New Zealand businesses have been grappling with a strange few years faced with a pandemic, supplier issues, and fast-changing technology.
So, what is 2023 likely to hold for small businesses in New Zealand?
Now several key trends could shape our economic backbone. And these are likely to impact the more than 500,000 small businesses that have survived the momentous past years:
- The cost of doing business
- The economic rollercoaster
- Customer love
- Digital is here to stay
- The labour shortage
We'll explore each of these trends and how you can make them work for you and your business.
The cost of doing business
Business expenses rose dramatically with the pandemic with small businesses continuing to subsequently face challenges in 2023.
Economists believe inflation has peaked but is likely to remain at high levels for some time.
Sales are slowly returning, but business expenses, such as materials and wages, may continue to rise.
It's no secret that many small businesses experienced negative cash flows during 2022. They were unable to accumulate capital to weather economic storms and may have found it challenging to obtain funding and financing.
For businesses, prioritising profitability and focusing on their highest-performing products and services could help.
“Sales are slowly returning, but business expenses, such as materials and wages, may continue to rise”
The economic rollercoaster
We've ridden plenty of highs and lows over the past few years, and the rollercoaster isn't likely to stop in 2023. We continue to grapple with high inflation, eye-watering costs and global instability.
Westpac warns that continued pressure on prices and wages may mean the chances of a soft economic landing are getting slimmer.
Wary consumers may be reluctant to spend and businesses, especially smaller ones, may feel the impact.
To lessen the blow, re-examining your business and its operations could help. Look ahead at what may help you weather more economic storms.
While it sounds daunting, our economy has suffered numerous recessions in the past and we've always bounced back.
Customer love
Customers may feel battered during these tricky times.
They may be more likely to go online and research their existing providers and check out new ones. It's not just about price. Research shows customers tend to value experience over price and product quality.
Customer satisfaction has always been important, especially to small businesses. In 2023, it's even more crucial.
More than half of the customers will leave a company after just one bad customer experience. Meanwhile, more than 70% of customers say customer experience is an important factor in their purchasing decisions, according to PwC.
It may be worth reviewing your interactions with your customers and how you can help improve them.
Regular communication can be a game changer. For a small business, the personal touch is gold, helping you to listen, observe and find ways to improve the customer experience.
With the economic climate that may see consumer spending subdued in 2023, retaining your customer loyalty could help.
Digital is here to stay
Lockdowns sent most of us on more digital journeys for our purchases – and it's not likely to go away.
With the growing use of digital commerce some key elements are important.
Ensure your online presence is intuitive and attractive for your customer. Discuss with digital experts how your site can attract and service customers.
And deliver on your digital promise. If you receive an online order, try to ensure it is serviced quickly. Transportation remains an issue, but customers still expect a rapid turnaround.
An increasingly popular digital twist for businesses is social commerce – the use of social media platforms such as Facebook or Instagram to market and sell products and services.
Customers are using social commerce to research and purchase products but also to interact with customer support.
Most of us are now social media users so it could be an ideal vehicle to promote your business extensively and tailor to specific groups.
But make sure you're comfortable using it and are able to adapt to feedback promptly.
That doesn't mean forgetting about brick-and-mortar retail. Once restrictions were lifted, many brick-and-mortar businesses that went online during the pandemic began reopening their doors. This will be an ongoing trend in 2023.
A key development is customers blending between digital and physical purchasing. They are likely to look at a product online and later purchase it in a physical store.
Workers wanted
Our labour market remains stretched, and the shortages may continue for some time.
The effects of the pandemic have seen the most acute shortes for both skilled and unskilled labour in a long time, according to the OECD.
It's still going to be a problem in 2023.
Throwing money at employees and would-be employees isn't enough. It helps to be innovative to attract and retain staff. Here are some statistics that may help.
TradeMe's Job Hunter Survey asked workers what was essential for their ideal role.
They were:
- Job security: 58%.
- Work/life balance: 57%.
- Feeling valued: 54%.
- Development opportunities: 49%.
- Finding a company that's a 'good fit': 49%.
- Their day-to-day duties: 48%.
Do you have the right cover?
So, while some challenges are expected for this year, there's plenty your small business can do to weather those challenges.
The start of a fresh new year can be an excellent time to reassess your insurance cover. Speak with a broker today for expert advice.
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