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Identifying 2019 Business Risks

Jindong Zhang – Chairman of Suning

Indications are that 2019 will be a year of heightened risk for New Zealand businesses. Property owners are now starting to experience a reverse ‘wealth effect’ as property values edge downwards.

This is likely to  impact consumer spending. Slowing international economic growth due to major trade stresses is starting to create uncertainty in our local marketplace. Business confidence is heading down as businesses grapple with minimum wage increases as well as capital gains tax proposals.

Most, if not all, of these come under the category of uncontrollable risks, ie. not worth losing sleep over. This leaves the ones you could do something about. It remains a pretty big list. How to Manage Business Risk

So what are the risks most likely to impact New Zealand businesses this year? Here are a few to think about.

Customer payment default

When economic conditions become volatile, customer defaults tend to spike. This can be caused by cashflow problems (passing on the pain, bank lending rules tightening, business slow), or by insolvency / business closure. ANZ New Zealand Business Outlook

Customer business failure

Significant losses from the failure of larger New Zealand companies continue. Another Mad Butcher goes under: Glen Innes store placed into liquidation Ebert Construction failure: creditors to be left $34m out of pocket

Some surprising stories are emerging of established businesses starting up in new locations, appointing suppliers, hiring staff and setting up new premises, then liquidating without anyone getting paid.

Intellectual Property issues

Creative industry operations could be exposed to:

Loss of goodwill

Social media can throw an intense and immediate spotlight

on anything a major business does wrong. This also applies

to smaller businesses which may not have the same resources to recover. Any type of business runs the risk of losing huge amounts of goodwill in this way. Matt Kuchar and Mexican Caddie  How To: respond when social media attacks your brand

Natural disasters

Blame climate change, Donald Trump or whatever you prefer, natural disasters are on the rise globally, Natural disasters – statistics and facts. How many businesses in New Zealand or elsewhere could be affected by natural disasters in 2019? The worst natural disaster risks facing New Zealand

Business model obsolescence

In China there has been a big shift to online shopping for most consumer products, seriously prejudicing the survival of many of China’s retail businesses. There was a famous bet in 2013 between Jack Ma from Alibaba and Jianlin Wang from Wanda Group (the biggest commercial developer, which owns most of the shopping malls in China) regarding whether online consumption would surpass 50% of total retail volume in 10 years time. That date is fast approaching, and Wanda is already selling a lot of its stores to Suning, an online shopping platform. A 16 million bet on the future of Chinese retail.

 

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