Weekly Digest – 23 April 2021

Welcome back to our Weekly Digest.  Read on for the latest updates and some ideas to help us all move forward.

New Zealand- Australia Travel Now Open

New Zealand and Australia started their first quarantine-free flights on Monday, after successfully keeping COVID-19 transmissions under control.

To fly under the travel bubble‘s rules, passengers must have spent 14 days before departure in either Australia or New Zealand.  They must not be awaiting the results of a COVID-19 test, nor have any symptoms, amongst other criteria.

New Zealand relies on Australia for 40% of its international tourism, injecting about $2.7 billion into the economy.  Meanwhile, Kiwis accounted for 1.3 million arrivals to Australia in 2019, contributing A$2.6 billion to the Australian economy.

NZ Startups Show Strong Growth Despite COVID-19

Startup investment has grown despite the challenges of COVID-19, according to a report from PwC and the Angel Association.

In 2020, investors provided more follow-on capital than before, with 56% ($109 million) of all investment being follow-on capital, which indicates strong commitment to support startups.  More venture capital funds also chose to invest in startups, and now account for 45% of total startup investment.

These developments show that the startup ecosystem in New Zealand is not only resilient, but also becoming more mature.

Tourism Infrastructure Fund Now Open

Applications for the Tourism Infrastructure Fund are now open, especially in areas under pressure due to COVID-19.

Between $13 and $18 million will be available, and five South Island regions namely Kaikōura, MacKenzie District – Aoraki Mt Cook, Queenstown Lakes, Fiordland, and South Westland will be given priority.

Applications will close on 30 April at 5 pm.  You can read more about it here.

What Does It Take to Grow Profitably?

When you ask entrepreneurs what their business goals are, one of the most common answers will be something to do with growth.  However, the real challenge is achieving both growth and profitability.

This Forbes article discussed how to grow profitably based on the model by Daniel Marcos of The Growth Institute.  According to this model, different strategies are required depending on where a business is at in its development.

Startup stage (1-5 employees)– Focus on total revenue.  Prove the business model and reach breakeven first.  Learn who your more profitable customers are and build systems around delivering your products and services.

Grow up stage (6-15 employees)– Add the right revenue.  Conduct an analysis of your gross profit to determine the customers you want to build processes around.  It may be a difficult mind shift, but learn to say no to the customers that are not a good fit for your business.

Scale-up (16-100 employees)– Concentrate on the cash flow aspect of your business.  Many companies grow too fast and flame out.  So in order to not outrun your cash flow, you should know the cost of acquiring a new customer.

Ideally, you’d want the revenue generated by new customers to offset the cost of acquiring them.  You want to have net cash flow from growth that you can fund through your operating profit.

Besides working on your cash flow, you must also continue refining the processes you started in earlier stages, growing your people, and adding talent with new skills that can help you in scaling up.

Need personalised business advice?  Get in touch with us and tell us more about your business.

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