Natural disasters, volatile economies, cybercrime – it’s been a turbulent few years, and it can be difficult for small businesses to stay on top of emerging risks.
So, what risks should you be aware of in 2024?
Cashflow and management
Owners will have to focus even more closely on their cash flow and its management under the tighter conditions.
For example, the average New Zealand small business experiences negative cash flow for four months of the year, with 17% struggling for more than six months each year. Looking for cash to sandbag their businesses will be an increasing challenge this year.
Owners will have to be more ruthless with running the business, looking at areas that are underperforming and reducing or removing them, such as dropping underperforming products and services.
Supply chain and labour shortages
While supply chain challenges have eased slightly, they remain tight, even for big businesses. Take time to look at how you can accumulate supplies or seek new (hopefully) cheaper suppliers.
Likewise, the skills shortage, although lessened, remains exacerbated by staff looking for different work-balance lifestyles and with more Kiwis moving to Australia looking for better prospects.
The skills shortages will likely be a challenge for businesses in New Zealand for some time to come. Businesses may have to continue their standard of customer care with fewer staff numbers.
We are also seeing small business owners paying themselves less and working longer than average to support their businesses, which isn’t sustainable.
During and following the pandemic, many employees had a taste of flexible working conditions and found it rewarding. Small businesses often have the opportunity to offer more flexible conditions than larger competitors.
In 2024, owners should focus on flexible conditions that will not only retain staff but also attract exceptional new talent.
“Owners will have to be more ruthless with running the business and look at areas that are underperforming and reducing or removing them”
Going digital
The pandemic saw a rush for e-commerce because of restrictions. Ironically, customers, now used to purchasing online, have become more complacent about visiting brick-and-mortar stores and less loyal to a business.
Because the customer relationship is now remote, small businesses will need to be more creative to get foot traffic and make purchasing goods and services online even easier.
The rise of cybercrime
The rise in digital buying has seen more small businesses face cyberattacks, which will likely increase in 2024. As we become a cashless society and our electronic use of payments increases, cyber threats will unfortunately increase, too.
The cost of an attack can be the death blow for some small businesses with small margins.
Recovering from an attack can delay the business starting up again and impact productivity and customer loyalty. Appropriate, robust protection and business backup plans are necessary to ensure business continuity.
Natural disasters
It’s been a devastating couple of years for some areas, with cyclones and storms battering parts of New Zealand. Weather conditions and their impact have increased in recent years and we could see more throughout 2024.
Small businesses should make sure they have the right protection, from appropriate insurance coverage to pragmatic business continuity plans.
Environmental & Social Governance
Consumers are increasingly aware of a business’s sustainability and ethics. They’re now paying closer attention to green credentials and inclusivity policies.
Businesses should ensure they are genuinely making sustainable measures and not just “greenwashing” or “virtue signalling”.
Safeguard your business
So, there are still some choppy seas in 2024. But the right insurance can help safeguard your business.
Don’t guess what’s right for you – get in touch with an insurance broker near you to discuss your specific risks and budget.
Important notice
This article provides information rather than financial advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, and seek appropriate financial advice before you act on any information.
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