SMEs urged to plan for life without JobKeeper

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Post covid-19 era helping hand for business and economy concept. Government economic stimulus after covid-19. Secretary of the treasury (politician) stimulate economy for GDP growth in year 2021.

With the JobKeeper scheme set to finish in 100 days’s time, insolvency solutions firm Jirsch Sutherland is urging SME owners to plan for the future now and answer the tough questions early on.

“The JobKeeper safety net is being removed in three months – not to mention other stimulus initiatives and forbearance measures ending soon – and that means business owners should be getting on the front foot now to survive,” Jirsch Sutherland Partner, Andrew Spring, said. “As a business owner, you know your strengths and abilities well, but you should also know when to call on the expertise of others.

“We’re experiencing an economic event that’s both macro and micro in nature and company directors need to be proactive about assessing the impact on their business and the changes required to get back on the right course,” Spring added. “That includes getting your accounts in order, meeting taxation and superannuation obligations and, if necessary, seeking professional help from a qualified adviser.”

Bill Lang, executive director of Small Business Australia and a business coach and adviser, said that SME “heads are out of the sand now” and many business owners are now developing plans to survive and “get to cashflow neutral or positive asap.”

Lang said, “There are practical steps owners can take to avoid bankruptcy, so with the right advice early on, owners should not be scared to consider shutting their business with a view to preserving resources to reinvent themselves in a post-COVID-19 marketplace. Getting educated about their options is critical.”

Lang noted that SMEs should do cashflow planning “under the worst-case scenario”.

“If neither a COVID cure nor vaccine are found, society will have to live with it,” Lang said. “Before JobKeeper ends, business owners should determine what expenses can be reduced to minimise the cashflow impact on their business, invest in further digitisation, particularly eCommerce and digital marketing, and, most importantly, keep healthy, talk to other business owners and family, keep close to creditors and involve them in their plans. It’s also crucial to get professional advice.”

Spring pointed out the importance of understanding that that personal guarantees don’t fall away under the COVID stimulus or deferral measures.

“Business owners should be aware of ‘sleeping personal guarantees’ that will awaken later – e.g. leases, make-goods, trade credit applications, finance, credit card debts etc,” Spring said. “Any debt deferral decision may exacerbate liabilities, which could put personal assets at greater risk if the business is ultimately unable to meet the liability.”

Spring suggests 10 tips to help SME owners plan for the post-stimulus environment:

  1. Plan: Plan for the current conditions, the immediate future, and for the longer term.
  2. Calculate: Ensure funds meet the current and projected cashflow
  3. Assess staffing needs
  4. Reduce costs
  5. Communicate: Talk to your staff, customers, suppliers, creditors.
  6. Renegotiate rent/lease terms: If necessary, renegotiate existing rent/lease with your landlord.
  7. Funding: Get in touch with your bank or lender or seek other financial service providers for funding needs or repayments/interest rate relief
  8. Give yourself breathing space: The Safe Harbour and Voluntary Administration regimes can help provide breathing space and secure credit leniency.
  9. Reinvent yourself: Prepare a new model, strategy, or market post COVID-19.
  10. Put your hand up: Get in touch with any mental health organisation if you are having problems dealing with mental health issues.