Business recession ‘cannot be fought on price’

Quality and reputation key to regional recovery

Business recession ‘cannot be fought on price’

South Canterbury businesses and retailers who use price to fight the war against the economic downturn, undercutting their competitors to snare dollars from local wallets, could damage the local economy further and put more local jobs at risk, a Timaru business expert says.

From a regional perspective it’s not only opening the wallets that are already here that matters, says business and human resource tutor Andy Walne – “what we need to make the region flourish are more wallets coming in from the outside and the ability to dip into overseas hip pockets through quality exports and tourism”.

And Mr Walne, Aoraki Polytechnic’s new business tutor, also has some advice for small businesses budgeting in these tough times – last year’s budget should no longer be the traditional starting point.

“All businesses should zero-budget each year in the current environment. That means writing a budget and business plan from a business start-up perspective and challenging and questioning everything on it.”

Now settled near Pleasant Point after emigrating last July from Cheshire in the United Kingdom in pursuit of a lifestyle change from a career in business and teaching high school business and economics and sharing education experiences with his primary school principal wife Julia – “it made us rather time poor” – the couple and their two children, Oliver 10, and Emily 6, have found South Canterbury welcoming.

They have also found a district still relatively insulated from the worst ravages of recession being experienced elsewhere in New Zealand.

But Mr Walne expects the trickle-down effect from large centres like Auckland will echo the tougher times in the United Kingdom where London was first to feel the economic chill some months before it gradually spread throughout the rest of the country.

“There will be more to come, but South Canterbury is fortunate to be largely agriculture-based and this will help soften the blow of recession here. Regions that feed people and clothe people will always have an advantage.

“As long as we get away from business survival based on price.

“This war will not be won on the redistribution of wealth that is already here. It will be won on quality and reputation only, attracting new business and people here because of it. Business budgets should reflect that goal.

“For the health of the region, local businesses must not try to each pinch the business that is already here. As a region we need to target wallets that don’t live here with quality and service.

“If we fight on price alone we will lose, because there will always be someone who can do it cheaper than you,” Mr Walne said.

He said the recession had one silver lining.

“It drove home the need for businesses to question everything they do.

“If nothing else, the key word is review. That’s the catalyst for change. Without review and the questioning of current practices and ideals, change cannot happen.

“Complacent businesses are businesses at risk in tough times,” Mr Walne said.

A passionate believer in education – “the biggest waste that society can make is ignoring people” – this former second division Bedford rugby front-rower says he is delighted at the contribution polytechnics make to society by upskilling a wide cross-section of the community.

“Here at Aoraki, being able to teach problem-solving, communication, and building confidence we equip our students with the skills needed to cope in this tougher job and business environment in Timaru.

“Businesses need to adapt, and change will only work if the need for it is accepted by both employers and employees.

“We have to want to change the way we do things, before we can,” Mr Walne said.

ENDS

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