How businesses can adapt to new Covid reality

Author
NZ Herald,
Publish Date
Mon, 25 Oct 2021, 2:04PM
Peter Vial, New Zealand country head for CAANZ. (Photo / Supplied)
Peter Vial, New Zealand country head for CAANZ. (Photo / Supplied)

How businesses can adapt to new Covid reality

Author
NZ Herald,
Publish Date
Mon, 25 Oct 2021, 2:04PM

Businesses are being urged to prepare for the new reality where Covid is being suppressed but won't be eliminated in New Zealand.

Peter Vial, New Zealand country head at Chartered Accountants Australia New Zealand (CAANZ), said the change in strategy meant the potential for more freedom if the country could hit the Government's 90 per cent vaccination targets.

"But localised lockdowns, supply issues, labour shortages and unpredictable consumer demand remain. Businesses need to be prepared for these and other challenges as part of our new Covid reality."

The Government on Friday announced a new traffic light system which the country will move to once all District Health Board areas reach a 90 per cent fully vaccinated target, although Auckland will move into it sooner once its three DHBs reach the 90 per cent target.

Vial said the 90 per cent vaccination target was a very high threshold which only a handful of countries had met.

"The new strategy is good news, but the challenge now is reaching 90 per cent."

He said businesses had to be prepared for a range of scenarios depending on how long it took to reach the target.

The accounting body has gathered advice from its members to help businesses survive the challenging period.

• Keep an eye on changing Covid workplace best practice and get ahead now

Christine McNamara, managing director at BB&S, said businesses should maintain the confidence of customers by improving tracing, masking and sanitising.

"Make it easy for your staff to get the jab, by providing time to do so, time-in-lieu, or other incentives, so we can hit our 90 per cent vaccination target."

• Don't under-price yourself

"In tough times it may be tempting to offer a hefty 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, director at Bellingham Wallace.

"This impact to profit is typically 50 per cent greater than a strategy of reducing variable costs by 1 per cent and three times greater than a 1 per 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."

Peter Prema from BetterCo Advisory & Accounting, said inflation was running hot and likely to be increasing costs.

"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 your head in the cloud

Silks audit director Talia Anderson-Town said it was challenging for businesses to get their audit completed during these uncertain times.

"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."

Silks audit director Talia Anderson-Town. Photo / Supplied

Silks audit director Talia Anderson-Town. Photo / Supplied

• Forecast for four seasons

Floyd Wicksteed at Schurr & Ireland Chartered Accountants, said business owners needed to forecast a range of economic scenarios that factor in both domestic and international border closures, and traffic light changes.

"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 the information you need to take a risk

Luke Kemeys at Next Advisory, said uncertainty was the hot topic right now, particularly in Auckland, and was one of the biggest barriers for business growth.

"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

Michael Grace at Grace Team Accounting said contrary to what many thought at the outset of the pandemic, the issue hadn't been lack of demand, but rather lack of supply.

"We're encouraging all of our clients to work through updated sales forecasting to secure additional stock at key times in the year."

• No. 8 wire ingenuity

Grant Eddy at CooperAitken urged business owners to look for efficiencies or workarounds to their Covid related issues.

"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.

Mike Atkinson said an independent review could highlight improvements hiding in plain sight.

"Seventy-five per cent of possible productivity comes from adopting existing best practice or catch-up improvements, and the remaining 25 per cent from innovations beyond today's best practices."

Sarah Walker, a director at Epplett & Co. Photo / Supplied

Sarah Walker, a director at Epplett & Co. Photo / Supplied

• Work with what you've got

Sarah Walker, a director at Epplett & Co, said businesses had to work with what they had.

"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.

"That means investing and empowering their people, re-designing their business to suit the resources they have or directing team onto customer-focused, value building activities."