Futurespace courageous conversations: Navigating economic uncertainty

Are you concerned about your company’s financial future? Do you have a steady workstream lined up for the next six months? Are there areas in which you could save costs? Do you have a long-term plan for managing economic cycles? 

We’re coming to the end of another complex year in which we’ve experienced many changes, including a shift from strong economic growth to recession warnings, a new coalition government, and a drop in inflation.  These are tough times to navigate and it can be challenging to remain upbeat when you don’t know what lies ahead.  

During the workshop sessions at Futurespace 2024, we asked attendees to share strategies and ideas for managing financial challenges such as inflation, boom and bust cycles, and supply chain disruptions, including cost-cutting measures and leveraging technology. ACE Chief Executive Helen Davidson said bringing great minds and diverse experiences together resulted in some valuable discussion, and we’re sharing the insights below to help support you in navigating economic uncertainty, managing financial challenges, and positioning your organisations for long-term success.  

Diversification 

Having a diverse client base can lessen vulnerability in slower work climates but it requires a conscious effort to achieve. Actions to take include:  

• Diversify clients and portfolios: spread risk by diversifying your client base across local and central government, and the private sector. Limit reliance on any single client to no more than 25% of your workload. 

• Geographic and service diversity: where possible, consider a geographically diverse workforce and offer a range of services to balance workload and mitigate regional economic fluctuations. 

We spoke to Silvester Clark Managing Director Scott Miller in July about the benefits of business diversification. The company made a conscious effort 15 years ago to diversify its client base and services after feeling vulnerable with much of its business tied up with one client. Scott said: “It’s talking to people, being open to new opportunities big or small, having geographical coverage and a range of expertise.” Read the full article here.  

Financial management 

• Regular reforecasting: reforecast budgets at least every three months to stay agile and responsive to economic changes.

• Cost management: identify true fixed costs and focus on reducing material and operational expenses. Consider whether outsourcing to lower-cost areas is right for your business and leveraging virtual work to cut accommodation costs. Also consider implementing a more stringent invoicing process to cope with delayed payments and reducing inventory, and consider speaking to your bank early about your credit line and managing cash flow. This short article from the BNZ, ‘Help manage your cashflow in a crisis’, suggests some strategies to help your business avoid running out of cash, particularly when unexpected challenges arise.   

In March following the announcement that New Zealand was officially in recession, we published an article containing our seven top tips for navigating the tough financial climate. Read it here. 

And, later in the year, we spoke with Harrison Grierson’s Head of Finance Stephen Sangster about what the lowering of the official cash rate means for the industry, and how members can capitalise on improving economic conditions. Read the interview here. 

Workforce management  

• Flexible workforce: train staff to perform multiple roles and move them across disciplines as needed. Engage employees early in discussions about workforce resizing and seek their input on cost-saving measures. 

• Communication: keep staff informed about business performance and economic conditions to provide certainty and enable informed decision-making. 

• Upskill employees: look at opportunities to upskill your people so that you have additional capabilities in your business when the market picks up – professional growth needn’t be expensive. Check out The Pillars Competency Framework to help you identify the most critical non-technical skills and competencies to thrive as a professional services consultant in a constantly changing landscape. 

Innovation and efficiency 

• Internal efficiencies: focus on small internal efficiencies, such as automating calculations and improving processes to reduce costs. 

• Advisory role: position your firm as a trusted advisor, helping clients extend the life of their assets and find cost-effective solutions. Consider whether there is any thought leadership you can publish to position yourself as an expert in your field and a provider of innovative and solutions-focused services. A good book to read to help you think about your sales model and how to sell your expertise is Blair Enns’ ‘The Four Conversations’. 

Strategic planning

• Long-term view: adopt a long-term perspective to smooth out the boom-and-bust cycles. Research indicates that businesses that can master the delicate balance between cutting costs to survive a financial crisis and investing to grow their business for the future do well after a recession. 

• Value-based pricing: use this opportunity to shift from time-based models to value-based pricing, emphasising the long-term value and cost savings your services provide. 

Client and industry engagement 

• Client education: educate clients on the value of your services and the long-term benefits of investing in quality consultancy. 

• Industry advocacy: Leverage ACE’s advocacy for continuity in government project pipelines and cross-party agreements on infrastructure spending through your conversations with clients and engagement with ACE, sharing best practice examples and improvement opportunities. ACE will continue advocating for supportive policies and facilitating knowledge sharing between members.  

Risk management 

• Proactive versus reactive: balance proactive planning with reactive measures to manage economic downturns. Consider insurance or subsidies for low workload periods. 

• Financial literacy: improve financial literacy within the firm to make informed decisions about discounting and risk management. 

Leveraging technology 

• Virtual work: increase the use of virtual work to reduce overhead costs and improve flexibility.