Is New Zealand headed for an economic winter? What do the next six to 12 months look like for businesses as our economy recovers from the past two years? What should businesses be doing to ride out the tough times?
Valerie Rowe-Mitchell, Director at Emerald Business Advisers Limited, shares her thoughts on our economic situation and her tips on how businesses can survive and thrive through this time.
There is no doubt about it, the belts will need to be tightened. Remember the times before the pandemic? Business was going well and there was a sense of certainly, but those times are gone, and we need to refocus and recalibrate to the new circumstances.
Have you heard of the term ‘Economic Winter’? These are the times characterised by inflation and high levels of bankruptcy. Prior to these times, as a rule, the interest rates are very low and borrowings are very high by individuals and businesses, and therefore there is too much credit in the economy. During the economic winter, the credit is flushed out of the economy.
What does this mean for you? It will be a lot harder to convert your product or service into sales; people will be slower to part with their hard-earned dollars and some businesses will have to close their doors.
But the strong will strive and survive. In economics, we say if you survived economic winter, you can survive any economic challenge.
The best investments you could be making right now are these:
- Invest in yourself, in your financial literacy and business education.
- Invest time in your business. I would like to encourage you to substitute the word business with the word system. The system is what that delivers results to your customers and not just results, but excellent, desirable and timely results.
Remember that every winter is followed by spring.
The two main areas that are extremely important during tough times are:
- Meticulous management of business costs. You need to know what metrics to watch and what the numbers are actually telling you.
- Management of your time. You have 24 hours each day, everyone gets the same allocation. If you use these 24 hours to your advantage it always translates into excellence.
An entrepreneur’s mind is a very sophisticated and processes multiple factors before making any decisions. Every time you are pricing, pitching and selling, you will need to think of your turnover, margins, profits, tax, opportunity cost, customer satisfaction, team satisfaction and much more. Investing in your financial literacy will give you the tools to see how your business is really performing so you can make better decisions. When times are tough it’s important to not fly blind.
Running a business is a bit of an art, but it’s also a muscle which needs to be trained and developed. An economic winter can bring challenges, but it will also bring opportunities for those who are informed, focused and ready to roll their sleeves up.
Get in touch with us if you are looking for a trusted business adviser. We are happy to assist and help you thrive today, no matter what season we are in.
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