Riding out 2013



New Zealand small businesses are less confident about their prospects than they were a year ago, with 28% of Kiwi firms expecting the economy to slow down in 2013. However, despite this 68% are hopeful that there will be some growth in their own businesses.
To help get through the year, there are a few basic steps businesses can take to survive the ups and downs of this volatile economy.
  • Reduce reliance on external debt

If a business is not expected to grow in 2013, reducing the reliance on debt may be appropriate. Businesses should focus on increasing their productivity using existing assets and staff and improving cash flow. Improving cash flow will also fund necessary purchases or investments without the need to resort to external financing.
  • Improve Productivity
– Evaluate productivity by collecting data on business performance and comparing that to similar businesses, industry benchmarks and the strategic goals of the business.
– Identify key drivers of the business and set goals for the drivers.
  • Review cost structure for savings
If a business cannot bring costs under control or pass these on to customers, this will have serious implications on cash flow and future viability of the business.
– Review costs that are variables in the business and can be controlled. Be strategic and aggressive about these cost cuts. They can always be reversed later.
– Re-negotiate with suppliers about receiving discounts or change stock delivery.
  • Review business plan for the current economic climate
It is good practice for business owners to review their business strategy as the market forces change. It is better being prepared for a sudden change in circumstances than to be caught off guard and suffer the financial consequences.

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