With JobKeeper due to end on the 28th March, thousands of small businesses could be in jeopardy.
Don’t make the mistake of thinking that because you’re no longer receiving the stipend your business won’t be at risk – the wider landscape is changing too.
By Michael Mekhitarian & Jim Vass
Since November 2020 about 1.5 million businesses have continued to receive the JobKeeper payment for employees. For these businesses, the next few months are going to be tough and now is the time to put a survival strategy firmly in place. Because, while the economic indicators are positive, there are still uncertain times ahead.
As JobKeeper ends, there are other important factors to consider too, such as the gradual tightening of the ATO’s stance on PAYG tax deferrals; the return of audits, the end of bank loan interest pauses, state payroll tax and land tax concessions, and rental relief measures; and the end of the temporary suspension of insolvency trading laws.
The Federal Government also intends to implement new bankruptcy legislation within the next few months, the implications of which could be far reaching.
While there is a lot of good in the legislation for any business facing insolvency, there are also serious implications for creditors of businesses in financial trouble. And, as we all know, a single outstanding payment of a few thousand dollars can send a small business reeling.
The fact is, that while Government stimulus has been a must over the past 12 months, during this time, many struggling businesses have been able to delay the inevitable. As the cushioning ends, we could very well experience a ‘domino effect’ … or as some media commentators have suggested ‘a Tsunami of insolvencies.’
So – are you prepared? Now is a key time to sure up your financial operations.
If you’re still receiving JobKeeper – can you survive without the additional support?
A survey conducted by the ABS midway through last year revealed that 30 percent of businesses have cash in hand to support fewer than three months of operation. Almost one in 10 said they had the cash to last only one more month.
That’s a pretty bleak picture. For those businesses still reliant on JobKeeper, even its water-down form, there’s an urgent need to review and refit the base costs of the business, and to consider headcount.
Beyond that, remodeling and re-forecasting should be an immediate priority of all SMEs in the current environment including a thorough assessment of:
Cashflow and access to capital have long been growth inhibitors for SMEs. Now as we work through the post-pandemic recession, both will remain under monumental pressure, and while reducing costs or hiking prices might seem like an obvious solution, neither will necessarily solve entrenched financial issues.
Right now we’re facing considerable economic complexities. While the government has committed to providing special assistance to troubled industries such as tourism, and has introduced a wage-subsidy for apprenticeships in the construction sector, for the remainder of small businesses, the time has come not just to stand on our own two feet, but prepare to navigate for the next several months of uncertainty.
Economic conditions aside, it’s impossible to ignore the fact that Covid has changed the way we do business, with a myriad of new health regulations, the potential for more on/off state border closers, an increasingly digitised environment … all of these factors must be taken into consideration.
And there is no ‘one-size-fits-all’ solution.
So join us for a free webinar on 31 March as ATB Partners accounting, tax and business mentoring experts Jim Vass and Michael Mekhitarian talk through the key operational components you need to address right now in order to position your business well for what comes next.
The webinar will provide case studies, as well as a number of assessment tools you can use to understand the key numbers within your business, and strategies for moving forward.
And if you need more help, contact us.