Small business needs a third mode between survival and thriving
Opinion by Mike Burke, Originally Published on The New Zealand Herald
New Zealand small businesses’ confidence is going up. Again.
How many versions of that sentence have we had in the past seven years? Since Covid, the attention deficit of our economic cycling has given New Zealand small business owners cynical whiplash.
I had never heard the term “green shoots” before 2020. We have had so many green shoots since then, we could have opened a garden centre.
Every moment of a hopeful economic tailwind has been swiftly followed by an uppercut of a headwind. Wars, fuel adjustment fees, election cycles – an economic cycle used to run about eight years; lately it feels closer to eight months, sometimes eight weeks.
This recovery has ghosted us at least three times and now it is back in our DMs saying this one is different. Fool me once ...
I swore I’d stop predicting when this thing would turn. So, instead, how can we go about being ready for a tailwind that could turn into a headwind at a moment’s notice?
Two modes
In my experience, there have only ever been two modes to run a business. Survive, or thrive.
Survive mode is brutal: “batten down the hatches”. Line of sight goes from months and years to days and weeks. The cashflow forecast gets its own weekly meeting. Cost restructuring, price-checking everything and calls to suppliers or customers turn into favours. Nerves high, sleep low, red alert all day, every day.
Thrive mode is a completely different world. The outlook stretches to the next quarter, the next year, the next five years. Discretionary spend is back. You are hiring. Customer calls become lunches. You draft strategies about something other than not dying and sleep arrives with a bit of giddiness attached.
The lists of liquidated companies are full of businesses that moved to survive mode too slowly, or not deeply enough. And almost every owner who has come through a downturn will tell you, in hindsight, that they changed mode from survive to thrive far too late on the way back out.
Habits outlive the conditions that made them
Three years in, survive mode is not a conscious decision anymore. It is your meeting cadence. Your approval thresholds. The pay freeze nobody lifted. The marketing budget you cut that never came back. A team that have been rewarded for saying no for so long, they have forgotten how to say yes. These habits become culture. That culture stops you seeing when to change mode. So, the business confidence score becomes the proxy business owners take for a change decision.
Today, in this impulsive economy, that is a fool’s errand.
Instead, know your signals to stay or change mode. The clearest survive signal is delay. When delays are everywhere, you should enter survive. The clearest thrive signal is its opposite: your frustration is capacity, not the delays, and your good people are being approached by competitors.
There are more signals than I have word count for here.
Drive mode
Gross domestic product (GDP) for last quarter was announced on September 17 and it is up, while business confidence has rebounded strongly from the year’s lows. But none of this says the good times have arrived yet.
GDP is up 0.2%, construction had its best quarter in three years while hospitality went backwards by 3.8%. Same economy, same three months, two completely different modes.
Which is why two modes may no longer be enough. We might need a third setting in between.
Let’s call it drive mode. Hands on the wheel, eyes up, foot constantly adjusting the throttle. Six-week cash discipline still running, 12-month thinking switched back on and scenario plans written so that “if this, then that” decision is ready ahead of time.
Survive and thrive become the extremes. Drive becomes where you live while this market stays erratic.
Personally, I just want a few of those green shoots to make it to a tree.
Mike Burke is the founder of Point16, its Business Growth School and co-host of iHeartRadio podcast: Pints, Pies and Profits with Scott Douglas.
