The JobKeeper wage subsidy has kept thousands of Australian businesses afloat, and their workers employed, through the worst of the COVID-19 induced economic downturn of 2020 but the scheme is scheduled to end on March 28, leaving many small business owners worried for the future.
If your business is currently on JobKeeper, here’s what you need to do over the next three months to avoid falling off the so-called fiscal cliff when support ends.
Play to your strengths
Many businesses have had to adapt over the past year to stay alive. Whether that’s gearing up the online provision of goods and services, moving staff to home working or even diversifying into whole new products or markets, it’s important to note that many of the changes you’ve made could be permanent and could play a key role in building future profitability, even as many aspects of your business return to something like normal. With the economy still under-performing, you need to grab every competitive advantage possible to stay alive.
If you no longer need to rent that office because staff are at home, end the lease and use the cash saved more productively. If most of your business is now online, don’t sacrifice those sales to return to face-to-face trading – try to leverage both opportunities simultaneously.
Look at your staffing
The point of JobKeeper was to keep workers attached to their jobs, but with the scheme ending many businesses will have to take a hard look at whether they can continue to support all their current workers based on their expected future revenue levels. If your business employs casuals, that could mean reducing or eliminating shifts. For full -time or part-time staff, you may need to ask staff to permanently reduce their hours or, in a worst-case scenario, make staff redundant.
With staff costs often the biggest overhead for small businesses, it’s essential to keep your labour budget sustainable. As your business recovers, you may then be in a position to bring staffing levels back up to normal over the medium term
Take up other support
As well as federal government support such as JobKeeper, most state governments have comprehensive business support measures in place for COVID affected businesses, including cash grants and deferrals or waivers of certain taxes and levies. Make sure your business has applied for all eligible support by checking your state government website.
In the case of some business support payments (such as those offered by the Victorian government), amounts received may be tax-free.
Is this really the end for JobKeeper?
There have been no formal announcements from the government but many economists believe that some form of continuing support will be necessary post-JobKeeper for some businesses.
Sectors such as tourism and hospitality have been impacted far more than other businesses and with international borders set to stay closed for most of 2021 and domestic tourism impacted by uncertainty over state border closures, it seems certain that these sectors, in particular, will continue to be hit hard well after the proposed end-date for JobKeeper.
This has spurred calls for sector-specific support for the tourism and hospitality sectors, perhaps by continuing the current JobKeeper scheme but restricted only to businesses in these sectors. The government has committed to nothing at the time of writing but watch this space.
Source: Money Magazine
Need to speak to a professional at FinCare?
Call 02 9542 4655 or email email@example.com
The information provided in this article does not constitute specific advice. For further information, you should contact your professional adviser.