How to help your clients prepare for 2024
With a new government looking to change things amid a period of economic uncertainty, 2024 offers businesses risks and opportunities. Here are some tips to help their preparations for the year ahead.
At a glance
Here’s a snapshot of the article’s insights:
- Businesses can ready themselves to take advantage of changes the new government has signalled by talking to financial professionals.
- In a challenging economy, it’s important to work smarter. Getting the most out of existing staff and securing the right technology is key.
- New Zealanders now have access to fit-for-purpose loans that can be a boon for business growth.
- A business’s wellbeing is linked to its success, so suggest that clients look after themselves.
Last year was tumultuous for a lot of small businesses in New Zealand. Alongside economic trends such as higher inflation and interest rates, the country dealt with catastrophic floods and a change in government.
However, that macro perspective can be misleading, because just as not every business succeeds during a boom, not every business stalls when times are tougher.
“If you listen to the news, it might say the economy is not growing,” says Huia Manuel, Senior Business Development Manager Prospa NZ. “However, 40% of our business customers got in touch with us to grow their business.”
This attitude will be important in 2024 if business owners want to expand because the opportunities will certainly be out there.
Here’s how you can help your small business clients prepare their business for the year ahead.
Encourage clients to be ready for changes
“The last government restricted claiming back interest for investment properties. The expectation is that the government will repeal that,” says Huia.
This, combined with the Reserve Bank easing loan-to-value ratio restrictions last year, means businesses should have more flexibility to pursue financial opportunities.
Consider talking to your clients about how they could make the most of this and other potential changes.
Huia points to research that found a sizable majority of the clients of financial planners (68%) were highly satisfied with their wealth while only 33% of those without a planner said the same.
“[Business owners should] absolutely speak to a financial professional about their goals, because they’re on point about everything that’s changing,” she says.
“Just one example: regulatory changes from the government don’t happen overnight. Financial institutions have to apply their lens as to how they will work within that regulation. If businesses get the work done with a professional early, when those changes happen, they’ll be ready to maximise their outcomes.”
Navigating a tougher environment
During the Christmas period, many New Zealanders adjusted to higher cost-of-living pressures by reducing the number of gifts or crafting their own. A similar approach has been taken up by smart businesses, and that’s an area brokers can suggest business owners concentrate on.
“Making their money work harder is about leveraging technology and the people around them,” says Huia. “For example, rather than hiring a new staff member, many businesses are cross-skilling existing employees.”
The right kind of business lending
Huia is keen for people to know that New Zealanders can now access fit-for-purpose loans, rather than having to rely on more old-fashioned methods of business lending. While the initial numbers might seem off, they can be deceiving.
“Traditionally people would have to use their homes and mortgages,” she says. “If you ask a fit-for-purpose lender such as Prospa about the rates on its business loans, they may seem too high – and they are if someone had a 30-year loan term. However, that’s not what we’re talking about.”
The way lenders like Prospa approach loans is different – typically customers are looking at a fixed-rate loan that will last three to 36 months. These are designed to help owners achieve specific business goals.
This distinction is something Partners can help their clients to understand, to alleviate any possible financial stress.
“Businesses should be looking at the cost of the opportunity,” says Huia. “If a loan worth tens of thousands of dollars is going to allow them to hire another staff member who will help them double their turnover, that loan is very valuable.
“Whereas if they’re tying up a business loan in a 20 to 30-year mortgage on their property, what is that doing to their budget and business?”
The lesson, says Huia, is to not just look at initial rates or costs, but create a business plan and see if the costs are worth it.