Published on 11/08/2020 by Any Business.Com.Au

Coping with Covid: Small Business and the Second Wave

As Australia continues to manage the impact of the COVID-19 crisis, survival remains top-of-mind for small businesses across all industries.

Before the pandemic, six million Australians were employed by small business, but research shows three-quarters of small businesses are reporting falling revenues.

In June, after the removal of lockdown restrictions in many parts of Australia, cafes, restaurants and takeaway food businesses saw revenues increase, but takings were still 17 per cent down on the same time in 2019.

Victoria's second lockdown has put those small businesses on the back foot once more.

While the extension of JobKeeper and JobSeeker payments has brought some relief, many of the country's 3.5 million small businesses face an ongoing battle to keep their doors open.

So as a small business owner, how do you ensure you emerge from the lockdown period more or less intact?

Increase your incomings

If you're a small business operating at reduced capacity amid COVID-19, or even thinking of reopening, managing cash flow has never been more important.

  • If you have large jobs coming up that have been agreed to, ask for up to half of the total cost up front as a deposit
  • Do a stocktake on the equipment you have eg: desks, copy machines etc that may no longer be in use, now might be the time to offload them

Slow your outgoings

  • If you have a 30-day account with a supplier, see if you can extend it to 45 days or more
  • You want to preserve relationships which may have taken years to develop, so negotiate within those relationships like offering to pay two-thirds of the bill when it's due and the remainder in a few weeks
  • The same goes for your tax obligations, reach out to the ATO and see what sort of payment plans they can organise for you

Make it easy for your customers to pay

  • Make sure all the forms of payment you accept are clearly displayed on your invoices
  • Encourage your customers to pay by the method that gets that money into your account the fastest
  • Offer incentives for payments made by the due date

Review your prices

  • If you had been considering raising your prices across any products this year, now might be the time
  • Businesses make CPI increases to their products and services each year, there's no reason yours should be any different

Explore all government surplus options

JobKeeper may have grabbed the news headlines, but don't forget about economic relief at the state and local level. For example, the Business Victoria Support Fund is offering $500 million in merit-based grants, up to $10,000 each, for businesses affected by the COVID-19 shutdowns.

JobKeeper

JobKeeper has been extended, with some notable changes. For employers to be eligible for JobKeeper payments from 28 September 2020 to 3 January 2021, they must have recorded an actual decline in turnover of 30% or more in both:

  • the quarter ended 30 June 2020 (compared with the same quarter in 2019)
  • the quarter ended 30 September 2020 (compared with the same quarter in 2019)

In the new year, to be eligible for JobKeeper payments from 4 January to 28 March 2021, you must have also had an actual decline in turnover of 30% or more in the quarter ending 31 December 2020 compared with the same period in 2019.

Change in payments

If you remain eligible for JobKeeper payments after September, the $1,500 flat payment per employee, per fortnight, may drop by more than half. There are no changes to employee eligibility requirements however, the amounts have been reduced.

For eligible employees who work 20 hours or more per week:

  • $1,500 per fortnight payment continues until the fortnight ended 27 September
  • $1,200 per fortnight until 3 January 2021
  • $1,000 per fortnight until 28 March 2021

For eligible employees who work less than 20 hours per week:

  • $1,500 per fortnight payment continues until the fortnight ended 27 September
  • $750 per fortnight until 3 January 2021
  • $650 per fortnight until 28 March 2021

Remember that as an employer, you must pay your staff before claiming the reimbursement from JobKeeper. So you'll want to take a close look at your revenue, your payroll and determine how these changes will affect your cash flow.

  • All of the information contained in this blog is of a general nature only and should not be taken as financial advice. All advice of a financial nature should only be taken from a certified finance professional. For any additional information consult the ATO website.

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AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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11/08/2020 by AnyBusiness.com.au
As Australia continues to manage the impact of the COVID-19 crisis, survival remains top-of-mind for small businesses across all industries.Before the pandemic, six million Australians were employed by small business, but research shows three-quarters of small businesses are reporting falling revenues.In June, after the removal of lockdown restrictions in many parts of Australia, cafes, restaurants and takeaway food busines...