With COVID-19 sure to have a severe and long-lasting impact on our economy, BNZ’s General Manager of Growth and Performance, Karna Luke, looks at some of the things businesses might be able to do to help survive and even thrive.
Ever since COVID-19 put the brakes on our economy, New Zealand business owners and leaders have been grappling with an uncertain future. But it’s a future in which New Zealand businesses could be well placed to succeed.
Our isolation from the rest of the world has helped New Zealanders develop a can-do business culture, and our small population means we’re well networked as a country. That allows us to be more agile, adaptive, and connected – all valuable attributes to help with navigating the new normal. Many businesses are finding smart ways to work through this, and some are taking advantage of new opportunities. From the conversations I’ve been having with businesses, those setting themselves up for success are focusing on a few fundamental things to help them adapt quickly and get their response right.
Do the numbers
For most businesses, everything changed overnight, not least their revenue. By taking the time to focus closely on your cash flow, and considering how it might look going forward, you’ll help yourself be in a better position to deal with a rapidly changing situation and make well-informed decisions.
Consider your future sales and costs, and create a cash flow forecast for the next 12 to 24 months. BNZ’s cash flow forecast template can help you with this task but, if you’re not used to doing cash flow forecasts, you might want to talk to your accountant, bookkeeper, or bank.
As well as giving you some idea of your position going forward, a cash flow forecast can help to bring your fixed and variable costs into focus, so you can start working on ways to manage those. For example, which variable costs could you scale back? Will your cash flow cover your fixed costs over the coming months and, if not, what steps do you need to take next?
In times like this, it could be worth talking to the people who pay you and the people you pay. Some might be understanding and willing to be flexible with things like payments, terms, and remuneration, which could have a big impact on your cash flow.
Plan your way forward
Once you know where you stand, it’s time to start planning for what’s ahead. A plan helps you prioritise the most important things in each area of your business, so you know where to invest your time and resources. A solid plan can also help your team remain cohesive and productive.
With everything changing rapidly, it’s best to start with a short-term plan – about one to six months – don’t try to tackle everything at once. Initially, you could focus just on the things that will provide the most benefit, particularly for your revenue. Review your plan regularly – weekly, fortnightly, or monthly – and update it so that everyone stays on track.
Face-to-face is limited
When you’re planning, think about what’s important right now. How are you going to operate for the foreseeable future so that you remain accessible and relevant to your customers? Physical distancing is the new reality. That means limited face-to-face contact, in some cases none, and perhaps you need to introduce a raft of new health and safety protocols.
For some businesses, the plan could be a completely new change of direction. Already, we’ve seen some New Zealand companies flip their business to produce or source new products, such as personal protective equipment (PPE).
If you’re a sole-operator or self-employed contractor, you might consider getting set up for online sessions so you can maintain relationships with your customers. For instance, many exercise instructors are now running their classes online.
If you provide products, that could mean transforming your business into an ecommerce operation. Interesting examples are businesses with excess products they would have sent offshore that are now turning up on online ecommerce platforms that are already there.
If you can get goods to people without being in a store, whether wholesaling or retailing, that might be the main focus of your plan, and it may also change your cost dynamics.
Once you have your short-term plan worked out and progressing, it might we worth spending time on a longer-term plan to help you prepare for when restrictions start to ease.
Digital is the new normal
Even before COVID-19, many bricks and mortar businesses had introduced an ecommerce option for their customers.
At the same time, a lot of SMEs have started running their businesses using SaaS (Software as a Service) applications. For virtually every business task, there’s a cloud-based app that can help you do it – accounting and cash flow, business planning, stock/inventory flow, customer relationship management (CRM), supply chain, logistics, and many more.
If new digital solutions are part of your plan, here are some questions to start with:
- Is your current technology resilient/capable enough to enable the changes you need to make?
- Is it time to think about moving to digital ecommerce and/or cloud-based solutions?
- What technology will help you operate the most effectively and efficiently going forward?
- Are many of your customers browsing and buying on mobile and are you optimised for it?
Apps making decisions easier
It’s never been more important to have all your information and data in one place so you can make informed decisions, operate efficiently, and deliver for your customers. The integration and connectivity of apps in an ‘ecosystem’ canoffer insights, additional efficiencies, and help to lower costs.
One such app ecosystem is BNZ’s MyBusiness Live* – a smart dashboard (free to all NZ businesses) that displays insights from your apps (like Xero, MYOB, Shopify, Facebook, and Google Analytics), so you can see how different areas of your business are performing, all in one place.
What help is available?
At BNZ, we’re trying to help as many people as possible deal with the impacts COVID-19. We’ve been in conversations with tens of thousands of businesses and individuals about support services and support packages from a banking perspective. And we’re keen to hear from anyone else who needs support.
The New Zealand Government has been working with banks to help provide finance for businesses. Find out more about our Government-backed Business Finance Scheme.
The Government is also providing support to businesses in a number of other ways. Find out more on their website.
We’re all in this together, so talk to experts – your bank, your accountant, people from your industry – to make sure you’re focused on the right things. We know what you’re going through and will do our best to help you.
*Use of any app is subject to the relevant App Provider’s terms and such terms are separate to the MyBusiness Live terms. BNZ has a relationship with 9 Spokes International Ltd to provide the MyBusiness Live platform, and 9 Spokes International Ltd has a relationship with some of the providers of Apps available on the platform. The platform is not otherwise affiliated with, related to, sponsored or endorsed by any App Provider (including Facebook, Google™, Twitter, Mailchimp and LinkedIn™ and each of their affiliated companies).
Any views expressed in this article are the personal views of Karna Luke and do not necessarily represent the views of BNZ, or its related entities.
References to third party websites are provided for your convenience only. BNZ accepts no responsibility for the availability or content of such websites.
The information in this article is provided for general purposes only, and is a summary based on selective information which may not be complete for your purpose. To the extent that any information or recommendations in this article constitute financial advice, they do not take into account your financial situation or goals and is not intended as personalised financial advice. While BNZ has made every effort to ensure that the information provided is accurate, you should not rely on this information to make any financial decision without first having sought advice specific to your circumstances from an authorised financial adviser. Neither BNZ nor any person involved in this article accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this article.