Navigating NZ’s slow-burn economy: EBI
The current economy and business landscape is defined by the legacy of high inflation and a profound lack of customer confidence.
Your customers aren’t just saving; they’re genuinely hesitant to spend. Years of high prices have stretched household budgets thin, leaving consumers with less disposable income and a cautious mindset, particularly for non-essential purchases. This reluctance is translating directly into lower foot traffic, customers spending less, and unpredictable revenue for you.
The interest rate lag: relief is coming, but slowly
Yes, the Reserve Bank is cutting the Official Cash Rate (OCR), and that’s good news. It signals a future where financing costs are lower and mortgage pain is reduced. But here’s the crucial reality check: there will be a lag.
It takes time for lower interest rates to translate into genuine consumer spending confidence. People need to feel financially secure before they open their wallets again. This means for the next six or more months, you must operate as if the squeeze is still on.
Your action plan: agility is survival
Don’t wait for the economy to save you. Focus on internal strength now:
1. Laser-focus your cashflow: Cash is king, now more than ever. Produce detailed, rolling cashflow forecasts. Identify your non-negotiable costs and aggressively look to trim the fat elsewhere. Ensure your invoicing is prompt and collection is relentless.
2. Know your customer (and your price): You can’t afford ‘bad’ customers. Focus on retaining your most profitable clients by doubling down on value and customer experience. Don’t be afraid to re-evaluate your pricing structure, your margins are too important to sacrifice.
3. Innovate or stagnate: Tough times breed ingenuity. Look for ways to automate, streamline processes, and adopt new technology to boost operational efficiency. Diversifying your service or product offerings, even in a small way, can unlock new revenue streams.
4. Seek wise counsel: Don’t go it alone. Engage a business advisor. They can provide the objective financial clarity and strategic planning needed to navigate the uncertainty.
The road ahead demands resilience and agility. Those businesses that strategically tighten their belt, optimise operations, and fiercely protect their customer relationships will not just survive this period, they’ll be poised to thrive when consumer confidence returns.
EBI Consultants is ready to help you sharpen your strategy. For a free, no-obligation discussion on fortifying your business for the year ahead, please get in touch.
