brighter future.

This economic cycle, like all others, is temporary. Consumer confidence will return, and with it, increased spending. By taking proactive steps now, your business will be well-positioned to thrive when brighter days arrive.