As we near the end of 2023 and look forward to the year ahead, we want to wish every small business in New Zealand a happy Christmas and New Year. We hope you are able to spend some quality time with friends and family and to recharge, ready for the year ahead. We thought we would take the opportunity to reflect on the tough past year for local businesses and provide some insights into what we have seen as trusted advisors working with our clients around the country.
Client Needs
With the tightening economic conditions, business owners have been increasingly more aware of the need for their staff to be performing in their respective roles, throughout every level of their organisation. Higher inflation, higher interest rates, higher wages and ever increasing compliance costs have made business owners and senior management more aware of staff being accountable and reducing waste. Where there was an increase in avoiding and/or managing potential personal grievances during the Covid pandemic years between 2020 and 2022, 2023 has seen a shift to a trend of more performance management of staff from their employers.
Technology
From a technology perspective, our Business Sentiment Survey in 2023 showed a routine approach to small business uptake of technology. During the times of Covid lockdowns, there was an obvious large uptake of digital technology platforms such as Zoom to help people communicate remotely. There was also a trend in staff working remotely. As normal face to face interactions have returned, the use of these technologies has reduced. Ultimately, we are social beings who are most attuned to interacting in the same space. However, the increase in working remotely has increased options for businesses in regional New Zealand, and online video meetings have expanded business networks and ease of communication both locally and globally.
Business Challenges
From 2020 to 2023, businesses have experienced huge challenges from inflation, interest rates, wages, compliance, disrupted distribution channels, falling sales, immigration, Government policies and global unrest. These challenges have had a massive impact on the viability of small businesses in New Zealand. During 2023 there have been some improvements. For example, while prices are still high, shipping costs have reduced somewhat, and consistency of supply is better. Sales volumes in some sectors has started to slowly rebound and inflation is starting to ease (although still too high). The recent change in Government is signalling a more business friendly approach with the reintroduction of the 90-day trial and the scrapping of the Fair Pay Agreements. However, the challenges ahead remain very real with high interest rates, potentially stubborn inflation, wage pressures and uncertainty.
Best Practice
While businesses have had a very tough time, there are many businesses who have not only survived, but thrived. Many of our clients who have done well, have done so by following recommended best practice from our advisors. Every business is unique. However, there are a number of principles that any business can use to improve their performance in financial management, people and performance development, systems and processes, customers, marketing and sales. These businesses have learned to leverage our advice and develop businesses that are flexible and adaptable to meet the inevitable challenges that they face. They have become both more resilient and successful as a result. Bring on 2024!