Trend-based decision making

Trend-based decision making

New research into the world of small business is carried out all the time using surveys of small business owner insights, and comments from the support industry such as accountants and government. Here at ASB, we also conduct our own research and have a bunch of useful facts and figures that could help change the way you do some things in your business and to consider for the year ahead.

Trend-based decision making
    <h3>ASB customer survey</h3> <p>In February 2022, we ran a short survey with just over 300 of our small to medium customers and found business confidence has fallen a lot since late year with the ongoing restrictions. The greatest concerns for business customers at this time are related to COVID as you'd expect, such as trading restrictions and the problem with the supply chain and getting inventory on time (or at all, especially outside Auckland). Other issues raised included the cost of compliance, staff unavailability, personal stress and as always, cash flow (which tends to be the result of these symptoms).&nbsp;</p> <p>&nbsp;A few customers commented:</p> <ul> <li>'We don't want to lose good people or have them worried about the future'.</li> <li>&nbsp;'Lack of product preventing us from completing work and getting paid'.</li> <li>'International trading is challenging due to increased costs, logistics and keeping up with ongoing worldwide product demand'.</li> </ul> <p>The survey also covered digital trends, finding websites and social media are the most used digital channels, and since the first lockdown, 25% of businesses started using a new digital channel.&nbsp;</p> <p>The most popular digital marketing tactics were (respondents could select more than one category):</p> <ul> <li>58% websites</li> <li>42% social media&nbsp;</li> <li>32% email marketing/ email newsletter&nbsp;</li> <li>30% Google listing</li> <li>16% search engine marketing&nbsp;</li> </ul> <p>Reaching new customers, communicating with existing customers and preparing the business for the future were the main reasons to start using these channels. It seems lockdown gave people the prompt they needed to diversify! Is it time to consider adding one of these top five channels to enhance your marketing?</p> <p>The reasons businesses started to adopt these digital methods were to reach new customers, communicate with existing customers, prepare the business for the future, develop the business and diversify with new revenue streams.</p> <p>If you'd like help to take advantage of these trends, the ASB Business Hub has a whole section on <a href="/content/asb/businesshub/en/businesshub/resources/build-business-online.html">digitalising your business</a>. Topics include how to improve your website, gain qualified leads, use social media to build conversations, learn about search engine marketing, email campaigns, online marketplaces and optimising your business to drive traffic.</p> <h3>ASB Economic Quarterly Update&nbsp;</h3> <p>In February, ASB's economic update also found several interesting trends:</p> <ul> <li>Global shipping remains severely capacity constrained, with global logistics challenges still troublesome and freight costs elevated.</li> <li>Oil prices are lurking around seven-year highs.&nbsp;</li> <li>Geopolitical tensions, rising interest rates, and imminent central bank tightening, as well as the ongoing COVID challenges, have triggered periodic bouts of risk aversion in financial markets.&nbsp;</li> <li>Labour supply and productive potential have been significantly constrained by a shortage of skilled and unskilled labour, linked to the border restrictions. The demand for labour is expected to remain strong.</li> <li>Freight disruptions, stock shortages, soaring consumer prices, slow population growth, consumer caution over COVID-19, the cooling housing market and rising interest rates are expected to weigh on consumer spending over 2022. Discretionary spending will likely to be the hardest hit.</li> </ul> <p>It's not all doom and gloom, but the trend of rising interest rates will likely impact on any business that has debt, or for business owners who may have used house mortgage debt to fund business expansion. To help alleviate the pain there are a number of things to consider, such as splitting debt between fixed and floating rates and build extra profit in your business to soak up any finance cost increases. Good examples include increasing prices where you can, selling higher margin products and services, stripping out unnecessary costs and ensuring you're collecting all outstanding funds owed to you as quickly as possible.</p> <p>The full ASB Quarterly Update is <a href="/content/asb/documents/en/documents/economic-research/quarterly-economic-forecasts.html">available here</a>.</p> <h3>Xero trends</h3> <p>Xero also conduct a yearly report on what their accountants see happening. Some trends and actions to consider:</p> <ul> <li>Many business owners pay themselves last after vendors and staff, and 60% feel a pinch on personal finances. To prevent this happening to you, review your margins, focus on the products and services that generate the most profits and pay yourself a salary rather than taking cash out when you need it.&nbsp;</li> <li>Supply prices are going up almost monthly and 38% of businesses say getting inventory is an issue. Solve this by having multiple supply arrangements so you’re not relying on a single supply chain or go directly to the manufacturer.</li> <li>Xero found 43% of small business owners worry about their mental health and a similar proportion are concerned about their employees' wellbeing. Create a culture of wellbeing to create more resilient, productive, and happy employees so they can better cope with setbacks, take advantage of opportunities and contribute to business growth.</li> <li>Debt is still an uncomfortable trend for most businesses, with 56% facing some form of cash flow pressure, so reduce 'bad debt' (covering cash crunches or emergencies) and manage 'good debt' (borrowing for things like equipment and enhanced productivity).&nbsp;&nbsp;</li> <li>Many businesses say hiring can be challenging, with new hires wanting meaningful work, opportunities to grow, flexi hours and a future with the business. As a business, you'll need to start offering more in the future than a decent salary.&nbsp;</li> <li>COVID compelled a quarter of businesses to consider a move online, so all forms of digital marketing to drive qualified traffic will be a massive future trend. You'll need partner technologies to work properly, such as the right software to manage leads, sales, marketing, delivery, logistics and accounting.&nbsp;</li> </ul> <p>The full report is <a href="https://www.xero.com/nz/reports/business-trends/" target="_blank">here</a>, and also checkout <a href="https://www.xero.com/nz/resources/small-business-insights/" target="_blank">Xero's Small Business Index</a>, which benchmarks how you are doing compared to other businesses on sales, time to be paid, jobs, and wages.</p> <h3>In summary</h3> <p>If you better understand wider macro trends, you’ll be better positioned to act in your business before they cause too much distraction or disruption. Note down what you want to change or explore in your business going forward.</p>