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Here comes the new year, and it would be lovely to think 2024 will be smooth sailing compared to the past three years. Unfortunately, that’s almost certainly not going to be the case. Instead, volatility will continue to reign as the pace of change only speeds up. Reflecting on 2023, most would agree it was a tough year, and those challenges are not going to disappear over the Christmas holidays. Businesses will continue to face cost pressures, high interest rates and staff issues in 2024. The world has fundamentally changed since the pandemic; buying patterns, financing, and technology have all been transformed. As a business decision-maker, not only do you need to get your head around our new economy, you need to do it while also tackling whatever new hurdles are thrown in your path. How can you help your business survive and thrive in 2024? The answer is simple: you must be ruthless. Start by building resilience When the economic landscape is in permacrisis, it’s essential to make your business as resilient as possible. To make sure you can ride the wave in 2024, you need to ensure your cashflow is reliable and predictable, and you must manage your costs. Look ruthlessly at your spending and outgoings to find efficiencies, while tightening your terms, invoicing and debt management processes to improve cashflow. The key is knowing what your cashflow is. Let go of underperforming products and services Cost-benefit analysis is valuable here as you decide what to let go. Crunch the numbers and identify parts of the business that aren’t providing strong and reliable profits, both historically and into the future. Ask yourself tough questions about those underperforming strands: ‘Why am I continuing to sell this product or service? Is it dying and do I just need to cut it out? Am I continuing to serve legacy customers because it’s in my comfort zone or I feel an allegiance to the past? Will I get a better return by investing the same amount of time and energy on something else?’ Cut out your D clients The Pareto principle, aka the 80-20 rule, says that 80% of your profits will come from 20% of your clients. Most businesses find this principle applies. This is an old exercise but an effective one: look at your client list and grade each one from A to D. Your A clients are the most profitable ones who are the best to deal with, and your D clients are the lowest-value, most headache-inducing to work with. It’s time to cut out your D clients and focus your energy on keeping, growing, and finding new A grade clients. Jettison outdated stock After the inventory rollercoaster of 2020 and 2021, some businesses are still sitting on outdated stock. Sell it if you can, provided you don’t cannibalise your own clients. In other words, don’t sell a cheap old item to a client who might otherwise buy a profitable new item. Instead, try to sell it to a market you’re not involved with. One of my clients was able to shift a huge amount of product to a dollar store, preventing the business from undermining itself. Otherwise, look for a way to give the stock away, or even better - recycle it if you can. Take legacy technology off life support Legacy technology is a drag on any business. We see it in government departments and large businesses, where slow, patchwork systems take hours to complete tasks that could happen almost instantly with up-to-date tech. Getting rid of desktops and landlines, and moving to the cloud, makes your business more resilient and cuts ongoing maintenance costs. Get the experts in to help your business transition to the cloud in a way that will work for your organisation – you should be able to find some significant efficiencies. Embrace AI The point of making all these cuts and cost savings is not only to boost your profitability and resilience. It will also free up funds so your business can be ready for the future, because any company not embracing AI will be left behind. As the pace of change increases, firms that embrace change, and have the knowledge and information to handle it, will accelerate their growth. Firms that keep doing what they’ve always done will start to fall behind. Eventually the gap between non-adopters and their AI-savvy competitors will become too wide to bridge, and the non-adopters will drop away. There will be some high-profile receiverships, but in general these failures won’t happen with a big bang. It will be death by a thousand cuts as small operators decide they’re too tired to keep fighting fires, decline to renew their leases, and let their companies wither away. Open that window of opportunity Skills shortages are already on the horizon for many industries, including accounting where the number of graduates is down by 40%. Overall university enrolment in New Zealand fell in 2022, in line with Australia and the USA which have also seen lower post-pandemic enrolment levels. When there are too few people to do the work, technology is filling the gap. We’ve seen this in our own horticulture industry, for example, where automation is being developed to pick fruit so we don’t need to rely on itinerant workers. And automation is much easier to apply to repetitive data-driven tasks – it will take over many of the drudgework elements of traditional roles undertaken by accountants, lawyers, managers or human resources. With the dreariest parts of the job outsourced, your business will be more efficient, and you and your team can concentrate on the kind of problem solving that needs a human brain - unlock that potential! Find accelerator opportunities The opportunities for innovative accelerators will be massive. Right now, as we head into 2024, we have a window of opportunity. This is the time to make change and prepare for a fast-changing future. By being ruthless now, you can set up your business to seize these opportunities when they appear. You can redivert resources to allow you to invest in technology so you’re better prepared for change and more resilient to challenges. The choice is stark when considering the outcomes. If you do nothing, your business will suffer and potentially dwindle away. But by changing the way you operate, you can become one of the accelerators, dominating in your niche and leaving your competitors behind. There is no middle ground.

