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As the business year starts in earnest on Monday, setting priorities and goals for the year ahead become important.
New Zealand has enjoyed nearly nine years of economic growth, but not all of society has felt the benefits.
While many people perceive it as just wage and salary earners not receiving pay rises, there have been other casualties.
Small and medium-sized enterprises (SMEs), in some cases, have found themselves at the mercy of their larger clients who have been slow to pay their bills.
The ability to hold off paying bills for three months or more gives larger companies extra cash, leaving their suppliers to either borrow, struggle to keep the doors open or, in the worst cases, close up.
A recent survey by online accounting firm MYOB identified putting a timeline on business goals early in the year as the best way to hit targets. Whether it is plans to increase revenue, introduce a new product, better manage compliance costs or reorganise operational structure, the start of the business year is a good time to put those processes in place to set yourself up for a successful year.
The New Zealand economy is dominated by SMEs. In Otago and Southland, it is rare these days to find large-scale operations employing hundreds of people, except for tertiary institutions and local authorities. Some tourism operators, such as Skyline Enterprises, employ many people. Meatworks and the Tiwai Point aluminium smelter continue to employ large numbers.
The southern economy is mainly built on small businesses supplying larger businesses and they are starting to face challenges. Not only is it harder for them to get paid, but the lack of people to employ is restricting their ability to expand.
The MYOB survey showed one in five business owners took less than one week of holiday in a 12-month period. Owners may be busy and running a business does take time, but looking after health needs is paramount. Without the ability to take on extra staff to cope with increased business, SME owners face health risks.
Technology is available to support business owners by making life easier through increasing productivity, reducing costs and saving time. But it is not the total solution.
Otago-Southland is a small business community, giving SME owners the chance to look at their competition and see how they market their products and services. Strengths and weaknesses can be analysed and compared, and changes can be introduced quickly to an existing organisation found wanting in any area. But it is cash flow which puts large pressure on about 20% of businesses. The best way to relieve this pressure is to take control of the finances and look at ways to reduce spending. This sounds good advice but how simple is it? At this time of the year, businesses should project their annual cash flow and identify times when they may be low on cash. They can then plan ahead and not have to stress about paying employees or paying off debt.
It is important for business owners to make sure they are being paid. The trouble is, most New Zealanders can be modest and do not always like to ask for things directly, especially if they are a small trader relying on a larger customer for much of their business.
It is not only large clients who can hold back their payments. SMEs face individual customers failing to pay on the terms of their contract. Too many of those type of customers can also tip a business into tight times.
Being paid on time will ensure a steady cash flow and owners are urged to set aside time on a regular basis to chase up unpaid work.
It seems likely the economy will start to slow this year as new government policies start to take effect. Building consents issued in November soared, particularly in Auckland, but also in Dunedin. The shortage of skilled labour will become a problem in the construction industry and among sub-contractors.
Hopefully, businesses will start their year in a positive frame of mind, wanting to expand, grow their revenue and workforce. Having a stable economy, without the imposition of too many new rules and regulations, is the key to keeping optimism at high levels.