While other countries have definitely been hit harder by the effects of the worldwide COVID pandemic – both from a health and fiscal perspective – many businesses in New Zealand have struggled to be resilient to the knock-on effects of a global economic downturn.

Business owners are particularly vulnerable to stress and worry during trying financial times, with the additional strain of feeling responsible for the welfare of their employees and their families, as well as their own whānau.

Maintaining a steady flow of customers, increasing or maintaining market share and continuing to produce a steady turnover isn’t easy when those around you – including your potential customers – are tightening their own belts.

The age-old proverb “control the controllables” definitely applies in times of difficulty. Worrying about those things you can’t control will only leave you less likely to manoeuvre your way through the challenges ahead. Instead, mitigate your risks by focusing on those factors you can influence.


Revisit your shareholder agreement

If you don’t already have a shareholder agreement in place, there’s never been a better time to sort one than the present! With any commercial arrangement, it’s imperative to set clear expectations and responsibilities for all parties. This is as true when working with a partner(s) in business as it is when dealing with clients and vendors.

Shareholder agreements allow for provisos to be put in place for likely (and less likely) future developments. A good agreement will cover what might happen should one partner wish to leave or dissolve the partnership; or how disputes will be mediated. The agreement usually also sets out a plan for how your business might continue to run in such scenarios, how borrowing might work, and options available (and unavailable) to stakeholders (eg, non-competition clauses).

Talk to your lawyer for qualified legal advice and help establishing or amending a shareholder agreement.


Formalise contracts and fully define terms and conditions

Even when providing services to friends and family, don’t lose sight of the fact that your business is your livelihood. If it’s your profession, approach it professionally.

Tempting though it may be to rely on good-will and a ‘gentleman’s agreement’, formalising agreements with customers protect your interests by clarifying expectations and timelines.


Evaluate your insurances

The insurance market offers a range of products designed to protect businesses and mitigate risks.

Liability insurance may be appropriate, depending on the exact nature of for your business, and covers loss through negligence that may be inflicted by a person representing your business. Not all costs are covered by liability insurance, depending on the exact nature of the circumstances: for example, failure to comply with health and safety and other laws may expose your business beyond the terms defined by your insurer.

Another common insurance taken out by businesses is business interruption insurance, which covers your costs in the event that you suffer operational losses due to a natural disaster, theft of key materials, or a burst water pipe.

Other insurances available for businesses include premises and equipment cover, which may be relevant if your business relies heavily on such collateral, and ‘key person’ insurance – which is an insurance that protects your income due to the loss of key personnel, through injury or illness.

Talk to a professional insurance broker with a solid reputation for advice on what insurances might be most pertinent to your business and offer the best, most appropriate protection. At Agar Fenwick, we recommend Cover Yours Ltd for honest expertise business insurance products.


Keep an eye on expenses

Be honest with yourself about what are genuinely essential cost-of-business expenses.

Treating your team to free lunches might be a lovely thing to do and help maintain team spirit, but staff will generally understand if you need to tighten your belt, and will value their ongoing employment more than their free bacon sandwich.

If you rely on materials or supplies, it might pay to evaluate your supply chains, and see if you are receiving the best bang-for-your-buck on long-standing vendor agreements.


Maintain an emergency fund, where possible

An emergency fund should equate to around three to six months of your business’s earnings, in order to see you through any unexpected troughs and ensure business continuity (wages for your staff; rent payments; unforeseen repairs, etc).

Maintaining a personal emergency fund that equates to around three month’s wages is also sensible, if you can, to allow you to weather the storm should unexpected expenses occur leading to you needing to sacrifice your own monthly wage to stay afloat.

Yes, this is easier said than done. Ideally, in times of prosperity you’ve had the foresight to put some money aside: preparing for the worst, while hoping for the best.

The key things is not to wait until things are beyond salvation. Talk to your Agar Fenwick Client Manager or financial adviser. It may be possible to structure any business debt in such a way that your savings can offset your debt and still remain available to you in an emergency.


Talk to us

We’re here to help. If you are worried about your business continuity or want to prepare for the worst in case circumstances change in the future, get in touch with your Client Manager, or if you are not a current Agar Fenwick client you can contact us through the website.

We’ll be happy to talk through your options and explore ways to structure your business in a way that ensures some resilience against the unexpected.


The Team at Agar Fenwick




Disclaimer: This article is a general advisory only. Before making any major decisions based on the information provided, please seek advice from your dedicated Agar Fenwick Client Manager, or similarly qualified financial adviser.