OPINION: No doubt, Covid-19-driven demand shifts and social distancing restrictions delivered a heavy blow to New Zealand’s small and medium enterprises (SMEs), which account for over 95 per cent of all businesses. At the time when these enterprises are leaving no stone unturned to revive from the virus debacle, a SWOT analysis – strengths, weaknesses, opportunities, threats – seems vital in charting out the growth trajectory of these undertakings.
SMEs make an unprecedented contribution to New Zealand’s cultural, economic and commercial health in terms of innovation, production and employment generation. As per the Government, SMEs employ approximately 29 per cent of the country’s workforce and contribute over a quarter of its GDP.
Making up the majority of NZ enterprises, these businesses play a crucial role in the economy, supplying larger exporting businesses as well as regional economic growth.
* Three trends instilling confidence as SMEs recover from the Covid-19 storm
* A flick through three emerging trends transforming the future of small businesses
* Digital trade will offer small and medium-sized businesses a range of opportunities
Leaving international trade in turmoil, the Covid-19 pandemic emerged as a stress test for NZ SMEs, which are now undergoing a paradigm shift and embracing new realities actively. At a time when SMEs are adopting unparalleled measures of operational resilience to wade through the virus crisis, a SWOT analysis shaping the landscape for Kiwi SMEs deserves closer attention.
Though New Zealand’s SMEs are not out of the woods yet, unmatched support from policymakers and their innovative business continuity plans are strengthening their resilience against the Covid-19 storm.
Amidst widespread demand crunch and overseas supply chain disruptions, financial hardship emerged as a significant challenge for NZ SMEs that encountered massive revenue hits from the virus crisis. However, much-needed financial aid from the Central Bank and the Government turned up as a knight in shining armour.
Particularly, the Government’s Small Business Cashflow Loan Scheme and the Central Bank’s mortgage deferrals programme have been instrumental in supporting Kiwi SMEs to recover from the Covid-19 storm.
Additionally, the quick adoption of tech-driven solutions amidst a shift in business requirements and consumer preferences has been providing some sort of cushion to the small businesses. In a major fight against the crisis, a majority of SMEs adopted cloud computing, remote working strategies, 3D printing, big data, automation & robotics and other digital tools to adapt to the new normal. These tech-driven solutions appear to have placed SMEs in good stead to alleviate any potential disruption to their business operations in the future.
Infometrics economists talk about confidence.
In spite of some encouraging signs, it is hard to neglect the Covid-19-driven challenges faced by Kiwi SMEs like managing cash flow, following the beat of technological innovation, finding skilled employees, dealing with changing regulatory and legislative landscape and adjusting to the new normal.
With Covid-19 pushing unemployment levels high and triggering income crunches, debt collection from customers has become another significant challenge for SMEs struggling to make ends meet during the crisis. Consequently, the risk of SMEs going insolvent has heightened considerably despite the necessary backing from policymakers.
Moreover, one cannot overlook that NZ SMEs’ participation in global value chains and overseas trade remains limited owing to restricted access to capital and cumbersome regulatory requirements. Thus, SMEs face a lack of visibility relative to large enterprises that cater to diversified markets, consumers and needs.
While the Covid-19 pandemic has opened a can of worms for the SMEs, it has also surfaced as a giant opportunity for small businesses to foster their digital capabilities and build a sustainable future.
A report published by software firm MYOB in July 2020 emphasised that Covid-19-induced lockdown restrictions sprung up fresh opportunities for the NZ SMEs to harness technology, with 3 out of 5 SMEs willing to explore new opportunities to acclimate to the changing environment.
Moreover, potential measures by the NZ government to soothe the concerns of NZ SMEs can further unfurl a slew of opportunities for such businesses reeling from the crisis. These measures comprise extending the cash flow support, reducing compliance and regulatory burden, expanding tax relief, unveiling employment incentives and providing digital technology training to the small businesses.
On top of that, lately signed Digital Economy Partnership Agreement (DEPA) can aid SMEs to harness the benefits of digital trade opportunities across the globe.
With most of the SMEs resorting to remote working platforms amid Covid-19, the mounting risk of cyber-attacks and data breaches is no surprise. In September this year, the New Zealand stock market also suffered cyber attacks for about a week, forcing the Government to activate NZ’s national security system. Amidst the looming threat of cyber-attacks, cybersecurity has become more important than ever for NZ small businesses for seamless functioning now and into the future.
In addition to cyber threat, fierce competition remains a continuing threat for NZ SMEs operating in the consumer-dominated society. Amidst surging consumer expectations, growing automation and rising adoption of disruptive technology, NZ SMEs are facing intense competition with their peers in delivering favourable client experience.
While surviving through the Covid-19 crisis is not a cakewalk for NZ SMEs, they can potentially transform the short-term challenges into long-term opportunities via brand building, business model innovation and digital marketing. Besides, SMEs can leverage their agility and flexibility to respond to societal demands and market needs to weather the virus storm.
Kunal Sawhney is founder & CEO at Kalkine and is a richly experienced and accomplished financial professional with a wealth of knowledge.