A new year, and Kiwi business owners are looking for positive indicators on how the economy will perform in the next 12 months.
Pressure remains on New Zealand's Small & Medium-Size Enterprises (SMEs) amid uncertainty, and the feedback we're receiving from our alumni and wider network is that rising costs, inflation and interest rates, and staff challenges will continue to influence owner confidence in 2024. However, there’s possible good news on the horizon.
SMEs are the lifeblood of the NZ economy, accounting for 97% of all firms, yet a recent NZ Herald study estimates that a person is more likely to live to 100 than own a business for more than ten years, while just 28% of businesses founded a decade ago are still in operation today.
One of the reasons SMEs lean so heavily into ‘what’s coming next?’ scenarios is that many of these businesses are uniquely financed; through family and friend investments, a single business angel or bank financing. Even a significant portion of "larger" SMEs, the ones who are successfully evolving into medium-sized enterprises, have legacy issues around these sorts of financial arrangements.
While getting caught up in the current economic narrative around you is understandable, if The Icehouse can impart one piece of advice in the first few weeks of the year, it's try not to listen (too closely) to "the noise" around you.
Whether you as a business owner choose to go hard, chase steady growth or consolidate this year, it’s easy to obsess about what everyone else is doing, when concentrating on what you can do to make your business more resilient and robust for the months ahead is a more rewarding option.
In times of upheaval, imbalance and uncertainty, “mindset” and how you approach challenges, can be a genuine business asset. Mindset is a way of thinking that enables you to uncover and see problems as opportunities and then turn those opportunities into an advantage. This is similar to an entrepreneurial mindset, and is often why an owner started a business in the first place.
One step on, a business mindset is a set of attitudes and perspectives that drive entrepreneurial thinking and decision-making. It centres on strategic planning, possessing that “opportunity-based” outlook consistently, and having a laser-like focus on what you do well.
Owners with a highly-tuned business mindset choose not to react to negativity or exterior distractions, and instead develop a kind of singular thinking that not only helps them be resilient but enables them to think positively and clearly. Owners with a business mindset also have the mental agility to think creatively and remain open to new ideas in times of trouble.
| Any tips on finding and developing mindset?
Consider starting the new year by assessing your current business model, taking an honest look at your strong points (both as an owner and the business as a whole), understanding and appreciating the unique value you offer, and following a strategy. This can be as easy as making a wish list and implementing a plan to make it happen. Business goals often begin with a big idea and are then broken down into smaller, more measurable, actionable tasks.
Seeing tasks get completed, and taking control of what you can control, promotes greater focus and direction and when undertaken in bite-sized pieces, everything seems more manageable, less daunting and more positive.
Furthermore, positivity fosters innovation, perseverance, and strategic thinking, crucial elements for business resilience in challenging environments. Best of all, a positive and proactive mindset can be created and nurtured over time.
| Reasons for cautious optimism?
The United Nations 2024 World Economic Situation and Prospects report expects the cost of living crisis to lighten by the end of the year, projecting inflation in New Zealand to fall gradually over the next 12 months.
Elsewhere, the New Zealand Institute of Economic Research states that just 10% of businesses in the last quarter of 2023 expected a deterioration in general economic conditions over the coming months, compared to a net 49% in the previous quarter.
The same survey, which polled around 4,300 firms, also revealed that employers are finding it easier to search for skilled and unskilled labour, partly due to the reopening of international borders.
Naturally, after any recent general election, it’s important to stay on top of policy shifts to better understand how they will impact your business. For example, the re-introduction of 90-day trial periods for new employees may affect owners' and HR teams' recruitment strategies, while potential tax law changes are expected in June.
Up next, we will explore specific strategies in the areas of aligning your team to your strategy, managing expectations, the importance of sound financial decision-making during times of uncertainty, and prioritising and utilising what you have over what you want and build closer partnerships.
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