Leading and owning a business has always come with both risks and rewards. It can bring high levels of personal satisfaction, professional development and growth. And for some, it can offer increased independence, lifestyle, flexibility and financial rewards. Yet, such roles also present challenges – many of which have potential to place your mental wellbeing at risk.
Against a backdrop of COVID-19, inflation, supply chain challenges, along with unstable economic, political and climate conditions, many businesses are finding it hard to plan – and for some, their financial situation is becoming increasingly fraught. Wellbeing and business performance are both areas which receive regular coverage.
But what is the relationship between the two among New Zealand’s business leaders and owners? BDO has recently surveyed NZ business owners in the hopes of better understanding this relationship and to offer practical tips and purposeful guidance – centring on the ways business leaders can maintain their business financial performance to minimise potential pressures on wellbeing.
Financial Management in your business is key to wellbeing
Just over one-third (36%) of respondents who indicated they had been feeling less mentally healthy than normal said that financial-related concerns in their business were contributing to this and Cash flow was specifically mentioned by a number of respondents as being a stress point. Retail, healthcare and tourism business leaders returned the lowest wellbeing indicator scores at the time of surveying – not surprising given the ongoing impacts of COVID-19 on these businesses.
In contrast, business leaders in the construction sector and agriculture sector returned higher than average scores. These results likely reflect a strong pipeline of construction work and favourable recent product prices in the agriculture sector at the time of surveying (late May).
Retail and Tourism sectors in Hawke’s Bay have a somewhat symbiotic relationship and have been hit particularly hard these last few years. While local initiatives to boost domestic tourism are to be commended, the reopening to the international tourism market and upcoming summer season provides real hope and opportunity for these sectors.
Ensuring that Business owners and their teams are prepared from a strategic and wellbeing perspective to take full advantage of these future prospects requires planning for now.
Top tips for managing financial performance
- Create a solid business plan that you regularly return to
- Stress-test your business plan and financials against various scenarios
- Financial upskilling – Get a strong foundation in financial literacy
- Ensure you have strong relationships with your lenders so you can access additional resource when needed
- Set aside time to think strategically.
What are the critical success factors for your business and what KPIs will help you get there? The business leaders who tend to perform the strongest are the ones who understand their finances and also what their critical success factors are. Put simply, you don’t know what you don’t know, and a lot of business owners are so focused on keeping their operations going that they don’t necessarily get a chance to think strategically about what success means to them.
When faced with poor mental wellbeing, the importance of being able to clearly outline, identify and measure your success cannot be underestimated. Being able to define your success, or in times of pressure; redefine your success, provides you with perspective and an overview that is so often lost in the murkiness of day to day operations.
It is often said that small and mediumsized enterprises are the backbone of New Zealand’s economy. However, at BDO, we acknowledge that it’s the people running these businesses who are the real heart of the business sector – and through supporting your wellbeing we can help you achieve your dreams and drive sustainable economic growth for Aotearoa.