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It was a year like no other. In 2020, New Zealand private businesses faced significant challenges created by the impact of the global pandemic. Amidst the uncertainty and rapidly changing business environment there have been significant growth opportunities for some businesses, while others have been ravaged by border closures, reduced demand and continued supply chain issues driving a two speed recovery, split predominantly by industry and business model. The sentiment among the vast majority of businesses surveyed at the end of 2020, was that experiences from this pandemic will allow them to return stronger and better equipped to deal with future challenges and build back opportunities.
New Zealand’s Engine Room includes NZ companies with a turnover between $5-$200M who make up 39%, the largest share of NZ businesses.
In our Engine Room Survey, clear themes emerged from the challenges outlined by respondents. There has been an acceleration and prioritisation of existing changes that COVID-19 forced leaders to address. The top challenges for setting a strong foundation for recovery and sustainable growth are:
There is a high degree of optimism among New Zealand small businesses for their own performance in the coming year. However, significant uncertainty still remains when planning ahead. The impacts of COVID-19 are being felt by businesses we surveyed in similar areas that we have seen in previous years but with added challenges and complexity. A common driver of these challenges is the border closures restricting the movement of goods and people.
Businesses with customers overseas are coming to grips with doing business and selling from afar. Businesses have been pleasantly surprised at the effectiveness of working from home and team communication. External facing business that involves negotiating with customers and finding new customers is a different challenge without face to face meetings. Some businesses are still opting to travel overseas to participate in business critical activities and acknowledge the isolation period when returning to New Zealand is part of the cost of doing business in the current environment. Others are leveraging partnerships and support provided by organisations such as NZTE.
The areas that border closures have impacted businesses reflect the talent shortage of certain skilled labour in New Zealand, particularly in the tech sector. The job market appears buoyant domestically for a number of jobs, but there are still skill shortages in areas that we usually import talent from countries that lead innovation and have the right experience.
As an island nation and with the pandemic still affecting significant trading partners, New Zealand continues to be impacted by a range of supply chain issues that are filtering through the system. This is also a big driver of additional cost for businesses that are impacting profitability and raising pricing questions.
The Government needs to help take some of the guesswork out of knowing when borders will open and could do this by communicating a framework and conditions under which we can rejoin the rest of the world.
In the midst of uncertain operating conditions, scenario based strategy and cash flow forecasting is a way to put business leaders back in the driver's seat.
Partner, Sustainability, Climate & Nature, PwC New Zealand
Tel: +64 21 711 641