02 Jun Certainly uncertain
There’s an old cliché- the only constant is change. For the economy at least, this could be adapted to: the only certainty is uncertainty. Interest rates look iffy, there may or may not be an AI bubble, at the time of writing, the Strait of Hormouz remains closed and the economy remains in a state of stagnation. Add to that, it’s an election year and for reasons that no behavioural scientist can adequately explain, this historically makes businesses jittery about making forward looking investment decisions, and it looks like external forces aren’t going to turn the ship around in the short term. All sounds grim.
The good news, most businesses in NZ are small businesses, and small businesses are pragmatists. They realise they have precious little influence on policy settings, foreign wars, technological innovation and credit conditions. They just get on with the task at hand- and it is this pragmatism that will help improve the economy. Of course, we still need to respond to the environment we are operating in and factor in what might unfold in front of us. It’s this last bit that small business isn’t great at- working through and preparing for what may happen. What we could/should be doing is scenario planning.
In short, scenario planning is working out some possible scenarios that might transpire, and planning what steps you’ll take in advance. For example, if you run a transport business that’s heavily dependent on fuel costs, you might have three scenarios for fuel prices- a best case, a probable case and a worst-case scenario, all of which will have thresholds for when surcharges or service delivery changes. This link explains it in a little (but not too much) more detail.
To be clear, this doesn’t need to be a complicated or time-consuming process. It doesn’t need fancy language or buzz words. This is simply about understanding what actions you’ll take, depending on what’s coming towards us.
Not sure about what scenarios you’re facing or how to deal with them? get in contact.
