What will the business environment be like over the next 12 months?
We’ll continue to have ongoing global financial uncertainty, multi-speed business environment, and the prospect of multi-year low growth domestically and within many of our traditional trade partners.
What should NZ business people be focusing on?
Management should have strong focus on delivering, and growing, business-generated free cash. Sharp oversight of debtors and stock will be essential.
Post the GFC many will have endeavoured to optimise the mix of equity and debt invested in their businesses. The continuing global financial uncertainty and the prospect of an ongoing low growth operating environment demands further oversight of that debt equity mix.
A timely rigorous review initiated and implemented by shareholders and management almost always leads to better business outcome than debt holder-generated review.
Optimal mix of equity and debt, particularly where the operating environment and the term of the debt have been calibrated to reflect the pulse and prospects of the business, allows management to focus on the business.
Focus on, and in, the business should deliver, at the very least, return on capital employed appropriate for the investment risk and the opportunity to plan for growth.
What advice would you give to NZ business people?
Given the size of the New Zealand marketplace, growth for New Zealand-owned businesses at the level necessary to facilitate lift in prosperity within New Zealand will have to be secured in other geographies.
New Zealand business, and indeed New Zealand, may well be located on the edge of the world but is geographically extraordinarily well placed in the Asia Pacific to benefit from what many describe as the ‘Asia Pacific’ century. New Zealand businesses serious about growth should be developing robust and credible strategies that are Asia Pacific centric.
New Zealand has growing reputation for innovation and indeed we have spawned number of cash-rich inventors and entrepreneurs. However, New Zealand business needs to spend lot more on innovation and indeed productivity, often combined with sustainable partnering programmes, with the intention of building scale New Zealand-based businesses with the capability of Asia Pacific, and indeed global, reach.
Business is all about people and talented people have access to global market place. New Zealand business must embrace and support an environment that attracts and retains talent. New Zealand business should ensure that at least one of our universities remains ‘safely’ amongst the top 100 universities in the world and they should embrace diversity as fundamental pillar of their employment policies.
Absent commitment to innovation, productivity, partnering, and the development and retention of talent, growth strategies developed by New Zealand business will not be robust and indeed will lack credibility.