Dorian dispenses small business advice for 2023

Last week, Christchurch director Dorian Crighton appeared on “The Real Solutions Business Podcast” presented by Godfreys Law business owner Brad McDonald. The pair spoke about the 2023 landscape for small businesses and provided some advice for the months ahead. Here’s a summary, abridged and edited for length.

Time to read: 9 mins

Brad: What does the 2023 landscape look like for small businesses? We’re all hearing about and feeling and knowing the pressures that face everyone at the moment in New Zealand, let alone globally… If I said, ‘hey Dorian, I’m one of your clients… what lies ahead and what can I do to get my business in the best shape possible to succeed?’.

DorianManaging cashflow’s really important. I’m talking about looking forward eight to 12 months ahead and if you’re in small business, it’s hard – especially now – to go, ‘well what’s happening in a year’s time? What’s the horizon looking like?’. Perhaps take that moment, even if it’s just finishing half an hour earlier, find a quiet bar somewhere, sit with a beer and go, ‘right, what does it look like?’. This is the bit where I’ll say, ‘it’s better done with an accountant’, but sometimes I find a bit of quiet contemplation with yourself is all it takes is to say, ‘where can I see there being a hole in the future?’.

Brad: I just wanted to make a comment there about the benefit of speaking to an accountant about it – obviously there’s huge benefit it doing that – but I like the idea of sitting somewhere in a quiet corner with a beer or wine or whatever takes your fancy, but just ordering your own thoughts, first of all, because my experience of using other professional services is that you get a lot more out of them if you already go in there…

Dorian: Prearmed.

Brad: Yeah, prearmed, some sort of schematic of where you’re at in your head to actually have a meaningful conversation.

Dorian: It gives you a head start. It means, and I say this with love and affection to my billable hours, you’re not paying for something that you could have solved yourself. It’s trying to understand where you sit and if you’ve got no idea, get a head start, go away, and then come back.

Brad: (And) this is quite basic, but I find a lot can spin out of it – doing a basic SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for your business: Where it is right here, right now? How you see it and how you see it moving forward.    

Dorian: Yep. And… only try and control what you can control, which sounds counter-intuitive, but what it’s saying is (in a broader sense), ‘it’s no use trying to worry about the global recession’.

Brad: That’s a really good point because that’s the noise we get all the time at the moment.

Dorian: We’re a wee blip on the ocean and the trends buck us where we go. I can’t change that, you can’t change that. And if you’re a ‘small business’ person in Christchurch, you’re not going to be able to change what the steel price is with China or anything like that. What you can do is control your reaction to whatever happens. What I mean by that is you need to be nimble. I’ve seen this too many times, where… people don’t react to price changes quickly enough. And they’ll wear it because they won’t want to put up their prices or roll out a price increase because they don’t want to damage their customer or client base. In these inflationary times, you do need to do that, otherwise you’ll just see your margin and bottom line erode to nothing.

The other thing is, you’ve got to be genuine in any price increases. I have heard and (seen) it myself where the price increase just seems a bit arbitrary. There’s no reasoning behind it, it’s like, ‘oh well, everybody else is putting their prices up’.

Brad: So let’s do it too!

Dorian: And I’ll do it too. And let’s face it – business is about relationships and trust, and if you’re just doing it because you go, ‘I can skim an extra 5% here’, that’s not going to work long-term. People are pretty cunning when it comes to their wallet – they’re going to figure it out – and if someone comes to you and you have put up your prices, then you should be able to say, ‘these are the reasons for it’.

(And) earlier I said, ‘cash is king’. There’s now a saying, ‘stock and inventory is the emperor’. Supply chain issues mean you can’t sell something you don’t have. We’re all getting used to the idea that you can’t just walk in and get things straight away.

Brad: What a change in mindset that is. You used to be able to go in and if you wanted something pretty much you could go and grab it off the shelf, but no, those days, are going, going, gone.

Dorian: You can’t sell what you don’t have and if you sell things that take three or four months to arrive, you’d better let people know. But if you’ve got it, you can charge a bit more because the cost of holding that inventory is inherent in the business. You can put your prices up if you’re having to front-load inventory. Don’t be afraid to charge for that.

