How will the next five years be different to the last?
2005 marks a turning point for us economically and socially, with some of the triggers of change being external and international and some internal and about us.The main economic trends that have driven our sustained period of growth in the last 10 years are undergoing sudden changes:
- End of housing boom
- Business outsourcing rush of the 1990s has slowed to a trickle
- The leading edge of the baby boomers are moving into retirement
- Moderate and falling unemployment is giving way to low unemployment and skills shortages
- Petrol prices are rising sharply
- Inflation has been under 4%, but interest rates have bottomed
- US economy is picking up while Asian economies continue growth
But economics is not about numbers, it’s actually about people, and how we react to external changes. There’s a tightly integrated relationship between these economic forces and our changing social, cultural and consumer patters. The relationships work both ways. We know from the headlines how much economics influences people, but when we look closer we can also see how people influence economics.
Emerging social and cultural trends give clear indications to astute business people about how the customer base is changing.
Many small businesses are product driven, devising and selling products and services that meet the skills and interests of the business owners and staff. But with the customer base changing, it is vital for small entrepreneurs to predict customer needs and devise and sell new products and services to meet those needs, rather than simply continuing to sell what they are good at supplying.
Some of the most important social and cultural trends which we are only just beginning to experience are:
- The leading edge of the baby boomers is moving into retirement
- Generation X is moving into positions of authority in politics and business – bringing a new set of values and demands
- Generation Y is starting to make its presence felt in the workplace, and is already a major consumer force
- The nature of our households is changing as
o More of us are living alone
o Grown-up children are staying at home longer (and longer and longer!)
o Fewer of us marry, and marriages are shorter
o Fewer women are having children and those that do are having them later in lifeAustralia's Population in 2005
The chart shows the profile of the Australian population in 2005 – 20 million of us with the peak at 40 to 45 years of age, and the leading edge of the baby boomer group moving into their 60s.
This baby boomer group has been ageing steadily, as shown in this series of charts prepared by the ABS in 1999.
1961
2001
2031
The charts show how we are just at the start of a period where baby boomers are moving out of the workforce and into retirement in bigger and bigger numbers.
Over the next decade, each year there will be nearly 10,000 more Australians turning 65 than there were the previous year – peaking at over 330,000 in 2035 – up from around 171,000 this year. That’s a strong market for gold watches.
Our population is forecast to keep growing at a little over 1% per year over the next 20 years, but around half of this will be through immigration rather than Australian-born children. The growth will not be spread evenly around the country – with the capital cities, ‘sea change’ destinations and ‘tree change’ destinations the winners, while other parts of regional Australia are expected to keep losing population.
Contrary to the image of sea changers being cashed-up early retirees from the cities, when the ABS looked at who had moved to coastal shires outside capital cities between 2000 and 2001 they found that the movers were:
- under 50 (79%), many in their 20s
- not from capital cities (69%)
- a mix of families and singles
- in the labour force but often unemployed.
The chart below shows an example of population changes (past and forecast) for a mixed regional area – Southeast New South Wales from the coast south of Nowra to the Snowy Mountains.
The chart is typical of many regional areas, showing the aging of the population as the later year lines drift across to the right, some in-migration to the coastal parts of the region as the lines drift up, and the big dip in 15-24 year olds as young people move away for education and life experience.Implications for small business
These economic and social influences are changing the nature of our customers – changing who they are and what they want. These influences are having a major impact on small businesses – opening new markets while old markets disappear.
The small businesses set to profit from the future are those tapped into these influences, and who are willing and able to reposition their operations to take advantage.
Other parts of this website show readers just how important these changes are, and highlight tips and tricks to help small businesses position themselves for growth over the next decade.
This information is a broad overview, designed to be useful for small business operators. We hope the information on this website will stimulate your thoughts about where your business is going.
The Small Business Futures workshops allow us to go beyond the overview, to customise information for any geographical area in Australia, and to take the time to run through the implications of these big picture trends on individual towns, regions and businesses. If you would like to book a workshop in your community, click here.
