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Leverage the onset of El Niño to highlight opportunities for your SME clients.
There’s an old saying ‘It’s an ill wind that blows nobody any good’ – which means that while some people will be negatively impacted in unfortunate or bad events, others will benefit. That certainly applies to the El Niño weather phenomenon, expected to bring hotter, drier conditions over the coming months. It will bring challenges for some businesses such as agriculture and energy providers, but shifts in consumer behaviour and industry dynamics are set to make it a boost for others.
You can leverage these changes to encourage your SME clients to be proactive rather than reactive and help them ride the El Niño wave to get ahead.
This brings opportunities to talk to your clients about harnessing the potential of El Niño to:
- grow their business
- manage resources effectively
- execute expansion or diversification plans
- ensure strategic seasonal restocking.
Turn a negative to a positive:
Equipment financing or working capital finance can be used to turn around potential disadvantage for a business.
For example, outdoor hospitality venues might find themselves less appealing to consumers this El Niño summer. Investing in portable air conditioning, cool misting systems and/or retractable awnings can give them an edge over their sweltering competitors, and maintain their seasonal revenue.
These and other outdoor businesses may also want to consider attractively branded, light coloured sun-protective gear for seasonal staff, to ensure they’re able to operate at their optimum level and reduce absenteeism when business is strong.
Utilise forecasting tools to assess impact on the business
Consumer shopping habits could be influenced by the weather, depending on location.
In some regional areas, consumers who are unable to stay cool at home will gravitate to air-conditioned places like shopping centres, ice rinks, public pools, indoor hospitality venues and other cool, enclosed environments, bringing a boost to trade. Installation or upgrade of air conditioning for retailers and other indoor venues could be called for here.
Conversely in metropolitan areas with rapid delivery systems, the heat could potentially drive more people to make purchases online. SMEs with e-commerce operations should enhance their digital presence and marketing efforts during this time, investing in inventory and technology to meet online shopping surges.
Forecasting tools can help predict demand patterns during El Niño, evaluate inventory levels and make data-driven decisions. Working capital finance allows SMEs to stock up on products and materials, or diversify into new lines that are likely to be in high demand.
Diversify to capitalise on the conditions
Renewable energy projects can thrive as Australia's energy demand spikes during El Niño. If your customer is in the renewable energy sector, or is looking to enter it, invite them to use this period to secure funding and develop projects such as solar or wind farms. Government incentives and grants may be accessible to support their green initiatives.
Keep a close eye on businesses like garden supplies, swimming pool-related companies, and nurseries, to ensure lending support is at the ready if climate impacts are being felt. Encourage them to explore opportunities to expand their product or service offerings to meet changing demands. For instance, a landscaping business might look to offer drought-resistant garden design services or water-saving irrigation solutions to appeal to environmentally-conscious clients.
Manage restocking strategically or collaboratively
Seasonal businesses like tourism can experience a surge in demand during this time, and must manage their inventory and resources effectively to ensure they can capitalise on the busy periods brought about by El Niño.
A good approach for your client is to collaborate with other similar SMEs or suppliers to strengthen their position in fulfilling contracts. Forming strategic partnerships can help them share resources, reduce costs, and enhance their collective ability to meet seasonal requirements.
If that’s not an option in your client’s industry, encourage them to instead strengthen their relationships with suppliers to ensure a smooth restocking process. By building a good relationship, and communicating their needs and expectations clearly, they may be able to negotiate favourable terms and discounts.
And finally, some helpful practical tips you can share to help keep your clients safe:
- Have a blackout plan to help their business adapt to power outages.
- Check their standard fire plan, keep fire alarm systems and fire-fighting equipment well-maintained, go through evacuation plans, and know where to find the latest information if there’s a bushfire threat in their area.
- Make sure their business data is stored in the cloud, so it can be accessed from anywhere in a worst-case scenario.
- If your client is dealing with Australian Taxation Office (ATO) debt, El Niño's impact on their industry can be an opportunity to prepare and streamline their finances. Encourage them to allocate funds strategically to settle outstanding debts and avoid financial strain.
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