In times of economic uncertainty, businesses are forced to confront new and often unpredictable challenges. Global events, market volatility, inflationary pressures, and changing consumer behaviour all test the ability of businesses to adapt and survive. For SMEs in New Zealand, the stakes are high: resilience is not just a buzzword, but a critical factor that determines whether a business can weather the storm.
At Bellingham Wallace, we understand that building business resilience requires more than just preparing for a rainy day. It’s about embedding strong, adaptive strategies into your everyday operations to ensure your business succeeds, regardless of the external environment.
In this article, we explore three core elements of resilience that every New Zealand SME should focus on: cash flow management, financial planning, and strategic agility.
1. Cash Flow Management
Cash flow is the lifeblood of any business, but in uncertain economic times, effective cash flow management becomes even more critical. When external pressures such as rising interest rates, inflation, supply chain disruptions, and softening demand prevail, businesses without strong cashflow management disciplines often find themselves struggling to cover costs or invest in growth.
How can SMEs in New Zealand build resilience through cash flow management?
Forecasting and Scenario Planning
The first step is to gain clarity over your cash flow situation by developing robust cash flow forecasts. This isn’t just about looking at your current bank balance—it’s about projecting your cash flow into the future and planning for different scenarios. This enables you to anticipate potential shortfalls and act pre-emptively.
We recommend updating cash flow forecasts frequently at monthly, weekly, or even daily intervals as material information becomes available. Higher frequency forecasting is required during times of uncertainty and heightened business vulnerability. This real-time visibility enables businesses to adjust their spending, improve inventory management, prioritise investment, negotiate terms with stakeholders or, if necessary, engage with funders regarding temporary financing.
Understanding Business Liquidity
Access to liquidity is essential for resilience. While many SMEs operate with lean margins, it’s important to establish cash reserves or funding facility headroom when times are good, so that you can draw on this reserve when times are tough. Ideally, businesses should aim to have enough cash on hand to cover three months of operating expenses, depending on the nature and seasonality of business.
However, we understand that for many businesses, building substantial cash reserves can be challenging. In such cases, improving liquidity by reducing unnecessary expenses, speeding up receivables, improving inventory management, or negotiating better payment terms with suppliers can free up cash. Taking a disciplined approach to cash flow management now will help establish liquidity contingency in the future.
Diversify Revenue Streams
Relying heavily on a single client or product can put your cash flow at significant risk if that revenue stream dries up. One of the keyways to build resilience is to diversify your income sources. Whether it’s developing new products or services, entering new markets, or finding ways to cross-sell to your existing customer base, revenue diversification can provide stability and mitigate the impact of economic shocks.
Cost Management
Establishing a cost management framework helps a business control the use of its financial resources and enables the business to change settings within the framework in response to challenges.
The key elements of a cost management framework include establishing accountability for the functional areas within the business, setting annual expense budgets for those areas and regularly measuring performance against those budgets so corrective actions can be taken when necessary.
Businesses should also establish delegated expense authorities at all levels within the business, so that the right people engage in prioritising and approval business expenditure.
Budgets and delegated authorities can be adapted as required in response to the business environment.
Managing business expenditure is significantly more controllable than revenue and is a fundamental practice in cash management and improving resilience.
2. Develop Robust Financial Planning
Resilience starts with having a clear financial strategy in place. In times of economic uncertainty, strategic financial planning allows businesses to not only survive but seize opportunities for growth when others may falter. Without a plan, businesses are left reacting to challenges rather than proactively navigating through them.
Here’s how Bellingham Wallace helps SMEs create resilient financial plans:
Regular Financial Reviews and Adjustments
Financial plans cannot be static documents. They need to evolve as market conditions change. Regular reviews of your financial health are essential to ensure your business is on track. This includes analysing profitability, assessing debt levels, and evaluating any changes in cost structures.
At Bellingham Wallace, we advise conducting monthly reviews of your financial position to spot any early warning signs. Whether it’s identifying underperforming areas of the business or adjusting budgets to account for unforeseen expenses, regular reviews enable agile decision-making.
Focus on Profitability, Not Just Growth
In times of economic uncertainty, growth for growth’s sake can be dangerous. Instead, businesses need to focus on sustainable profitability. This means understanding the profitability of the products, services and customer segments of your business and aligning resources to target those areas. Often, businesses that have expanded too quickly find that during challenging times, their lower-margin services or products start to drain resources.
By focusing on core, high-margin areas, businesses can maintain profitability even if revenue growth slows. Resilience doesn’t always mean expanding—it can also mean pulling back strategically to ensure long-term sustainability.
Leverage Expert Advice
Many SMEs face complex financial challenges, from managing debt to navigating tax obligations in an unsettled environment. Having a trusted advisor can make all the difference. At Bellingham Wallace, we provide tailored financial advice that helps businesses strengthen their financial foundations and prepare for the unexpected.
For example, refinancing existing loans to take advantage of lower interest rates or restructuring debt to improve cash flow can ease financial pressures. Similarly, strategic tax planning can unlock savings that can be reinvested into the business. Financial resilience is built through informed decision-making, and this is where expert advice becomes invaluable.
3. Embrace Strategic Agility
In uncertain times, businesses that can quickly adapt to new circumstances stand the best chance of success. Strategic agility—the ability to pivot, innovate, and re-align resources in response to external pressures—is a cornerstone of business resilience.
Here’s how New Zealand SMEs can foster strategic agility:
Foster a Culture of Innovation
Businesses that thrive during uncertain times are often those that embrace change and innovation. Whether it’s adopting new technologies, rethinking business models, or entering new markets, a forward-thinking mindset enables businesses to stay one step ahead of competitors.
For example, the rapid shift towards digital transformation during the COVID-19 pandemic demonstrated that businesses that were agile and willing to adopt new technologies were better positioned to continue operating. At Bellingham Wallace, we help businesses assess their current processes and identify areas where innovation can create efficiencies or open up new opportunities.
Scenario Planning for Strategic Decisions
Strategic agility requires planning for multiple outcomes, much like scenario planning for cash flow. By mapping out potential future scenarios, businesses can ensure they are prepared for whatever may come. This might involve exploring how different market conditions could affect your operations, or how you might respond to changes in customer behaviour or supply chain disruptions.
At Bellingham Wallace, we encourage businesses to stress-test their strategies under various scenarios. This not only helps to identify risks but also highlights potential opportunities for growth. When businesses are proactive in their planning, they can pivot more easily when challenges arise.
Invest in Skills and Leadership Development
Finally, building resilience requires strong leadership and a workforce that is adaptable and skilled. Leaders need to be able to make swift, informed decisions and guide their teams through periods of uncertainty with confidence. Investing in leadership training, professional development, and upskilling your team can strengthen your business’s ability to respond to challenges.
Resilient businesses are those that empower their people to take ownership, innovate, and contribute to the organisation’s success. At Bellingham Wallace, we work with businesses to develop leadership strategies that not only support day-to-day operations but also drive long-term resilience.
In today’s unpredictable economic climate, resilience is no longer an option—it’s a necessity. Cash flow management, financial planning, and strategic agility are the pillars that will support your business as you navigate uncertainty. At Bellingham Wallace, we’re experts in helping New Zealand businesses build resilience by providing tailored advice, innovative solutions, and strategic insights.
By taking proactive steps now, your business can strengthen its position, seize opportunities, and thrive in the face of future challenges. If you’re ready to build a more resilient business, get in touch with our team at Bellingham Wallace.
Author - Nick Savill
