Australian Small Business and Family Enterprise Ombudsman Kate Carnell answers your questions
by News Corp Australia NetworkFew would argue that 2020 has been a tough year for Australia – and especially for the country’s millions of small businesses.
We started the year with many of parts of the country still in drought, other parts being consumed by devastating bushfires – then came floods and wild storms to NSW and Western Australia.
Australians barely had time to catch their breath when the COVID-19 pandemic hit.
With it came the unprecedented collapse of employment, tourism, and businesses around the country. The country went into lockdown to try and reduce infections rates of the virus, which has now killed more than 100,000 people in the US.
The hibernation has paid off, and Australia’s infection rate has plummeted. The death toll stands at 103.
The economic fallout has been devastating, and few businesses have been spared.
As Australia now heads into recovery mode, small businesses are expected to play a major role. There are some three million small businesses in Australia, which account for 98 per cent of all businesses.
Collectively they contribute almost $400 billion annually to the nation’s economy. They employ more than five million Australians and are the single largest employer in eight of Australia’s biggest industries.
Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said small businesses provide positions for more apprentices than any other sector.
“The key to restarting the economy is to get people back to work and build economic confidence,” she said.
“Small business provides the foundation for economic activity – to construct a secure future for themselves, their families and their employees.”
Ms Carnell was online today to answer your questions. Here’s what she had to say:
Q. How do you think this pandemic compares to the GFC, when so many businesses went under?
A. While there’s no doubt businesses are facing enormous challenges right now and some won’t survive, this crisis is different to the GFC – a financial crisis – versus what we are experiencing now, ie: a global pandemic with restrictions placed on businesses, many of which were solid, viable businesses just a few months ago. The government response has been different in this current scenario compared to the GFC. Certainly the pandemic has hit small businesses significantly harder than the GFC. We really can’t predict at this time what the final outcome will be. With the right support measures in place, I hope businesses will be able to recover from this.
Q. I have a small beauty salon and really looking forward to reopening next week. I am worried about how I am going to communicate my hygiene standards to clients – do you have any suggestions?
A. We are seeing small businesses do some really clever things on social media. Social media is your friend when it comes to getting the information you want out among your customer base cheaply and effectively. When you are sending your booking confirmation emails, include any details of things your customers will need to do to comply with hygiene measures. Signage around your salon is also useful. There are printer-ready posters you can access for free on the Safe Work Australia website. Good luck with reopening your salon!
Q. I have a small family business and have deferred my repayments and a number of other bills. Now I am really dreading how I am going to catch up in time to meet the repayments as my cash flow is still about 60% down. Do you think the banks/creditors are likely to come up with any more relief packages?
A. The key here is to talk to your bank early. Let them know what your situation is and work out a repayment plan. I’ve called on the banks to be reasonable beyond the six month loan repayment holiday that’s currently in place because realistically it’s going to take 12 to 18 months for small and family businesses to recover from this crisis. It’s in nobody’s interest to see a wave of insolvencies. The bank have so far been receptive to our approaches.
Q. What businesses do you see as being able to trade through the pandemic and even do very well?
A. There are a lot of businesses doing it very tough right now, but we have seen some good examples of small businesses that have been able to survive and even thrive in this environment. Their trick has been to look at the business and consider how they can use their resources to deliver their goods or services in a different way. Here in Canberra there is a bakery that has gone mobile with a Mr Whippy-style sound system installed in his van. He posts on social media which suburb he’s going to the next day and often sells out. There are personal trainers offering sessions via online and mobile platforms, there is a local clothing maker that is now producing hospital scrubs and a shopfitter now making home office furniture. It’s been quite inspirational to see!
Q. Do you think the governments at state and federal levels should be doing more to help small businesses? I am not sure if mine is going to survive this, let alone recover enough to pay off the debt we have incurred by deferring some of our repayments and rent.
A. We understand it’s a really tough time for small business and my office has been active in calling on all levels of government to support small businesses however they can. Certainly the support measures rolled out to date have been substantial. In terms of debt, banks have so far been very receptive to the difficulties small businesses have had, with repayment holidays in place for 6 months. Realistically, it’s going to take 12-18 months for small businesses to get back on their feet and I have called on the banks to be reasonable during that time. Already yesterday we saw the RBA Governor talk about the need for extending support packages such as JobKeeper post the September cut-off to some small businesses. The Government is acutely aware that it’s going to take time for small businesses to be in position to manage the costs they had prior to COVID such as rent, loans and wages.
Q. Do you think there is going to be a recession and how will small businesses survive this? Does there need to be more government financial support?
A. I’m not an economist, but there seems to be an emerging consensus among Australian economists that a recession is probable. We understand it’s a really tough time for small business and my office has been active in calling on all levels of government to support small businesses however they can. Certainly the support measures rolled out to date have been substantial. The government has also suggested this is scale-able and there has been talk of further support for the sectors that have been hardest hit. The challenges of operating in a recession is to have a solid cash flow plan and to minimise your expenses. If you haven’t already, now is the time to visit your accountant. Planning is key.
Q. Do you the government should consider a four-day working week, to try and stimulate the domestic tourism economy?
A. Great question. This is an idea that’s been floated in New Zealand, but labour laws are quite different here in Australia and much harder to make 4 day working weeks fly within our regulated labour market. The challenge right now for tourism businesses is to get state borders open and to focus on Australian tourism and while Aussies can’t travel overseas, there is a significant opportunity here for local operators. The next stage is the opening of the NZ bubble and the good news is New Zealanders love Australia and are prepared to spend their money here. I’d really like to see a major local tourism campaign to encourage Australians to holiday at home.
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