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Here's What Falling Oil Prices And A Weak Loonie Mean For Businesses

02/18/2015 06:02 EST | Updated 04/20/2015 05:59 EDT
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Cork, Ireland

We're two months into 2015 and we've seen more economic surprises than we bargained for. Oil prices are down significantly, the Canadian dollar continues to slide, and interest rates are at historic lows.

These factors have brought hard times to some industries and uncertainty about the broader impacts to the Canadian economy as the whole. While uncertainty is never comfortable, it can present some opportunities and challenges depending on your situation or sector. Here are three to watch for the rest of the year.

Low commodity prices

With low oil prices, Canada's income from oil exports will be reduced. Investment and employment in the energy sector are already feeling the hit with delayed or cancelled projects and job losses. If low oil persists, there could be further negative impact on the energy sector and parts of the economy reliant on that sector. Focus on managing discretionary spending closely and looking at enhancing the efficiency of your operating model.

At the same time, low oil prices can benefit companies who operate in industries such as transportation or manufacturing, where the price of oil is a significant business expense. Savings in fuel costs can be put towards investment in your business including R&D, buying new equipment or hiring skilled talent. Low oil also puts more money in the pockets of consumers, giving them more spending power so look for ways to leverage that added buying power.

Low loonie and buy local mentality

The low dollar will mean higher prices for items that have imported goods as inputs. With forecasts for the dollar to remain low, and perhaps go lower, talk to an advisor about currency hedging strategies. On a positive note, the weakening loonie will keep Canadians shopping here at home. If you're a local manufacturer, retailer or restaurateur this could be good news for your business. Take the opportunity to promote and market your local goods to attract and retain customers while the price is right.

The weak dollar could also create export opportunities

The low loonie means our goods are less expensive for American consumers as well. Most experts agree that the dollar will remain weak in 2015, which should actively help exporters ship more goods across the border. With the recent surge in consumer confidence in the US, now could be a great time to break into or expand operations in the US market.

If you're a business owner or an entrepreneur thinking about launching your own company in 2015, take these factors into consideration. Changes in the economy create both challenges and opportunities, depending on the industry and business you are interested in. The business landscape may have changed, but careful research will help you to identify and pursue new and attractive market opportunities.

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