New Covid-19 reality is coming – but is your business ready?
Monday, 25 October 2021
It has become clear that we’re abandoning our Covid-19 elimination strategy and moving to a one of suppression, and that means businesses should be reading between the lines and preparing for our new Covid reality.
I’m not a public health expert – I’m a Chartered Accountant - so I’m not going to argue the pros and cons of this change in strategy. However, the move has been well signalled in the Prime Minister’s speeches, the Governments’ introduction of ‘steps’ within the alert levels and the loosening of restrictions in Auckland, even while case number rise.
Chartered Accountants from around New Zealand recently met for a national workshop and shared how they’re helping clients to both survive and thrive in our new Covid reality – here’s some of what they had to say.
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Forecast for four seasons
“Business owners need to forecast a range of economic scenarios that factor in both domestic and international border closures,” said Floyd Wicksteed CA at New Plymouth’s Schurr and Ireland Chartered Accountants. “Particularly when dealing with your bank, they will see an engaged and organised business and that makes a real difference. No one has a crystal ball, but a handful of forecasts will help maximise growth or ride out the doldrums.”
Get your head in the cloud
“One of the challenges our clients face is how they get their audit completed during these uncertain times,” said Whanganui based Silks Audit Director Talia Anderson- Town CA. “The new norm is virtual audits, meeting on Teams or Zoom and accessing records through cloud storage.” The end-product is still the same, but how we get there is up to ‘me mahi tahi tatou’; us working together.”
Don’t under-price yourself
“In tough times it may be tempting to offer a discount, but on average, a 1 per cent price increase, assuming volumes remain the same, would deliver approximately a 6 per cent to 8 per cent increase in operating profit,” said Mike Atkinson FCA, Director at Auckland’s Bellingham Wallace.
“This impact to profit is typically 50 per cent greater than a strategy of reducing variable costs by 1per cent and three times greater than a 1per cent increase in volume. Price is just one of three areas in which business need to beat or meet the market, with the other two being customer experience and product offering.”
“Inflation is running hot, and likely to be increasing the price of inputs,” said Peter Prema CA at Auckland’s BetterCo Advisory and Accounting. “We are working with businesses to review the price of their products or services. If their price hasn’t increased in the last 12 months, it’s highly likely they’re undercharging and putting additional strain on their business.”
Get the information you need to take a risk
“Uncertainty is the hot topic right now, particularly in Auckland, and is one of the biggest barriers for business growth,” said Auckland based Luke Kemeys CA at Next Advisory.
“Business owners should seek out well-informed decision makers who can help them take action. We all need to take risks to progress towards our goals, and having the right advice is vital.”
Plan ahead for supply issues
“Contrary to what many thought at the outset of the Covid pandemic, the issue hasn’t been lack of demand, but rather lack of supply,” says Michael Grace CA at Grace Team Accounting in Tauranga.
“We’re encouraging all of our clients to work through updated sales forecasting to secure additional stock at key times in the year.”
Keep an eye on changing Covid workplace best practice and get ahead now
“Maintain the confidence of your customers by improving tracing, masking and sanitising. We’re in a leadership position on this,” said Christine McNamara CA, Managing Director at BB&S in Dunedin. “Make it easy for your staff to get the jab, by providing time to do so, time-in-lieu, or other incentives.”
No. 8 wire ingenuity
“Whether it’s fixing known variables such as interest rates, using tax pooling to manage short term cash-flow or reviewing your structure and assets, look for efficiencies or workarounds to your Covid-related issues,” says Grant Eddy CA of Waikato’s CooperAitken.
“Seventy-five percent of possible productivity comes adopting existing best practice or catch-up improvements, and the remaining 25 per cent from innovations beyond today’s best practices,” said Mike Atkinson FCA. “An independent review can highlight that are right in front of you.”
Work with what you’ve got
“Whether labour shortages, stock outages or missing and sometimes hiding customers, we’re helping clients play Lego brickmaster to re-arrange the pieces they have,” said Sarah Walker CA, Director at Hawke’s Bay’s Epplett & Co. “That means investing and empowering their people, re-designing their business to suit the resources they have or directing team onto customer-focussed, value building activities.”
Indications are that we will be moving down levels slower, at different rates around the country and with different restrictions. Supply chain delays, labour shortages and unpredictable consumer demand mean businesses need to be looking ahead, fine-tuning their plans and forecasts and working with good advisors.
It’s an old truism, but the best thing that business owners can do is focus on what they can control, and plan as much as possible for a range of economic scenarios – good, bad, or somewhere in between.
Peter Vial FCA is New Zealand Country Head of Chartered Accountants Australia and New Zealand.