The Hunter's set to boom. Are you ready?
The coal industry in the Hunter is booming, thanks to higher prices and demand from rapidly developing economies such as China and India. Coal exports from Newcastle, already the world's largest coal export port, are predicted to nearly double over the next decade...

Planning for growth. Will your funding keep up?
One of the key challenges for a business considering expansion is ensuring that working capital reserves are protected...

Business assistance. Where do I go? 
Assistance to business in Australia is provided by a myriad of Commonwealth, State and Territory government agencies. In some cases help is also available through industry and community groups...

By our Business Services team

The coal industry in the Hunter is booming, thanks to higher prices and demand from rapidly developing economies such as China and India. Coal exports from Newcastle, already the world's largest coal export port, are predicted to nearly double over the next decade.

Investing in the future 

In order to meet this level of expected growth, significant investment in all areas of the Hunter Coal Chain’s infrastructure is being made. The recently opened third coal terminal on Kooragang is a great example. In addition, significant investment in rail infrastructure by the Australian Rail Track Corporation is underway as well as investments to expand the capacity of haulage providers.

Like it or lump it, Coal is King. 

The importance of the coal industry to the Hunter and NSW cannot be underestimated. The NSW mining industry is a major employer in NSW with over 38,000 direct jobs. About 15,000 of those are here in the Hunter.

If you include the 30,000 jobs in minerals processing then some 18% of NSW employment is directly or indirectly related to mining. 75% of that figure resides in regional and rural NSW.

The industry spends more than $2 billion a year on local and regional suppliers in the Hunter and contributes more than $10 million a year towards local community projects and amenities.

So what does all this mean for you and your business?

The ‘knock on’ effect

One of the very interesting things is the extent of the ‘knock-on’ effect which the coal industry has across the Hunter economy. The increased activity will extend from the coal producers digging up the coal to the service providers hauling the coal to the small and medium sized businesses and sole traders such as the painters, steel fabricators and machine shops. 

All are critical to the supply chain and all are heavily reliant on a steady flow of orders. 

How to get your share

However, business owners need to realise that sitting back and waiting for your slice of the profits from the boom may mean that you will in fact miss out. It is important to act now and prepare your business to take advantage of the increased opportunities that will be available.

In particular, you should consider the following tips:

1. Understand the current health of your business.  A good starting point here is to get your financial statements up to date and perform a thorough analysis of them.
2. Understand how your business is currently operating. Determine what changes may need to be made in response to changes in your customers’ demand requirements. A strategy can then be formulated based on your findings. For example, you may need to add capacity to the business by adding staff, machinery etc or maybe shifting capacity elsewhere within the business.
3. Review your business plan. As the saying goes ‘failing to plan is planning to fail’. Update the plan where appropriate to include how to expand the capacity of your business. You will also need to consider how much the expansion may cost and how this will be paid for.
4. Implement the plan. But keep a close eye on your cash position and profitability.

Talk to us

The best investment you can make is to get the right advice. Through our specialist Business Services team you’ll have access to the combined expertise of six Partners and over eighty professional staff.

For a no-obligation chat about how we can help position your business to cash in on the boom, call 4928 8500. Ask for David, Adam or Steve.

An integral step in the planning process is to undertake an assessment of your current finances and then factor in the expected costs associated with any proposed expansion. In addition, cash flow projections will need to be updated to include the additional costs and revenues expected from the planned expansion.

Some of the questions that you should ask/answer in preparing your plan are:

1.    What will my financing requirements be?
2.    Will we rent or purchase business premises?
3.    How can I purchase my own business premises?
4.    Where can I get finance for a small business?
5.    What options are there to improve the business cash flow?
        a.    Should I consider hire purchase, leasing or other?
        b.    Should I pay cash for capital equipment? 
        c.    Should I finance my company cars? 
        d.    Will a new supplier want deposits?

Once you have updated your cash flow projections you will be able to realistically determine if you will encounter any difficulties with your ongoing/ proposed commitments.

Where a decision is made to obtain finance to allow the business to expand, it is critical that the finance is specifically tailored to your business. Poor finance structuring can puts assets at risk, strangle cash flow and erode tax benefits. However, there are a number of proven strategies to help you better manage your business finances.

Cutcher & Neale’s specialist Finance Broking team can help. We take the time to understand your business and will work with you to structure your business finances so you can achieve your goals now and into the future.

For a no-obligation chat, call 4928 8500 and ask for Alan Johnston.

By our Business Services team

Assistance to business in Australia is provided by a myriad of Commonwealth, State and Territory government agencies. In some cases help is also available through industry and community groups.