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Lessons of 2021: What can small businesses take into the New Year?

At the end of 2020, we felt somewhat confident in where the country was going. Covid cases were nil and Aotearoa was opening up again. It was exciting, especially after the ups and downs we’d experienced since April.

We saw small business owners all over the country adapt to a new Covid landscape, taking the steps necessary to remain operational and profitable should the country need to return to an Alert Level lockdown.

Kiwis became accustomed to scanning in at stores, restaurants and bars with the Covid tracer app, which became a part of our day-to-day routine.

We saw record high GDP growth in the September quarter, as the nation’s economy seemed to buck the doom and gloom trends of economists and media alike.

And then Delta hit.

Thankfully, the Bay of Plenty has managed to avoid the long tail of lockdown restrictions seen in other parts of the country.

But local businesses can still learn valuable lessons from how these regions have managed to pivot and remain relatively functional through digitalisation, which should be a key focus for small business owners in the coming months and years.

For example, where possible we saw small businesses pivot to e-commerce and online offerings, providing click and collect when and where it was an option – something that will remain handy outside of lockdown.

Xero’s latest Small Business Index data shows a bounceback in sales in October 2021 after two months of declines during the Alert Level Four and Three lockdowns, with much of this owing to small businesses being able to remain operational.

As we pull the curtain on 2021 and prepare for the New Year and new traffic light system to manage Covid, now’s the time to look ahead and see what lies on the horizon for small business.

Digitising our small business community

Firstly, digitalisation is going to remain a crucial part of business development. For many, the Alert Level Four lockdown in April 2020 was a sharp awakening into the shortcomings of their operation.

Many had to react quickly to digitise in order to remain open. This change has continued well into 2021 with many small businesses changing the way they operate overall, embracing digital tools to improve their overall productivity and wellbeing. Of course, there’s still a way to go. We know businesses who digitalise their business are more profitable and productive than their counterparts.

Many small business owners think digital tools are for particular industries and mainly for office workers. But these days there are specialist digital tools for every type of work.

It’s important you take the time to sign up to the Government’s free Digital Boost programme or check out our Why We’re In It guide to getting started with digital.

Preparing for new financial processes

Small businesses aren’t the only ones embracing digital processes to improve productivity.

E-invoicing is on the horizon for Kiwi businesses, aiming to simplify and automate the exchange and processing of invoices, all while removing human error. The main benefits include faster payment times and improved cashflow, along with reduced processing costs and more connectivity to other businesses.

Furthermore, while still in its infancy, open banking has the potential to revolutionise the way we do small business. In a nutshell, open banking refers to a framework where customer data is shared with trusted service providers.

This will enable these providers to offer a wide range of new financial services like account aggregation, instant credit risk assessments and subscription management.

Open banking is starting to gain traction globally and is something the Government is working to bring to our shores.

Reopening of the borders

As we move into the new traffic light framework, there is likely to be increased pressure on the Government to reopen our international borders.

After all, the tourism industry has been severely impacted by the lack of international travel over the last 18 months.

When we open the gates there will be an influx of spending – as well as the potential for Covid outbreaks and potentially new strains.

No one knows the curve balls that will come in 2022, but I’ve seen the small business community adjust to everything that’s been thrown at them this year with determination and resilience.

I believe we’ll do well next year with our digitalised workforce, new technology coming through and international tourists on the way.

Read more: How to get back in touch with the reason why you got into business

Craig Hudson
Xero Managing Director for New Zealand and the Pacific Islands

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