Sarah Duffin (Senior Partner, Newmarket Commercial, BNZ) shares
There’s been much talk recently about rising interest rates, the closure of the Trans-Tasman bubble and travel disruptions, and of course how well we did at the Olympics, but three other business challenges come to mind that I think are more pressing.
Challenge One: Solving Supply Chain Shocks
Pre-COVID, a customer could walk into a business, ask about a specific product and buy it immediately. If it wasn’t in stock, it’d be ordered and arrive within a week for collection or delivery. But with COVID causing ongoing disruptions to global supply chains, it can now take months for goods to arrive.
It’s also causing shipping costs to rise. A customer recently told me the cost of a container has increased for them nine times since January. If you’re experiencing supply shock, you can think about:
- diversifying your supplier base by investigating new markets
- collaborating with other businesses to share resources
- working with your Bank to fund an extended working capital cycle
- embrace the buy local ethos and look to local suppliers to source components. Regardless of your circumstances, planning for the next supply chain shock now is sensible. The impacts of COVID will take some time to work through, but there are other potential challenges – earthquakes, boats getting stuck in canals, accidents, or something as simple as your supplier’s truck breaking down, can all impact your supply chain in some way. Make a list of what is realistically outside your control that may impact your business, and then develop contingency plans to reduce the effect.
Challenge Two: Transitioning to Digital
COVID has delivered a once- in-a-generation opportunity for businesses to digitise, embracing the tailwind as consumers rush online because of lockdowns.
While some segments of retail have been struggling with shrinking margins and lower foot traffic,
the shift of consumers online is a permanent and structural one, and it’s time to double down on your efforts. For example can you:
- adopt digital operating models by blending online and physical services
- use digital tools that allow a business to view key information
- allow customers to choose how they want to pay (in-store, online, contactless, or with their mobile)
- assist customers to research what you’re selling before they walk in or contact you
- set up a post-purchase digital experience to keep customers coming back, such as sending SMS reminders, online tracking of orders or even asking customers to opt into a regular e-newsletter.
This may seem daunting but you’re not in it alone. The Government, BNZ and a range of other New Zealand organisations and businesses have committed to help the acceleration of the use of digital technologies across Aotearoa. You can find out more at digitalboostalliance.nz.
Challenge Three: Contending with the labour shortage
Many businesses and industries are struggling with recruiting the skilled workers they need. Agriculture, construction, trades, software, services and hospitality are all finding it tough.
Some businesses may be able to help more of their employees work remotely, allowing recruitment of people outside their immediate area. If this isn’t an option for your business, can you reduce the chance of key staff leaving by rewarding them with better conditions such as pay, flexibility, environment, training and career progression.
In summary, if your business is facing any of these challenges, take time to seek advice from your support group to minimise, solve or off-set the impact. To ensure your ongoing success, it’s best to be proactive and plan ahead.