Last week’s Reserve Bank announcement was not the news most of us wanted to hear, with their forecast confirming some of the views we shared in our 2023 “Tailwinds & Headwinds” forecast a couple of weeks ago.
Along with rising interest rates & inflationary pressures, the other potential headwind to keep in mind is us kiwis tend to slow down our purchases, particular major purchases, in an election year. This is driven by the desire to have more certainty around who the government will be, and confidence to make major decisions.
Our view is forewarned is forearmed with the opportunity to be best prepared.
Is it a time to hit the panic button?
No, definitely not, but it is a signal the economic pie will likely be a little smaller and you will need to fight harder & operate smarter to gain your desired share. This is particularly so in the segments of discretionary spend which we expect to be most significantly impacted.
A piece of advice I was given thirty years ago was when the economy gets tough, do the opposite to everyone else- double down on sales and marketing. This, if done effectively, helps to gain a bigger slice of a smaller pie, exudes confidence and success to the market & as many studies have proven, often ensures even better results than the competition as the economy recovers.
Some Other Tips:
1/ Review all expenses/ payments and ensure that they are aligned to generating profitable cashflow. Cut or reduce any expense that are not driving this – examples could be right sizing your premises, looking at a sub-lease, replace manual processes with digital ones to free up sales capacity, re-negotiate payment terms, look for consignment stock opportunities, extend debt repayment periods, optimise your marketing investment based on CLV (customer lifetime value) & CAC (customer acquisition cost) + channel mix and many, many more…..
This is where you also find out how good your Accountant is – are they the old style tax and compliance accountant that you only hear from once or twice a year or do you have a strong business partner who is a Growth Accountant? If you need help here, a Grow NZ Registered Accountant is a great place to start.
2/ Make sure your marketing dollars are working hard and directed to the best returning activities.
I must say this is one of my biggest frustrations, every week I speak with business owners who have wasted thousands of dollars by going the “cheap” option, a family friend or a supposed “social media expert” who really has very little experience except for doing a couple online courses. In the NZ marketing space, there is a general lack of breadth of knowledge across all available channels and how they work together & work with your website. Most website developers are below par and do not have the legal knowledge to ensure compliance, in fact our recent review found 72% of website developers did not comply with the Privacy Act 2020, and hundreds and hundreds of websites they have built, also did not comply.
If you want to get serious about your website and have it operating at its maximum potential for sales, customer experience, security, speed and meeting legal obligations – please get in touch with Virtual Innovation who we regard as the best in New Zealand for a total solution.
Another option to consider is our Grow NZ Marketing Interns – they say time is money, and our interns not only save you time, but help you make money by ensuring your marketing execution stays on track with quality & in a cost-effective way.
Find Out More About Our Marketing Interns
3/ Consider switching some of your Google investment to Microsoft Advertising.
We find for most clients the returns are more than 35% higher due to a better quality, and more affluent type of customer who is likely to be comparatively less impacted by the discretionary spend squeeze.
Start with a little as $250 per month to validate the returns, and if higher than Google, start to divert more here until your market share is around 60% is our advice.
As Microsoft Advertising’s only New Zealand-based award winner – we are well-skilled to help!
Learn More About Microsoft Advertising
5/ Consider outsourcing non face-to-face activities. Not only can you save up to 60% in costs here, it can help solve some of the challenges being faced with the skills shortage – learn more about outsourcing here.
6/ Support each other with our wallets – be deliberate where you spend your hard-earned dollars – support New Zealand-owned businesses and support your local community rather than send your money overseas.
Consider these stellar facts as to how much of a difference it can make.
If every Kiwi deliberately diverted $50 per week of spending from overseas companies to New Zealand-owned\ businesses, the impact is:
- $250 million of extra New Zealand dollars stay in the country each week.
- Each month it would be a massive $1.083 Billion kiwi dollars!
- And annually it would be a whopping $13 Billion!!
The flow-on effects are significant – less unemployment, less businesses failing, more cash flowing locally and more taxes collected in New Zealand – yes, this is a good thing.That’s how we collectively we can ensure New Zealand-owned businesses get a bigger slice of a slightly smaller pie – together we can make a difference!
And as we announced last week – Buy Kiwi is a great way to gain more exposure for your business and to find Kiwi-owned businesses you can deliberately divert some of your hard-earned dollars from being spent with overseas companies to New Zealand-owned businesses. If you haven’t done so, make sure you have signed up to www.buykiwi.co.nz .
Forearmed is forewarned, 2023 is going to be a challenging year for most of us, but one if approached with good old-fashioned kiwi grit, ingenuity and helping each other, can be a successful one.