It’s hard to go a day without reading something in the news about the state of the global and New Zealand economy. Whether it’s interest rates rising or the cost of living, there’s no getting around the fact that in 2023 there are many doing it tougher than a few years ago. But while there are some economic challenges for individuals and businesses, it’s important to not go too far down the rabbit hole of negative stories. Remember - economic conditions are forever changing, and one thing history tells us is that the current climate is liable to change at any point.
If you’re a small-medium business owner who’s worried about what the state of the economy will mean for your business, or indeed have felt the impact of this already, then read on. In this article we’ll explore some of the ways you can adapt and improve your business during these slower periods. By the time the market gets out of the weeds, your business can emerge stronger too.
Take the time to really understand your market conditions
As we’ve mentioned, the news certainly promotes doom and gloom. It’s important that we have this information so we’re fully informed, but reading every last word of every opinion piece or social media commentary is a recipe for a negative headspace. It’s really important to look up and around in your own business and industry and determine what are the actual challenges you’re facing. Doing some research could even surface some opportunities as well.
Consider the following:
- Have there been competitors disappear or stop advertising?
- How much demand is there for your products/services currently? ie: are they essential or a luxury?
- Have competitors increased prices or entered into a price war to win a reducing pool of potential customers?
- What are the knock on effects to any broad economic factors like inflation on your industry specifically?
- Are there consumer trends that may impact your business positively or negatively?
Building a picture of these things can start to help you understand your business’ position within the current market, revealing opportunities to stand apart from other businesses. This can inform where you spend your marketing dollar and how the business frames its products/services.
Also make sure you’re measuring how many enquiries (and of course sales) you’re generating each week and month. The data is the best source of truth for how your business is doing - not headlines.
A chance to build in efficiencies to your business
If your business is experiencing fewer enquiries or sales and you and your team have more time in the week, the slower period could be a perfect time to do work ‘on’ the business. As any business owner knows, improvement initiatives get deprioritised in favour of customer or admin related tasks. A slower pace in the business opens those long-standing plans up to be executed on.
Despite business improvement activities making us more efficient, it’s typical for these to be deferred as the time and effort of ‘change’ feels daunting. Should the time open up, then there’s a number of things to introduce into the business to create efficiencies - something that will be felt even more once things pick back up:
Writing and communicating processes
Articulating the processes that make your business run is an excellent use of your business improvement time. From how to order from a supplier to the customer case process, having this captured in a document and better still, materialised as a visual diagram or video can help get your team up to speed much quicker than manually coaching everyone. It’s also a really good idea to protect your business from ‘key person leaving’ risks - knowledge and best practices are detailed for other people who come into the business.
Building in automation
There’s not a day that passes without talking about artificial intelligence at the moment. Automation has been part of businesses for decades, but the recent advancements in AI technology is seemingly fast tracking the roll out of software exponentially in 2023. You’ll have to do some research into how AI and automation is being used in your industry, but broadly there are efficiencies to be gained through reducing data entry, reporting, inventory and customer database management.
Updating old systems with new software
The migration from one system to another is often complex and time consuming, leading to businesses to stay with legacy systems for longer than they probably should. However new tools can make daily jobs get done faster, which is good for business long term.
Exploring different revenue streams
Have you found that there’s a dip in demand for your core services or products at the moment? It could be a chance to review what other things you can provide to your target market.
Service related businesses
What knowledge exists within your team? Do you have the practice experience in house to broaden your work to capture more customers? The trade industries are a good example of this. If you’re a builder who typically works in new builds, consider how you can communicate your skills for applications in property maintenance, custom carpentry, outdoor living spaces, or even project consulting for other builders. Your skills, experience and industry knowledge can be commoditised in a variety of ways - it just takes some time and space to think about it.
Product related businesses
If you’re selling products that you buy wholesale, there’s a high chance you’ll be able to bring in other products that align with your brand and current offering. Often this is quite cost effective to do so if you can continue to order through an existing supplier. New products or categories you sell can not only open up new revenue streams but keeps your brand fresh and current - and provides good marketing opportunities such as through email marketing to your database.
Keeping your customer relationships strong
It’s applicable to virtually every business in New Zealand - stay focused on your existing, loyal customers as a priority first, and acquisition of new customers second. This doesn't mean either has to lose out, but is a reminder that the cost of getting new business usually far exceeds that effort of ensuring your loyal customers stay happy. In today’s world, great customer experiences count for a lot - testimonials and recommendations online can be the influencing factor for someone considering engaging with you.
Dedicating time to your loyal customers isn’t something that should even go away, but with more time in a quieter period, it could be an opportune time to find ways to add value to them spontaneously. This could mean some advice, getting in touch to see how they’re finding the solution you provide, or even providing something for free that surprises and delights them. The business that goes the extra mile for their customers - and thinks about them outside of the moment of transacting, will earn valuable trust and respect.
And for word of mouth and referrals, this can be game changing for your bottom line in the long term.
Exploring B2B opportunities
Are you a business that’s primarily dedicated to services or products for the end user? What would it take to modify an offering to cater to other businesses as well? By this we mean providing your offering to a business that may supply this to their customers.
This is one of those areas that many businesses neglect to explore, but can open up a regular stream of revenue that doesn’t demand nearly the same amount of time or management as direct to consumer engagements.
One thing to think about is whether your pricing to a business might be less than direct to the consumer. There’s an exercise around estimating the potential revenue against reduced margin. If the numbers still work, it could be worth exploring - whilst retaining your core business as well.
Staying on top of financials and budgeting
This is also an area that should never fall by the wayside - your finances should always be reviewed to find ways to improve the health of the businesses. In a quieter period however, you may find the team has more headspace to put cost saving practices in place in a way that sticks. Some actions like reviewing the suppliers you have and whether there’s a cheaper option can save precious admin time - if you’ve got that time however, it can really pay off.
When a full review of expenses is done, savings can be unlocked without anyone in the business really feeling any material change.
Recognise the natural peaks and valleys of business
Perhaps the most important tip we can provide here is really simple; don’t panic and make long term decisions off of short term events. Unfortunately it can be hard for us to not be influenced by the seemingly endless commentary on the state of the economy, but it’s in your business’ best interest to make decisions based on concrete facts and data.
This is another reason why it’s so valuable to have a business plan that extends years into the future. This helps act as your reference point or ‘north star’ for business decisions. If you’re finding it a challenge to decide the best course of action in the short term without impacting your long term goals, chat to our team who provide valuable business advice.
At RightWay we take pride in providing our clients with access to a nationwide team of experts who specialise in providing vital strategic business advice, accounting, bookkeeping, and payroll services. Our team is dedicated to providing you with the support and guidance you need to make informed decisions that will help your business succeed.
By building a better business, you'll build a better life.