The Fog of an Unpredictable Economy
The Fog of an Unpredictable Economy
Few challenges rattle SME owners more than economic turbulence. Unlike internal issues, shifts in the wider economy arrive uninvited and fast. Recessions, inflation, rate hikes and global shocks ripple through small businesses almost immediately. Owners often describe it as moving through fog — visibility is low and every decision feels like guesswork.
Mereana, who runs a construction company in Rotorua, saw the effect when interest rates spiked. House builds vanished. So did her forward bookings. She still had wages to pay and gear to finance, but no clear idea when demand might return. Most nights she stared at cashflow projections, hoping for clarity that never came.
This is when many owners reach out to Pivotal People. Not for forecasts — those are rare — but for practical steps that create confidence when certainty is missing.
Why Economic Uncertainty Hits SMEs Hard
External shocks expose SMEs more than corporates. There’s less margin for error and fewer safety nets. Pivotal People often see these pressure points:
Low reserves
Heavy reliance on variable-rate debt
Small customer bases, meaning sharper demand drops
Limited ability to hedge against cost shifts
Small teams with fixed labour needs
Mereana’s business thrived in stable conditions. But when the ground shifted, her setup proved fragile.
Rethinking the Issue
Rather than hoping for calm seas, Pivotal People encourage owners to build for the storm. Uncertainty is not the exception — it is the environment. Businesses that plan for turbulence are less likely to be capsized by it.
Think of it like sailing. You cannot change the wind, but you can prepare the vessel and train the crew.
Practical Techniques Pivotal People Recommend
Build modest reserves. Even one month of operating costs creates breathing space.
Spread risk. Serve more than one customer type, channel or region.
Watch your debt. Keep growth ambitions grounded in cashflow reality.
Model scenarios. Map what happens if revenue drops 10, 30 or 50 percent. Know your cuts and keeps.
Stay close to your market. Customers often signal pullback before it hits the books.
Improve efficiency. Slim margins now can protect jobs later.
Use your advisors. Accountants, lenders and Pivotal People help you spot early warnings and options others miss.
Planning does not guarantee stability. But it shortens the shock and often softens the impact.
Case Study One – Mereana’s Survival
After the construction downturn, Mereana reshaped her business. She pivoted toward renovations — less glamorous but more reliable. She also renegotiated lease terms, cut non-essential expenses and began building a small reserve with every paid invoice.
With support from Pivotal People, she created three simple economic scenarios and matched each with decisions: when to reduce hours, pause equipment hires or delay new hires. It was not perfect, but it turned uncertainty into something she could work with.
Two years later, with new builds returning, Mereana had a leaner, calmer operation. Her biggest gain wasn’t profit — it was the confidence that she could face change without spiralling.
Case Study Two – A Canterbury Exporter
A Canterbury-based dairy exporter felt the hit when global milk prices collapsed. At first, they slashed costs — which dented morale. Then, with advisory input, they shifted from chasing volume to targeting value. Specialty cheeses, organic lines and niche markets like Singapore took priority.
They secured longer contracts with reliable buyers and gradually rebuilt stability. Milk prices eventually rose, but by then, the company had stronger foundations. Their owner later said uncertainty had forced innovation they should have done earlier.
The Emotional Dimension
This is one of the hardest parts. You can’t reason with markets or stop global forces. That sense of helplessness sits heavily. Owners feel responsible for their teams, but powerless to fix the cause of the pressure.
Pivotal People often help shift the focus from what cannot be controlled to what can. Mental preparation matters as much as financial strategy. Downturns come and go. What endures is the ability to adapt, cut cleanly and bounce back when the fog lifts.
NZ SME Context
New Zealand’s economy is small, open and exposed. What happens overseas arrives here fast. Global recessions, commodity shocks, supply chain disruptions — all hit SMEs harder and faster than larger firms.
Construction, tourism, hospitality and farming all live close to the edge in times like these. But NZ businesses are also agile. During COVID-19, many adapted faster than expected: retail to e-commerce, restaurants to food boxes, tourism to local experiences.
Agility, paired with solid planning, is what Pivotal People see as the winning formula.
MBIE surveys show economic uncertainty is a top stressor. But those with written contingency plans, modest reserves and multiple income streams report significantly lower stress levels.
Measuring Progress
Owners often know they’re gaining ground when:
Cash reserves build slowly but steadily
Income comes from more than one product or market
Debt is under control
Scenario plans guide tough decisions
Stress eases, even when headlines don’t
Mereana knew she was tracking well when she declined a risky job and still slept that night. The Canterbury exporter saw progress when specialty cheese sales carried them through a volatile quarter.
A Final Thought
You can’t eliminate uncertainty. But you can reduce how much power it holds over you.
With preparation, diversification and trusted support from Pivotal People, you turn the unknown from a threat into a challenge. The fog stays, but your path forward becomes clearer. Not because the world settles, but because you are ready to move anyway.