Brad: I think what I’m hearing from you is… it’s a ‘no surprises’ basis, which goes hand-in-hand with trust and confidence in the relationship.

One of the things we spend a lot of time on here at Godfrey’s Law is our team culture and that’s always a work in progress. I think that’s so important for businesses – to have a positive, vibrant team culture.

Dorian: Well when you look at the five reasons for resignations, I was talking to someone this morning, and they said the five reasons for resignations – number five was having flexibility to work from home, which is great for someone like an accountant, but hard to work from home if you’re swinging a hammer or laying a pipe… Number one is toxic environment and culture. So if someone feels the culture is not a good one, it’s one of the key reasons to leave. A cornerstone of culture is safety, so as a business owner if… every day you’re walking in going, ‘I don’t know how I’m going to pay the bills… oh the book’s looking pretty thin’ and you’re down, then your team’s going to go… ‘is my role safe here?’.

Then you start building around other factors that make it a great place to work and you need to pay the right amount of money, as well, and as we know, that’s never clearer than today. You can’t get away with trying to undercut people too much.

Brad: Pay people what they’re worth.

Dorian: It’s all about communication, too. So, when I was thinking… what does 2023 look like, putting the crystal ball on. I see small business continuing to do well, if they do what they do well. There’ll be pressures around it, but I think you come back to the core – my big four things that I talk about in good times (also) applies in uncertain times… Plan, Budget and Cashflow, Structure and Manage Risk. So it’s never been more important to have a business plan. If you don’t want to pay for it or get it facilitated, at least drag something off the internet and give it a go yourself because something’s better than nothing.

Give a plan a try and it should have:

  • Who’s your ideal client?
  • A bit of a micro budget – I call it a bottom-up budget
  • What do you stand for?
  • What’s your purple cow – what makes you different?
  • Where do you want to get to?

And there should be a bit of SWOT in there – just so that you can focus on it and see how you’re going with any threats. So you’ve got a plan, you’ve got to know you’re going to get there… a budget cashflow – accountants are always going to say they’re needed, but they are. My most successful clients do budgets and cashflows. (There are) some nuances between them – some things that are in a budget that aren’t in a cashflow. That’s for another day, another podcast.

And then making sure you’ve got the right people doing the right jobs… and managing your risk – the good old risk matrix. ‘What’s going to sink your business?’ is always a good start, and (they’re) the red ones. So deal with those first, work thought the orange ones that will give you some sleepless nights, and then there’ll be some tidy-up green ones – the good-to-haves.

Looking forward, there are going to be some challenges I see in the middle of next year. That’s my big, bold prediction so we’ll leave that in the podcast, if I’m right, I’ll play it. That’s end of July, I think. Probably the third quarter could be the most challenging so… get your ducks in a row. Look at those four pillars – Planning, Budget, Structure, Risk. Make sure you’ve got a plan, speak to your professionals – speak to your financial advisor, your lawyer, your accountant and your banker – as often as you can.

Brad: I’d add one other to that: Your insurance broker.

Dorian: Yes. For the risk. Perfect. Make sure that you pick people that work as a team.

Brad: That communicates with one another. It’s amazing how many clients seem to be scared of that.

Dorian: They think that if I send you an email you’re going to charge them and I’m going to charge them, so they’re getting double charged for the one email. It’s not true. If anything, it’s making your life cheaper and easier.

So, next year, look after your cash. Do it in a responsible way by paying your bills on time, making sure you’re collecting your cash, making sure that your cashflow cycle is solid. Look after your inventory. Make sure you’ve got a plan (and) your budget – and your plan should have some KPIs. Make sure you’ve got the right people doing it right, and look after your risk, and you’ll have a great Christmas in 2023.  

Click here for the full interview on Spotify:

DISCLAIMER No liability is assumed by Baker Tilly Staples Rodway for any losses suffered by any person relying directly or indirectly upon any article within this website. It is recommended that you consult your advisor before acting on this information.

Sign up to our newsletter

Thanks for signing up!

Our website uses cookies to help understand and improve your experience. Please let us know if that’s okay by you.

Cookies help us understand how you use our website, so we can serve up the right information here and in our other marketing.