For many in the region’s primary sector (and most sectors), 2024 has been the year “to just make it through”. The good news is that things are starting to look up, with strong indications 2025 is going to be the year pressure begins to ease and businesses can begin to look forward with confidence.
The general consensus is that the cost-of-living crisis is over, and from here the effects will begin to trickle down.
With inflation heading towards 2%, this creates an optimistic catalyst for change, and improved ability for healthy businesses to seize new opportunities. As a result, the economic outlook is looking reasonably positive, with expectations that the official cash rate (OCR) could drop to 3% by the end of 2025; great news for any business that has had to make significant reductions in spending to ride out the downtown. As the effects of this rate-drop begin to flow through the economy we will begin to see more opportunity for investment.
For businesses that are good at what they do, have a strong balance sheet and are in a position to borrow – there are good opportunities out there; to acquire another property, invest
in new equipment or technology or just deferred expenditure such as fertiliser. For many, it will be a case of where to look and which opportunities to choose.
Strategic Growth
Having a clear vision of where you want to take your business as well as an understanding of how you are able to achieve future growth is essential if you want to pursue opportunities that are the best strategic fit.
If a business can get clear on its goals, as well as get control over their on-farm costs, they can then shift their focus to revenue generation and growth.
Play To Your Strengths
When it comes to determining which opportunities will best serve your business and support your strategic vision, it’s important to identify what you are good at, and then investigate whether there are opportunities to do more of this.
Business Is Booming
The large Baby Boomer population is set to provide well-positioned businesses and individuals with a wealth of opportunities for investment across a broad range of primary sector businesses, as well as wider investment categories. Farms, commercial businesses and residential homes will be coming up for sale in larger numbers than ever before and now is a good time to look at the different investment opportunities out there. With lower funding costs influencing decisions to make investment purchases, the opportunities for younger people to invest in and grow established businesses are only going to increase.
The Right Advice
A trusted business advisor will work with you to get your balance sheet looking as strong as possible, as well as providing financial forecasts, cashflow management and scenario analysis that will help you to make informed decisions and offer a top-down view on major business decisions. When it comes to securing the big opportunities that involve significant financial investments, we are here to assemble the resources needed when dealing with the various stakeholders required to get deals done. This includes working closely with banks, farm advisors and solicitors. While it’s likely the work has been done over the past year or two to cut unnecessary costs, having a strong balance sheet, as well as all your metaphoric ducks in a row, will leave you well-positioned to quickly take up any opportunity that aligns with your strategic vision when it does present itself.
Author: Mark Knofflock is a Director at Nexia Hawke’s Bay, a leading full-service advisory and accounting firm that has been part of the Hawke’s Bay community for over 100 years. Formerly Moore Markhams, the firm became part of the global Nexia network in 2023, expanding its capacity to serve businesses throughout the province, while remaining locally owned and deeply connected to their regional roots.
