JobKeeper has been a life-saving COVID measure for many small businesses and is credited with the surprising resilience of the Australian economy. But that all comes to an end on 28 March, with the government standing firm on its promise to remove JobKeeper and pour more resources into job creation. But what does it mean for the many thousands of Australian small businesses that have been relying on this support measure?
Here’s some strategies for dealing with life after JobKeeper.
- Get really familiar with your figures – what you have been doing and what you forecast will happen. Take out the JobKeeper payment you received to determine if your business has been trading profitably without it. If it has, that’s fantastic. What can you continue to do to keep it that way? If your business wouldn’t have achieved a profit, or would have made a bigger loss, without JobKeeper, you need to really dive into those figures and understand why.
Is there any way to increase revenue? Can you pivot your business to bring in extra revenue sources? Do you see trade increasing in the short to medium term?
Are there any expenses you can cut? This isn’t just aimed at staff who have been supported by JobKeeper, but any other costs your regularly incur. Do you need them all right now? Can you negotiate with suppliers and get better deals?
- Take stock of your cash reserves – do you have any? If so, how long will that support your business for? If you don’t have cash reserves, are you able (and willing) to obtain credit to help support the business? Speak with you finance broker or bank to see what options are available. Can you renegotiate current loans to stretch out the payment terms, giving you more cash flow in the meantime? Now is not the time to overcommit yourself, especially if you are concerned with how business will go, so only do what you are comfortable with.
- Get some good advice – do you have a strong financial team around you? If so, book in a time to sit down with them and run through your finances. Get your books up to date and do some strategy and cashflow planning so you can make informed decisions. Now is not the time to be uninformed or flying blind – knowledge is power if you have some tough decisions to make. If you have come out of JobKeeper in a strong position, a planning session is still in order. It’s time to get on top of creditors, make plans and keep momentum going. If you don’t have a strong financial team you can call on, I suggest finding someone who can help you understand and navigate the next phase of your business.
- Speak with your staff – unfortunately, there are going to be some businesses who cannot continue to employ staff once JobKeeper ends. You need to be upfront with those people as early as possible to give them time to make decisions. Also check with Fairwork or your governing industrial relations body, to check the process for ending employment if you can no longer afford to maintain these employees. There are legal and financial obligations you must meet and plan for, so get that advice early on so you are aware.
- Ensure you have systems and processes in place to make business efficient and easy – if you are worried about your financial future or want to stay on top of things financially, ensure your systems and processes are efficient and easy by:
a. Having real-time accounting software that you use and reconcile often so you can keep on top of your financial data.
b. Implementing payment options that make it easy for customers to pay you – so you have cash in the bank and don’t waste time chasing payment.
c. Having an inventory system so you can oversee your stock levels. Leaving stock on the shelves for too long ties up your cash so it’s good to get this right.
d. Automating as much as possible – if you are going to have to spend more time in the business, automate or outsource things on the business so you use your time most effectively.
Michelle Maynard, Chartered Accountant and Partner, Carbon Group