Everywhere you look in 2022, the cost screws have been tightening. Interest rates. Parts and labour. Freight and handling. Fuel and energy prices. Wages pressure. Insurance premiums. With 2023 beginning to loom on the horizon, the squeeze on New Zealander’s bottom lines has rarely been more intense. It’s a natural time to take stock and consider your options. It could also be the moment to make important changes that enhance the efficiency of your operations and set you up for future success. But what changes should you make? When should you make them? And how?
Plan well, prioritise clearly.
Escalating overheads can be stressful for any business, especially if they’re impacting multiple cost centres simultaneously. Navigating them safely demands careful planning, ideally based on an understanding of your complete financial picture – both right now, but also where you want your business to be in the months or years ahead. The other thing you’ll need is a clear (and agreed) set of priorities in your business, so you can make informed decisions about where, and where not, to dedicate your stretched financial resources.
Playing the long game.
Cashflow is the lifeblood of any business, and the benefits of short-term savings are obvious enough. However, you also need to keep an eye on the horizon, both in terms of mitigating risks and also seizing longer-term opportunities for growth. Trim the sails too much, and you could miss the breeze, and possibly even become ‘stranded’ as a business. Forgoing some of your insurance is an obvious example. Yes, doing so could save you money today. But it could leave you badly exposed tomorrow. Is it worth it?
Another common temptation is searching for new, cheaper suppliers. The theory is great, but again it can lead to compounding problems if you’re not careful. After all, suppliers are usually cheaper for a reason. Perhaps their product quality is inferior? Maybe their customer service or systems aren’t as robust as you’re accustomed to. What about the reliability of their supply and distribution chains? These are all big questions. It’s essential to do your due diligence, so any major changes are made with your eyes wide open. Otherwise, short-term savings could quickly cost you far more than you bargained for.
Expert advice can be valuable.
Whether you decide to make large-scale structural changes, or just tinker around the edges, the challenge is to strike an effective balance with measures that ease the immediate day-to-day pressure on your bottom line, whilst still supporting your longer-term business growth and objectives. Both are important. Both can directly shape your future. Neither is easy.
With the stakes high, seeking professional advice could be one of the wisest decisions you ever make.
If you’d like assistance in getting started, please contact the Penberthy Team today!
