BNZ: know your numbers & seek help to maintain resilience.
The 0.3 per cent fall in New Zealand’s gross domestic product (GDP) in the September 2023 quarter confirmed what Kiwi businesses already knew: 2023 was a challenging year in a patchy economy.
Now, according to a BNZ expert who has spent 16 years helping hundreds of customers navigate several difficult economic cycles, it’s a good time to look ahead to 2024, to plan and prepare your business for a year in which continued headwinds can be expected to blow – and where business goals might have to be revised.
“The December retail figures were the ones to watch,” says Stacey Martin, Senior Partner, BNZ, whose 16-year tenure with the bank has equipped her with valuable experience when it comes to weathering economic storms.
Those figures showed that total retail sales fell by a seasonally-adjusted 2.0 per cent in December when compared with the prior month, according to Stats NZ. Core retail spending, which excludes fuel and vehicles also fell 2.0 per cent, while all card spending - including non-retail industries – was down a seasonally-adjusted 0.6 per cent in the month.
The lingering high cost of living, high Official Cash Rate (OCR), and sluggish demand are putting pressure on consumers and businesses in 2024. From manufacturing, which dropped 3.4 per cent in the September quarter, to the dairy sector where milk prices are finally seeing signs of recovery, every business is addressing the soft economic conditions in its own way.
But as many entrepreneurs and business owners took a break to recharge over the holidays, Martin says it was also a good opportunity to think about business goals for this year – and a big part of that, she says, is “understanding your numbers”.
“Knowing your numbers is essential as well as knowing the cycles that affect your business.”
In a tight economy, it’s crucial to have an emphasis on effective inventory management, cost controls and ensuring you are doing everything you can to fill your sales pipeline.
“Have you got a good inventory management system? What is your ecommerce set-up like? Do you know your website traffic statistics, and sales conversion rates, and when is the best time to run promotions?”
These are fundamental questions worth reflecting on as we head towards a new financial year. With lots of subscription software packages like Xero, Shopify, and Hubspot now available to small and medium-sized businesses, gleaning the intel to make informed business decisions is easier than ever.
Martin says key questions for business owners are whether they are getting sufficient advice, mentorship, and guidance to help their business thrive in 2024.
“Is your accountant giving you good advice or just doing your tax return? You may need the services of a business adviser to get more meaningful support,” she says.
For businesses facing a looming cash flow crunch, Martin advises reaching out for support as soon as possible. That help is available from more sources and in more forms than business owners may realise.
An accountant can help with cash flow forecasting for the next 12 months while a bank manager can help talk through solutions to potential cash flow challenges. They could include securing a temporary overdraft, or temporarily going interest-only on loan repayments to lessen the strain on finances. Bridging finance can be provided for large invoices or inventory purchases coming due.
“The most important thing is to communicate with your bank, your accountant, and fellow business owners,” Martin advises. “It requires a willingness to be a bit vulnerable. There are a lot of avenues for help available, but often business owners feel they have to battle on alone.”
Multiple avenues of support
The Covid-19 pandemic saw a deepening relationship between banks and their customers as they worked together to navigate the economic crisis caused by the spread of the virus and the resulting lockdowns: “I felt very proud of BNZ – that we were so proactive in helping our customers access government and other support” says Martin.
The support network for businesses is now stronger than ever. For BNZ, collaborations with the likes of entrepreneur mentoring organisations The Icehouse, Dsrupt, and Indicator which helps business owners manage their growth journey, have helped clients get the support they need.
“We are also well networked in local chambers of commerce, agencies like New Zealand Trade & Enterprise, and programmes like Digital Boost. A good bank is part of that entire ecosystem and part of a community that can help.”
For seasonal businesses which may face a lean few months over the summer, Martin suggests getting back to basics to rustle up sales: “Come up with special offers, and maximise every marketing opportunity you have, including via social media and digital marketing channels.”.
Foster customer loyalty
For instance, those in retail or hospitality could reach out to surrounding businesses with loyalty discounts and partnership offers for catering, events and private functions.
“That’s a good way to generate some foot traffic through the door,” says Martin. “Customer loyalty is particularly strong in the regions. People want to back local businesses.”
For those entrepreneurs who don’t see a sustainable way forward for their business, Martin urges them to explore all options before throwing the towel in. “It may not be the end of the road for that business venture, or the idea you originally had,” she says.
“Most successful entrepreneurs have failed at one point in their career. But most successful businesses are well networked and connected. That’s what will make you and your business resilient as we face continued economic challenges, at least in the first half of 2024.”
For more information: Start and grow your business – BNZ.
This article is solely for information purposes. It’s not financial or other professional advice. For help, please contact BNZ or your professional adviser. No party, including BNZ, is liable for direct or indirect loss or damage resulting from the content of this article. Any opinions in this article are not necessarily shared by BNZ or anyone else.