With 2022 shaping up to be another year of unplannable disruption for Kiwi small business owners, getting business fundamentals right is crucial to give businesses the best chance at weathering the storm.
Charlie Nicholls, director of business growth at Xero, says a robust business plan can help owners plan ahead rather than just reacting to day to day pressures.
While they sometimes sound hard and scary, they are worth the investment, she says. "We do genuinely see businesses thrive and grow when there is a structured, thought out plan in place."
People should switch their thinking to view a business plan as a foundation to help navigate whatever unpredictable times throw up, Nicholls says.
A good business plan describes the business product or service, identifies who the customer is, explains why they need a particular product or service, and shows how to make money from that opportunity.
First up, Nicholls says, a business plan should focus on the company's description and why it's important. Next, an analysis of the market and opportunities. Thirdly, an execution plan should have a rollout phase, levers, and marketing plan.
"If we break it down month by month, or quarter by quarter, we just need to move the needle in small increments so it no longer feels overwhelming."
"And in those days when you're feeling overwhelmed and you think 'I just don't know where to start, I don't know what to do and I feel like the odds are stacked against me', you come back to your anchor point - your business plan - which will give you guidance as to what your next objective or steps to success are, and you work from there."
One example is Noema Johnson, who runs Kia Kaha Electrical in Hamilton. At age 55, Noema, who would not describe himself as a particularly tech-savvy man, left a lifetime of specialised employment in refineries and power stations and started his own business.
But one of the key challenges for Noema was how to properly plan for the future of his business, with growth and prosperity in mind.
"When I did a business course, it was a real eye opener. There were so many things I didn't know I didn't know. One of the first things they taught us was to make a business plan," says Noema.
Business plans are important because they allow those with their hands on the levers to understand the wider context for their business and plan ahead, rather than just reacting to day to day pressures.
One of the key areas Noema identified was the need to digitalise.
"As far as computers went, I came from an era where computers were a new thing. I didn't even have a Facebook page. My kids used to give me a hard time about it so eventually I thought 'you know what, I need to go there'," says Noema.
He signed up with Xero on another contractor's recommendation. "I ended up with Xero because the guy that came to service my work truck sent me the invoice and I was impressed with how professional it was."
His top tips are to use Xero's free business plan template, and create a financial buffer to offset the likes of slow periods and unexpected lockdowns.
"And I would say, just hang in there and ask people for help. Be ready to diversify if the market changes, instead of doing just one thing," Noema says.
Business models, says Xero's Charlie Nicholls, are changed forever as a result of the pandemic.
"I think, as Kiwis, we'll take the best of the situation and use that to shape our ongoing business models. Going forward, we won't be turning back the progress on digitalisation - especially as people get used to working online and remotely."
There is also no going back for businesses that have been forced to adapt to survive, that have reinvented themselves with a "number eight wire", can-do approach, she says.
"I think the vast majority of Kiwi businesses have capitalised on what they could from a global pandemic perspective and have adapted their business models accordingly. It's pretty exciting to see, but not surprising for New Zealanders."