Tauranga Business Chamber chief executive Matt Cowley. Photo / Mead Norton
Tauranga Business Chamber chief executive Matt Cowley. Photo / Mead Norton
OPINION:
There are many external factors impacting New Zealand businesses at present.
Rising fuel costs, supply chain issues, additional pandemic requirements and higher costs of capital. Consumers have less discretionary spending, there are extreme weather events and military unrest globally.
But when hasn't there been a range of local, nationaland international factors impacting business?
New Zealand's economy will contract over the next 12-18 months. The Reserve Bank is making sure of it to combat the unsustainable spikes in inflation.
A recession is just an economic contraction for two or more successive quarters. Recessions are not necessarily a bad thing, particularly with the current scavenging over supplies and headhunting of staff.
Business leaders, who have been around for a while, know there is usually an economic correction every decade or so and they factor it into their planning.
Regardless of whether New Zealand goes into a technical recession or not, the Western Bay of Plenty will likely be one of the country's top performing regions.
Overall, Cowley says the Western Bay is a better place to endure a recession than most. Photo / Getty Images
Our long-term population trends appear unchanged. We have low unemployment. We have a long list of public infrastructure projects planned over the next decade. Our export sectors are going strong.
New Zealand businesses have always faced challenges, especially given our geographic isolation.
Instead of pondering what could happen, successful businesses focus on being adaptive - supporting their teams to roll with the highs and lows of whatever is thrown at them.
Recessions provide opportunities for businesses to make strategic moves, internally or with other stakeholders, to prepare for when things pick up again.
This is when company boards earn their money as they assess their strategic plays. Recessions can be a good time to merge with or acquire partners and/or competitors at cheaper prices than their current value.
Industries facing crises also start to take a strong stand. With annual construction inflation at 18 per cent, the New Zealand Herald recently reported some construction leaders are avoiding the tender market altogether, instead sticking with design-and-build contracts.
I keep hearing from local business leaders that the silver lining of the pandemic was they didn't realise how complacent they had become in their business. The looming economic tightening is forcing them to focus on their core business. They're empowering their teams to be more adaptable and flexible at the coal face, and are streamlining their business processes given the staff shortages.
I acknowledge businesses are about to face another tough period after the pandemic. Each industry will face different challenges. Many businesses will need to absorb cost increases as customers start pushing back on continued price rises, or find alternative solutions.
