• News & Events
• News
• News Archive
• Media Contact

Challenges and Opportunities for Business post earthquakes

By Richard Neave, Partner

First published in The Press, 23 April 2011

The September 2010 and February 2011 Canterbury earthquakes, together with their aftershocks, have created a very challenging environment for many business operators in Canterbury. They have also provided an opportunity, albeit unwelcome, for businesses to review their business models and what they need to do to ensure their future sustainability.

Many businesses have had their premises destroyed or damaged so that they cannot trade as before or have had to move to alternative premises either temporarily or permanently.  Even if their business premises have not been damaged businesses need to consider the impact of the current environment on their businesses.

One of the features of the earthquake is the polarising effect it has had on Christchurch businesses.  Some have had their turnover reduced to or near zero, while others have experienced a four-fold increase in turnover, generally because of their geographical location in the city and the new patterns of commerce throughout. 

For example, hundreds of people who used to work in the CBD are now in the suburbs, and even where those businesses intend to return to the central city, it could be several years away.

All businesses should now take the opportunity of considering how their business currently operates and will operate in the changed environment.  Matters that businesses should be considering include:

• An analysis of the real profit centres of your business;
• The products and services that your businesses are providing and whether there will be a continued demand for those products and services in the medium term;
• What goods and services will be needed in the market;
• An analysis of the industries that your customers are in and whether their businesses themselves are sustainable in the current climate;
• The opportunities that may exist in the area which you operate from or have moved to;
• Are you servicing an area with a significant increase and decrease in the number of potential customers; and if so, how long is the geographical change to your customers likely to last?;
• Is your business insurance still appropriate?  For example, if your turnover has increased following the earthquake, should you adjust your business interruption cover accordingly?;
• Whether your customers are based inside the earthquake zone or outside the city/province;
• What is the state of the businesses of your competitors and the opportunities that may exist as a result of this.

You should look closely at your insurance cover and how this will assist over the ensuing period as well as Government and local assistance that may be available. Also investigate banking and financing facilities you may have available through your financier or elsewhere.

Gathering this information will help you decide whether you need to restructure your current operating model to ensure survival and/or growth in the market.

This restructuring could include a change of operating procedures, upskilling or retraining of staff, recruitment or reduction in staff numbers, investment in capital, plant or technology, relocation of premises (or operating from more than one location) and redirection to different target markets and areas of industry.

Restructuring itself is not without risk, especially where dealings with employees, suppliers, or landlords is concerned.  Professional business advisers, including accountants and lawyers who are familiar with individual businesses or have experience in restructuring, analysis and know of the available options, should be consulted. This will ensure that any restructuring and the business model moving forward are to the best advantage to the company involved.

Although these are challenging times for business survival they are not without opportunity and a careful analysis of your business and the market could not only benefit the sustainability and profitability of your business but also the future of the Canterbury economy.

• Richard Neave is a commercial law specialist partner at Duncan Cotterill Lawyers.   r.neave@DuncanCotterill.com

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.