It's no secret that times are about to get tough for businesses in New Zealand. Economic recession, mounting competition, and rising operating costs are just a few of the challenges we can expect to face.
So what can business owners do to overcome these obstacles and succeed in an otherwise challenging landscape? Let’s explore the most pressing issues facing New Zealand businesses and some positive spins (and actionable advice) to start the new year strong.
The skills shortage in the workforce
The skills shortage in the New Zealand workforce has long been an issue and is the result of a combination of factors, not least of which is the "brain drain" of graduates moving to Australia. While there are several initiatives underway to address the skills shortage, it is likely to be a challenge for businesses in New Zealand for some time to come.
The good news
While many small businesses will struggle to remain competitive in terms of wages, there are many other (free) ways to attract new staff. Covid-19 has significantly impacted the expectations of our workforce, with employees increasingly expecting greater flexibility over their location and hours. This is a fantastic chance for small firms to tempt potential employees with more relaxed working arrangements.
Other tips for retaining exceptional employees as a small business include:
- Giving employees autonomy in their work
- Offering a compelling benefits package
- Creating a community
- Prioritising diversity and innovation
Cash flow and funding
Funding and financing can be difficult to come by in New Zealand, especially for small businesses and startups. There are a number of reasons for this, including our conservative banking sector and our relatively small population, which can make it challenging to attract investors.
According to research by Xero, the average SME in NZ experiences negative cash flow for four months of the year, with 17% struggling for more than six months each year. Without an injection of cash, these businesses are facing an incredibly challenging 2023.
The good news
There are some initiatives underway to try and address these issues. The government has recently launched a number of programs to support small businesses, and several online platforms have sprung up that connect businesses with potential investors. Now is also a good time to reconsider if your payment terms are working, and put a system in place to discourage late payments.
Rising competition from overseas businesses
New Zealand businesses are increasingly faced with competition from overseas companies in today's global market. In many cases, these foreign firms can produce goods and services at a lower cost, making it difficult for domestic businesses to compete.
This trend has been particularly evident in the manufacturing sector, where many jobs have been lost to cheaper labour markets abroad. As a result, businesses must find ways to remain competitive in the face of this rising tide of foreign competition.
The good news
With a reputation for high standards of quality, innovation and ingenuity, New Zealand businesses are in a great position to offer customers additional value. Instead of joining a pricing race to the bottom, business owners should focus on producing higher-quality products and services that provide value beyond simply being cheaper.
Unpredictable economic conditions
Over the past decade, we’ve seen a number of unpredictable economic conditions, from booms in the housing market to devastating import and export costs due to COVID-19. This has made it difficult for businesses to plan and invest with confidence.
We’ve also seen a rise in income inequality and a decline in job security. These factors have contributed to a feeling of insecurity among many workers. The result is that consumers are spending less and saving more, leading to decreased demand for goods and services and a further slowdown in economic growth.
The good news
While there isn’t a lot about the economy to celebrate as we edge toward 2023, it’s not all dire straits either. New Zealand is predicted to be less impacted by the recession than most of the world, putting our domestic small businesses in a comparatively strong position.
Difficult reaching new customers
Any business owner knows that one of the most difficult tasks is finding new customers to target. Without new customers, your business can become stagnant and risk losing revenue, so reaching a fresh audience is crucial.
While organic growth - where customers find your business of their own accord - is ideal, many companies can’t risk the wait. But targeting customers without any knowledge of outbound marketing techniques can quickly become expensive and time-consuming, with no guarantee of success.
The good news
There are a few basic benchmarks you can focus on to help grow your customer base. First, make sure you have a well-designed website that showcases your products or services. Second, create compelling content that will draw readers to your site. And third, use social media to reach a wider audience. By taking these steps, you'll give yourself a better chance of growing your customer base and achieving success. Not sure where to start? Read more about The importance of digital marketing throughout a recession
In conclusion
The global economy is in flux, and staying ahead of the competition can be challenging when conditions are constantly changing. However, by thinking outside the box and bringing in help to support your weaker areas, you can meet these challenges head-on and confidently face the year ahead.
Mint Digital works with businesses of all sizes throughout New Zealand. We have the marketing know-how to help your business grow in these unpredictable times. We can help you expand your customer base and create an online presence that sets you apart from both overseas and domestic competition.
Contact us today to learn more about how we can help you achieve success in today’s turbulent market.
