While the nationwide lockdown created significant challenges for everyone, many parts of the country have adapted well to the ‘new normal’. In fact, the new normal looks a lot like business as usual. For others, the picture is more nuanced.

We interviewed directors from across Baker Tilly Staples Rodway’s national network to find out how their clients have fared this year, whether they had any surprises or lessons from COVID-19 and how they see the business environment shaping up for 2021. 

Mike Rudd Director, Tax, Auckland

I’m pleased with how resilient businesses have been. While tourism and education sector clients are still significantly impacted, many businesses, especially those selling cars, household furnishings and DIY, are doing extremely well. Unlike the GFC, where people were worried for their jobs and weren’t spending, we haven’t seen the same nervousness this time. That may be because we haven’t had the rolling lockdowns they’ve had overseas and the psychology of feeling vulnerable every time you leave the house.

The wage subsidy scheme was a very good move by the Government to stop the panic of April/May and prevent sudden reactions like getting rid of staff. It gave everyone a breather to assess how things were actually playing out, and by August the predictions of doom and gloom were largely gone.

Arguably, the changes we’ve seen in the retail sector with the shift to online are possibly just an acceleration of what was already going to happen. For me, the biggest surprise was the massive house price inflation we’ve seen. The failure of the predictive models is without precedent in our lifetime. Our economy has so many moving parts, it’s taught us you can’t just look at one aspect and make a prediction.

The key issue facing us now is supply chain holdups. The focus for the next few months will be how businesses can service their clients and keep up with demand resulting from ongoing lockdowns around the world. There’s still a great deal of pent-up demand, which bodes well for next year if we can manage the current situation. 

Daimon Stewart Director, Business Advisory Services, Taranaki

We’ve been pretty well insulated from the impacts of COVID-19 here in Taranaki. Agriculture clients are largely unaffected, our domestic tourism spend is up, and people are really busy. With borders still closed, many clients are actually finding it hard to get staff, particularly in construction and professional services (including accounting), but that’s a sign that our economy is chugging along pretty well. Our Taranaki firm is in growth mode, which reflects how buoyant the local economy is.

The Government’s Regional Business Partnership Scheme has really helped the area’s businesses through any struggles. It’s enabled them to get free business advice, which has helped quite a few people understand how they can improve their businesses for the long term, not just through COVID-19, which is a great foundation for the future as well. Other lessons have been equally valuable, such as the importance for SMEs of being a bit more conservative with spending.

The only caveat is that while Inland Revenue has been great at showing leniency around paying back taxes on time, that mountain of debt in most cases hasn’t gone away and businesses now have to trade out of it. Also, many businesses are suddenly owing their staff a lot of leave, as no one’s been going on overseas trips, which creates a liability on the books that needs to be addressed.

Supply chain concerns have also come to the fore recently, which is going to be a real issue if things don’t shift. Construction clients have told us appliances for new builds have long delays, and there’s a three-month lead time on some computers. This could actually create a bit of a supply-led recession next year if goods aren’t being manufactured overseas because countries keep going into lockdown.

Despite those issues, everyone has shown an incredible ability to be agile. Things are looking extremely positive for Taranaki. 

Roger Shackelford Partner, Tax and Business Advisory Services, Wellington

This has been a year of learning, and the lesson has been that everything can change overnight. That means having a good business plan, but also being prepared to throw it out the window and try something new. Because Wellington is a government city, and the public sector has actively encouraged remote working, hospitality and event management businesses have suffered significantly. This has also had major impacts on retailers and small businesses in the central city. I haven’t sat in a traffic jam for the past six months Wellington feels like it usually does during the school holidays.

The way small businesses have adapted is really inspiring. Necessity is the mother of invention, and it’s who we are as a nation. I’m proud of my clients, who are doing their best to improvise. Hospitality businesses are now delivering to offices. People are trying to come to us, rather than us going to them. And luxury car dealerships are doing so well from the travel drought, they can’t get enough stock.  They’re now calling previous customers and offering to buy back their cars for the full purchase price because they know they can sell them on at a premium. Jewellers are doing the same with watches.

As adaptable as people are, I do think we miss that social interaction. People have mentally written 2020 off, but I predict we’ll see a return to more normal ways of working next year. Event management companies have full books again for the next few months, so I’m feeling the future looks a lot brighter. 

Wendy Skinner Director, Business Advisory Services, Christchurch

One of my clients commented to me during lockdown that they’re glad they’d been through the earthquake in Christchurch as that really helped them during COVID-19. They had a plan in place quickly, looked after their staff and clients and that resilience built up during the earthquake period has stood them in good stead. It was nice that the IRD were also very understanding and supportive of clients during this time.

However, the Christchurch hospitality industry was struggling pre-COVID, generally due to too many players in the market, and it continues to struggle. Whilst economically things seem to be tracking better than expected, there is still uncertainty and I think there are still some bumps to come next year. My feeling is: expect the unexpected!