Mike Clark's Business Bites: Put your support behind your community

Local economies are like washing machines in that the money you put in at home tends to go round and round the economy to the benefit of many. Photo / Freepik

OPINION:

Supporting local is a current CEDA and PNCC campaign. It is important and I encourage you to do what you can.

Local economies are like washing machines in that the money you put in at home tends to go round and round the economy to the benefit of many.

There are two rules of business. You must make a profit and have cash flow. All other details are up for discussion.

Okay, I concede another rule (to avoid a visit from Inland Revenue) – you must pay your taxes.

Recently Hong Kong and Singapore ports were closed or operating at a bare minimum. A look at the shipping map (a great online tool that shows ships in ports in real time) showed some of the biggest congestion of ships I have seen off the Hong Kong and Singapore ports and coastlines.

A good number of those ships either have product from New Zealand waiting to offload, are en route to us with products from other countries, or are waiting to pick up product for us.

What this means from a business perspective is that money is tied up in product, or customers are waiting on product (and the business is likely waiting on full payment). This hurts cash flow, if not killing it completely!

Why should you care? Other than the frustration of having shops out of stock, the ripple effect can create a tsunami that can destroy economies.

A closer to home example is the shortage of Gib board and labour. Builders usually get progress payments. Agree a price to do a job, eg. build a house, and you get paid when the concrete foundation is poured, then again when the timber is up and then when the walls are gibbed, then the roof on, the finishings, etc.

Builders who built houses and got caught out with the Gib shortage would have outlaid a lot of cash to get a job to a set point and then, for the sake of half a dozen sheets of Gib or a crew off work due to Covid, suddenly find themselves with a lot of expenses and no income.

From the outside looking in it can appear that those who own a business have it all. Nice car, good salary, great house. The reality is not quite as shiny. Many business owners talk of long working hours, loneliness, stress and pressure around how to make wages, chase bills, find sales, manage people and pay taxes.

More than 90 per cent of NZ businesses are small or medium-sized enterprises and many employ around five people. They are good people trying to do the best they can. You likely work for an SME and/or know a close relative who does.

You can help – shop local. Look to buy NZ made. Given options put your support behind your community. It really does make a difference.

• Mike Clark is director and lead trainer and facilitator at Think Right business training company.