How to find opportunities in recession
Successful businesses can adapt their strategies to the highs and lows of whatever is thrown at them
There are many external factors impacting New Zealand businesses at present. Rising fuel costs, supply chain issues, additional pandemic requirements and higher costs of capital. Consumers have less discretionary spending, there are extreme weather events and military unrest globally.
But when hasn’t there been a range of local, national and international factors impacting business?
New Zealand’s economy will contract over the next 12-18 months.
The Reserve Bank is making sure of it to combat the unsustainable spikes in inflation.
A recession is just an economic contraction for two or more successive quarters. Recessions are not necessarily a bad thing, particularly with the current scavenging over supplies and headhunting of staff.
Business leaders, who have been around for a while, know there is usually an economic correction every decade or so and they factor it into their planning.
Regardless of whether New Zealand goes into a technical recession or not, the Western Bay of Plenty will likely be one of the top performing regions.
Our long-term population trends appear unchanged. We have low unemployment. We have a long list of public infrastructure projects planned over the next decade. Our export sectors are going strong.
Instead of pondering what could happen, successful businesses focus on being adaptive — supporting their teams to roll with the highs and lows of whatever is thrown at them.
Recessions provide opportunities for businesses to make strategic moves, internally or with other stakeholders, to prepare for when things pick up again.
This is when company boards earn their money as they assess their strategic plays.
Recessions can be a good time to merge with or acquire partners and/ or competitors at cheaper prices than their current value. Industries facing crises also start to take a strong stand. With annual construction inflation at 18 per cent, the NZ Herald recently reported some construction leaders are avoiding the tender market altogether, instead sticking with design-and-build contracts. I keep hearing from local business leaders that the silver lining of the pandemic was they didn’t realise how complacent they had become in their business. The looming economic tightening is forcing them to focus on their core business. They’re empowering their teams to be more adaptable and flexible at the coal face, and are streamlining their business processes given the staff shortages. I acknowledge businesses are about to face another tough period after the pandemic. Many businesses will need to absorb cost increases as customers start pushing back on continued price rises, or find alternative solutions. If you are nervous, there are plenty of free tips and guides online for running a business during a recession to spark your creative thinking. Overall, the Western Bay of Plenty is a better place to endure a recession than most other regions.