What Does The End Of Job Keeper Mean For Small Business?

written by Michael Lanteri .

As much of the world continues to struggle with the impact of lingering second waves and third waves of the COVID-19 pandemic, there’s a few things we can be thankful for here in Australia. 

1. Being an island has allowed us to remain largely isolated from the rest of the population, and aside from a few quarantine missteps, this has worked well. 
2. Our government stepped in with various stimulus schemes designed to minimise the impact the pandemic would have on the large-scale economy. 
3. These first two points has allowed consumer confidence to remain, and people have continued to spend money, thus keeping the liquidity essential for a functional economy to remain intact. 

The initial uncertainty that rolled through in March and April of 2020 as lockdowns came into force and revenue plummeted, stabilised somewhat, for the most part, under the support of the Job Keeper scheme. 

It is a fact that many companies did not qualify for the benefits post September, and some even prospered, opting to give the money back such was their revenue increase. 

Unfortunately, if you were in the retail, hospitality or travel industries, Job Keeper was most likely the respirator that did all the breathing for you. So, now that it’s gone what does this mean for business and the Australian economy? 

1. 1Unfortunately, there will be casualties by way of insolvencies – estimated to be into the thousands - as companies cannot pay off their debts, or their staff or make any revenue because their industry has been decimated. 
2. It is likely these insolvencies will become more and more evident in the next 3 months and beyond as the cash dries up. 
3. The actual “insolvency” rate fell, as in decreased, by 37% in 2020 because of the government benefits. With these benefits gone, it is anticipated that the 2021 figures will be far higher. 
4. Ultimately, it was predicted a year ago that up to 200,000 business’ could go under as a result of the COVID pandemic – those figures are now estimated to be between the 5,000-10,000 mark – not great, but a far cry from the worst-case scenario. 
5. There’s no hiding from the knock-on effect of such an outcome. Unemployment. Estimates vary, but it has been cited that up to 150,000 people could find themselves out of work in the coming months as these floundering businesses topple over. 

The unpredictability of spontaneous lockdowns, such as Melbourne’s five day valentines-day hibernation and the most recent events in Queensland are bound to occur, and we can do nothing but weather those storms as they roll in, but in terms of “coming” out of COVID, there’s a few things businesses can do to stay afloat. 

1. Get the correct financial advice! 

You might find that restructuring certain parts of the business is not only necessary to keep things running, but actually makes good business sense moving forward. 

2. Avoid Making Decisions Based on ‘Here Say’ 

Avoid making big decisions based on news articles, or from someone else’s “personal experience”. Even if they are in your industry, the circumstances are not the same and should not be treated as such. Make an informed decision based on your own circumstances and with trusted advisors that understand your situation. 

3. Build a War Chest 

Where you can, save. Save. And then save some more. It is easy to say, but hard to do, but ultimately, it is cash flow that is the life blood of any business. 

4. Know Your Numbers 

Again, a conversation to have with an accountant or financial planner that knows what they’re talking about. Numbers don’t lie. So, use them to navigate the choppy waters that may linger around for a while yet. 

5. Consider Acquisition(s) or Consolidating 

Again, talk to a trusted and experienced financial advisor, - about acquiring a business or selling / consolidating a business can be a sound strategy to ensure things remain on target. Provided the numbers stack-up. 

To state the obvious, no-one knows what’s coming up over the hill, whatever it is, some business’ will not survive, others will thrive, but whatever the case, which such levels of uncertainty, seeking out the correct financial guidance will put you in the best possible position to make the best decision for your situation.