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.

Clear out the Clutter – and Bring your Business Joy

Clear out the Clutter – and Bring your Business Joy

Last week at my advisory board meeting I presented a new business opportunity to my peers to get their feedback and ideas. Before I shared it with them, I thought I had analysed the situation reasonably well and had uncovered some concerns on how to proceed. The feedback I got was immensely helpful but also pointed out something that really caught me by surprise. What I had considered a good analysis of the problem, they described as ‘head trash’, advising that my mind was cluttered with negative thinking more likely to steer me towards failure than success.

They pointed out that my focus was on the concerns of the timing of the meeting, the need to hold the meeting on Zoom, the closeness of Christmas and my assumption that the client was not in any rush. I’d got bogged down in ‘negative’ concerns giving me an excuse for failure. My fellow board members suggested that I was failing to highlight that it was an excellent opportunity to deliver a great result for a client or get excited because I knew what their problem was, how I could help solve it – and the client had actively sought my services.

Far better that I go into the meeting – Zoom or otherwise – with a clear mind uncluttered by the negatives that had been creeping in. If I focus on the process of how I can help them solve their problem now and get them excited about it – it will be much better than worrying and making assumptions about timing.

Lockdown has produced huge concerns for many businesses and in developing scenarios to help us survive or simply deal with what’s in front of us, perhaps we should take a moment to ‘declutter’ our thinking and instead, work on some plans to be proactive, spotting the business opportunities ahead of us without getting bogged down with ‘what ifs’ and other concerns.

Thanks to my board members, I was reminded that we should get excited about the opportunities we have. Do that and your teams will get excited about facing the new world with you. And, if you are struggling with ways to reclaim the positive, talk to some other business owners – it really does help clear the clutter and the ‘head trash’, allowing you to see the opportunities.

“Worrying is like a rocking chair …

“Worrying is like a rocking chair …

it gives you something to do but never gets you anywhere.”

– Erma Bombeck

Business owners like to be creative and think about threats and opportunities in their business. Their brain is trying to help them resolve every issue out there to keep them safe from failure or hurt. The problem is when the worrying becomes overwhelming and prevents us from making a move. It helps to recognise that worry is there to keep us safe, but we have other skills that help us perform. Planning is a good positive one.

Think about what your end goal is and implement a plan that will solve the issue and get you closer to your goal. Use a daily task list or diary appointments to find time in your busy life where you can implement the plan. And remember that if you find other stuff is getting in the way, question whether you have your priorities correct.

Recently a client came to see me a few days after he had been blindsided by a staffing crisis. He had had three sleepless nights caused by numerous issues that he was struggling to deal with. These issues were big and life changing such as cancelling large projects, fifty percent revenue declines, having to sell his lifestyle property and even winding his business up. These threats were real – but they were overwhelming him and preventing him from addressing the issue in front of him.

The issue was – “how can I replace a key staff member in the shortest time frame”?

Not easy in the current employment market. But by putting in a plan in place to focus on strategies and tasks to replace the key staff member it took away the worry on things that hadn’t happened yet. And even if the key staff member took a while to find – the strategy and plan to find and replace the staff member would be appreciated by the bank – applying to a bank for financial assistance they would see you were aware of what you were up against but you had a solution you were working toward. As luck would have it – while we were brainstorming on different ideas of where to get specialist staff – a lightbulb went off in my client’s head. By focusing on the issue and not what might happen – he discovered he had a name that could solve his staffing crisis. By the next day, he had interviewed a qualified person and within a week he had a signed contract in his hands.

If you ever find yourself overwhelmed and can’t take a step forward – find someone to talk to that can get you to take a step back, look at what your key issues are, and help you to find a plan that you can implement to solve it. Sleepless nights can be cured by stopping the worrying – by putting a plan in place that gets you to where you want to go.

Do you plan to not lose, or plan to win?

Do you plan to not lose, or plan to win?

Often in business, we size up a situation and become determined not to be worse off but in so doing we lose focus and miss out on creating successful outcomes.

It comes down to mindset. Are we actively looking objectively at strategies that put us in a position of strength or are we setting minimum standards and fixing mistakes as we go so as not to fail? It takes foresight and effort to plan to win. It is about proactively weighing up strategies that have risk but are calculated to provide a greater benefit. It is about learning and adjusting as we go.

At a recent peer-advisory board a business owner was faced with a $6,000 “expense” that could be eliminated. A wise choice – reducing expenses – because as confirmed in our recent Business Pulse Survey there are dark clouds on the horizon for New Zealand businesses. But during discussion with other business owners on his advisory board – the return on the $6,000 “investment” would add $70,000 p.a. to his net profit and by analysing and taking this path he would become more motivated to grow his business during a downturn. Also, with the opportunity to double the “investment” to $12,000 he could add $140,000 p.a. to his net profit in these troubling times. Sure, this is not a given – he still needs a defined goal, strategy, and action plan to achieve it but that’s what planning to win does – it makes you put in place a plan to take advantage of opportunities. Planning to not lose is reactionary and cautionary and can gradually stunt business growth. It avoids the need to be visionary, create a plan, and be held to account and often the business owner who finds themselves in this reactive position is there because of difficult circumstances and lack of motivation or encouragement. Are you planning to win – or, subconsciously, doing just enough to not lose?

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.”

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