Post-election 2023, can we expect to see our newly formed Government acting on their campaign cries of supporting a “health system that’s in crisis”? Or is it time for the industry to more actively participate in its own rescue? Either way, the time for action was yesterday – today, we are at risk of the state of our healthcare system being treated as business as usual. So, apart from healthcare professionals working in a perpetual crisis that’s stymying innovation, as well as the time and energy they need to truly transform the sector – what else is holding the primary healthcare sector back from change? A recent report issued in August 2023, Lifeline for Health, Meeting New Zealand’s need for General Practitioners, by Emeritus Professor Des Gorman and Dr Murray Horn, suggests the solution lies in transforming funding models. The authors’ comments about primary care being funded on an activity-based model resonated the greatest with me. The cries for additional funding across the healthcare system have been heard loud and clear, with more than enough evidence to justify this. However, if more money is tagged to more activity, how does a healthcare system already stretched from a human resource point of view improve outcomes – or the wellbeing of our healthcare professionals - by engaging in more activity? The report suggests behaviours and outcomes barely differ between a capitated funding system versus a fee-for-service model that previously existed in New Zealand, thereby challenging future health ministers to be bold and innovative. The report’s authors recommend, ‘the “health system” must focus more on outcomes and value.’ They also acknowledge this would mean a reduced rate of investment in hospitals and hospital care, while focussing more funding on primary care. This makes perfect sense - investment in prevention and early detection of major illness will require less hospital funding for a healthy, well-looked after nation. Prevention is less expensive than the cure. And, General Practitioners can take heart, as the report reiterates the importance of the role of good primary care in a well-functioning health system, re-affirming their role as ‘specialists’. The sector needs to support and financially incentivise specialist GPs to be the architects of their future and lead an innovative, sustained transformation. They need to be empowered to focus their expertise and efforts on improving health outcomes in the long term, rather than being underpinned by a ‘fee for service’ system that leads to more activity, stretched resources and poorer health outcomes for Kiwis. A quick look back at history History tells us drastic overhauls of public systems are achievable. In the 1990’s our accident compensation system was facing a crisis. The looming tail of investment required to fund both current claims in any one year, plus the ongoing funding required for historical claims was becoming unsustainable. The system was in dire need of transformation and many thought it could not be done. Despite the stop-start process of privatisation - and unravelling of privatisation - and a blowout in debt in the next decade, strident efforts to manage claims better on a fully funded model, coupled with the prudent investment of funds, ACC turned its fortunes around to become one of the largest investment funds in the country. No system supporting health will be completely perfect, but as with ACC, if hard calls are made, it can be turned around to deliver better outcomes. Time to be bold, not just tinker around the edges To date successive governments haven’t attempted to offer truly revolutionary solutions such as social insurance models which could be the way out of the current dilemma. Social insurance schemes such as those established in Switzerland, France, and the Netherlands, focus on funding for the long term. The fear in New Zealand in the past when these schemes have been suggested, is that it is a move to privatising the health system. However, the reality is, the majority of primary healthcare services here in New Zealand are already delivered by private providers. This leaves the current financial risks associated with funding primary care sitting with the private sector, which will only encourage primary providers to vote with their feet; and when the financial viability of their business is declining, difficult decisions will be made that will impact many communities. In the meantime, let’s harvest the low hanging fruit The new Government’s promises to establish a third medical school, increase medical placements at Otago University, establish satellite training centres in regional areas, and training alliances to deliver more doctors to rural parts of the country are all welcome. Those promises need to be followed up with a more structured process for managing the careers of those trainees to ensure that they do stay in New Zealand. We need to incentivise over 50% of current trainees to commit to working in general practice in the longer term, if the current primary care workforce is to be maintained, let alone grow to accommodate future population growth. If the new Government follows through on its partial student loan repayment and bonding plans for midwives and nurses, it is at least starting to show a commitment to help build up the primary care workforce.

The US is the bastion of capitalism – and yet it is committing to building a greener, more sustainable future. It has recently done something revolutionary, investing in transforming its economy for the better. Biden’s signature piece of policy, the Inflation Reduction Act of 2022, is a powerful tool for positive change. It provides $500 billion in new spending and tax breaks that will boost the green transition, encourage investment in R&D, and support its manufacturing and agricultural sectors.

In February we launched a bi-annual research initiative to track business sentiment and explore where New Zealand businesses are succeeding, and where they’re feeling pain.

Watch: Grant Thornton New Zealand Post Budget event 2023

Our industry experts share what they wanted to see delivered in Budget 2023 and how this year's announcement impacted some of New Zealand’s key sectors. Read on to discover where the opportunities and roadblocks lie in this year’s announcement.

The Budget is an exercise in resource allocation – trying to divvy out a limited pool of money across an almost endless list of New Zealand’s needs and wants. Nearly infinite demand but restricted resources: it’s the underlying challenge for all economics. But with some creative thinking and ideas, Budget 2023 can deliver meaningful outcomes for people and the planet.

In the lead up to last year’s Budget, we wrote about a build-to-rent asset class to incentivise the construction of long-term rentals – and it actually happened. So while we’re on a roll, for Budget 2023 we’re going to be even more ambitious.

With enormous and inexorable spending commitments barrelling toward us, collecting revenue to cover those costs is a priority for the 2023 Budget. But with an election impending, it needs to keep voters sweet, giving them a sugar hit of positive spending, without any unwelcome tax changes.

Unfortunately, New Zealand’s productivity has been lacklustre since the turn of the millennium. We work longer hours, but achieve less output when compared to the OECD average.

General practitioners are under immense pressure – working long hours (often unpaid), facing staff shortages, and experiencing high rates of burnout. Too few young doctors are becoming GPs, leaving the profession facing an exodus as aging practitioners prepare to retire.

As the likelihood of a recession looms, businesses need to avoid self-fulfilling prophecies about hard economic times to come. Instead, now is the time to make sound decisions about future proofing their operations. Think proactivity, not reactivity; opportunities not crises.

Fantastic news on the horizon for Kiwi exporters, as the UK/NZ Free Trade Agreement will likely be ratified later this year, removing tariffs from 99.5% of our current trade into the UK.

A Grant Thornton survey of nearly 300 business owners and leaders across New Zealand has revealed many are anticipating a tough year ahead despite a majority experiencing success in the last twelve months.

Circular revolutionaries share their insights into creating a low carbon economy

Our summary of the key facts that are relevant to you and your business.