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Article:

Culture of strategic planning stands Māori Business in good stead when faced with COVID-19

16 April 2020


Kia kaha, kia māia, kia manawanui, kia atawhai tētahi ki tētahi. 

(Be strong, be brave, be steadfast, be kind to one another)

 

In 2019 BDO undertook a survey of the ‘Māori market’. This included a wide range of businesses from large Iwi mixed models to hapu landowner/primary industries, and the SMEs which are whanau level businesses.  At the time of producing the report, BDO were unaware of what was to come with COVID-19 so it is insightful to look back and reflect on what the respondents told us. 

To recap, over 50% of survey respondents had a primary focus on cultural, social and environmental outcomes.  Yet they also understood that to be sustainable they had to balance employment, growth and profits.  This can be summarised as having a focus on balancing the ‘People, Planet, and Profits’ which gives the business a sustainable model, or, you could say, not having all their eggs in one basket. 

primary purpose

COVID-19 has brought about an economic environment where saving people’s lives must come before profits in the short to mid-term, and the environmentalists are purporting to see positive change in the environment from less emissions.  The debate on these three key elements is playing out in many media forums.  What BDO would like to contribute to the discussion is taking a lens on the Māori market, through our conversations with clients, leaders in the sector, and our learnings from our sector survey.

 

At an Iwi level the commercial arm (income generating and reinvestment) and social arm (contract reliant and distributer of returns) have healthily debated each other’s contribution to the Iwi with a tug of war on the re-investment or distribution of financial returns.  The value of the social arm has come into its own during COVID-19; this is where the rubber hits the road and wellbeing is the goal, with financial breakeven.  For the commercial arm it is a time to revisit and review past investment decisions in a fast changing uncertain environment.  The discussions our Maori business team has held with our clients and survey respondents indicate that those who have a well balanced strategic plan across People, Planet, and Profits will see less need to deviate from this core strategy following COVID-19.

The challenge for the commercial arm is to keep informed, make decisions at the margin quickly and hold tight.  This is also a good time to revise your risk management plans; how well did they work and what needs to change.  The social arm has a front line challenge which evolves daily.  They also have the opportunity to have a different conversation about contract income post COVID-19; what is working and what is not.  If New Zealand wants positive change for wellbeing going forward then this is an opportune time to start that conversation.

 

The Hapu level of Māori business are mostly landowners who contribute to New Zealand’s primary industries.  As essential service providers, many have continued on whilst taking on board social distancing and PPE requirements.  Those in the horticultural space have seen an increased demand for labour.  This unique set of circumstances has seen high demand for food as people cook at home, which has changed our spending behaviour.  For red meat, the ability to trade store animals is on hold until the lockdown lifts and the meatworks are at 50-60% capacity as their workforce is older and better to stay at home for health reasons.  As each day plays out, more becomes known and the general feeling is that this event will delay income but it might catch up if the demand remains and prices hold.  This is on the back of a drought which was already hurting our red meat producers. NZ’s primary industries are resilient, they will re-forecast and make necessary changes as required.  Those who have a balanced strategy in place will make changes at the margin and continue to provide food to the market

 

The area where COVID-19 has had and continues to have an impact is in our SME market.  These are whanau owned businesses who are entrepreneurial and often with only a small amount of capital.  These businesses are reliant on being in an active market where people frequent them for the purchase of goods or services.  They often employ whanau, so when shut down the whole whanau is impacted.  This market started to feel the impact of decreased income prior to New Zealand’s lockdown, for example the forestry industry in NZ closed down much earlier than most due to global wood markets shutting down.  Then with NZ’s level 4 shut down the challenge they faced grew. 

However, ingenuity starts to come to the fore and we are seeing many small business owners recreate themselves with an online presence.  Some are also providing positivity/wellness or physical movement activities for free, as part of their contribution to a well society.  We encourage these businesses if they haven’t already to assess your eligibility for the Government’s wage subsidy

Another interesting result from the BDO survey was that 58% of respondents prefer to trade locally, which in the short term looks to be a viable market as our borders remain closed and at best we might hope for level 3 to re-start our domestic economy.  Equally most saw the biggest barrier to growth as the inability to attract the right people with the right skills and positive attitude.  COVID-19 has brought about the return of New Zealanders and with a forecast that unemployment will grow in the short-term, it is the right time to attract and retain talent.  The shutdown has provided space for entrepreneurial minds to rest, rethink, re-energise and be excited about a return to a post COVID-19 market.

 

At BDO we are mindful that there are also those who are struggling. The fear of COVID-19, the fear of uncertainty, and the very real financial pressure people are facing is something not to bear on your own.  Reach out to those you trust, talk through the challenges, solution find together.  The following whakatauki resonates:

‘Ka ora pea i a koe, ka ora koe i au’

‘Perhaps I survive because of you, and you survive because of me’

(Each member of the tribe is essential to the survival of all the others. Likewise in any group enterprise the performance of each member is important to its success.)

 

The Māori sector continues to be an exemplar for business in NZ.  Balanced strategic plans that daily face the challenge of balancing the People, the Planet and the Profits during times pre and post COVID-19 will bode well for Māori.  Revisiting risk management plans will be timely to see if they put you in good stead, or if they need to be amended given what has been learnt over the past few weeks.  For us all, the ability to change fast and meet the market’s needs once they re-emerge will be imperative. 

At BDO we are business owners too, so have faced COVID-19 alongside our clients and the market.  We have learnt a lot on this journey and hope that by sharing our insights we add positively to your thinking over this time.

 

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Download BDO's 2019 Māori Business survey results