Challenging Realities Ahead For Small Business Sector

Challenging Realities Ahead For Small Business Sector

Falling confidence, fragile operating conditions and the shadow of inflation are just some of the economic challenges stacking up for small business owners in 2022.

This year’s Pulse Tracker from The Alternative Board tells the story of small business survival through the second year of the pandemic and, while the strong, steady beat of the small business pulse remained consistent through the first onslaught of COVID19, it has now quickened with anxiety as the realities of the pandemic’s midpoint move into view.

The Pulse Tracker charts the progress of small businesses and their owners through a year that has seen them grapple with employment issues, cash flow crises, supply chain breakdowns, port disruptions, rising costs and other problems.

Alfredo Puche, Managing Director of The Alternative Board said: “Confidence remained high until July, despite the many obstacles and uncertainties but the Delta outbreak cracked that confidence with many business owners who had resolutely worked their way through the highs and lows finding themselves exhausted – and some have reached breaking point.

“July also saw the first red flags with business owners warning their prices would have to rise in response to higher input costs. The prolonged lockdown in Auckland plus restrictions across the rest of the country eroded confidence even further, with many feeling it was time to sell up and move on”.

The latest phase of the pandemic is crunch time for many, taking some by surprise with its severity and cementing the view that doing business is likely to get tougher.

With the end of the year in sight, owners are analysing the potential scenarios 2022 might deliver and planning how they will cope. Inflation, rising interest rates, worsening supply chain issues, the implementation of vaccination policies plus the advent of a new variant have fuelled the uncertainty clouding the months ahead.

The Pulse Tracker tells this year’s small business story, as seen through our quarterly Pulse Check, which provides ongoing insights into how owners have managed during 2021, where they are now, and how they will tackle the challenging realities ahead.

The Alternative Board supports small to medium-sized businesses and their owners through advisory boards consisting of other local business owners, expert one-on-one coaching, a suite of business planning tools and business mentoring. The Pulse Check is a quarterly monitor of the sector and the Pulse Tracker aggregates and analyses the research results for the whole year. Each edition of the Pulse Check has a confidence level of 90% and a 5% margin of error.

You can download a copy of the tracker report here.

We will continue to check the pulse in 2022 with the next edition scheduled for mid February.

Each Pulse Check has had a confidence level of 90% and a 5% margin of error.

We’ve Done It Before – We Can Do It Again

We’ve Done It Before – We Can Do It Again

A sudden slip into Alert Level Three, the blast of the emergency ‘COVID’ warning through our phones and once again we’re into the balancing act of keeping our businesses moving in exceptional circumstances.

Last month our Pulse Check results told us how adaptable and flexible New Zealand’s small business are, with business owners altering operations and changing practice in order to survive the challenges that 2020 has thrown at us all. Just as we have rolled out our August Pulse Check – which you can access here if you would like to participate – the beat has changed again and, in Auckland, we are facing at least three days at Level 3, probably more, with the rest of New Zealand parked up at Level 2 for the time being.

We asked our Auckland team for their thoughts on the current situation and their advice was simple — we’ve been here before, rely on past experience and know that it will pass.

The Alternative Board’s managing director Stephen James said: “Knowing it will pass, spend some time addressing a few scenarios. For example, if Level 3 lasts, as announced, for three days what do you need to do? Or, if it remains in place for two weeks or if Level 4 is declared and we have full lockdown for an indefinite period — what then? Develop plans of action for each scenario and communicate these to your staff and stakeholders.”

Scenarios are very helpful when it comes to managing uncertainty as Alfredo Puche explained in his recent blog post. Other helpful advice is to be found in Gordon Stuart’s tips on surviving a recession and Karen Van Eden’s thought-provoking piece on thriving in times of uncertainty.

Whatever your approach, remember that The Alternative Board is here to help you, the business owner, manage and grow your business regardless of circumstances — and we are all here, ready to help you.

As Karen says: “We’ve done this before – together we can do it again. Stay safe, stay well.”

Turning disasters into opportunity – the case for planning and the lessons learnt

Turning disasters into opportunity – the case for planning and the lessons learnt

The thing about business planning is that it presents options that are available at some future point. Having a clear view of potential options can be remarkably useful. Especially when your business collapses around you.

Take this example – a TAB member had a small engineering workshop in Tauranga, with two CNC machines that were fully committed. The opportunity to expand capacity was in the 2021 plan (built using the TAB planning tools). In mid-2019 disaster struck – one machine failed and the business was in real trouble. The machine was no longer supported by the manufacturer and after six weeks of attempted repairs and imported second-hand parts that failed to help, the reality was accepted. Customer orders had been given to competitors to supply and the machine was scrapped.

Now the choice was to re-invest or close!

Fortunately, the planning had been done on new capital investment and the monthly accounts were in very tidy order in preparation for the inevitable scrutiny by a lenders credit committee. So a new machine was purchased at $200,000 and the business began a new chapter.

Lessons learnt;

Time out of the business: This owner was forced to take time away from being completely focused by his workshop and now had time to talk to customers and potential customers. What he learnt was worth more than his lost production.

Customers: This was the opportunity to leave behind the customers who were low margin or late payers as the company took on new business.

New Investment: The new machinery catapulted the business’s capability over the competitors and gave the business a competitive edge to talk about. It changed the business’s position in the Tauranga engineering business.

New business: Was being won on the capability of the machine, at improved margins, for the reality of the market was different from the owner’s perception. It was not a priced based market! The lowest price was not the key desirable. It was reliability-based. Customers were willing to pay for surety of supply and were not interested in obtaining a lower price.

– Craig Ross, The Alternative Board Business Owner, Bay of Plenty

The Alternative Board - OwnersTauranga & Rotorua