No one saw it coming, but COSBOA, the small business advocacy peak body predicts unemployment could exceed 10 per cent due to the coronavirus fallout as non-essential businesses are ordered to shut down. Strong urges business owners to brace for at least six months of hardship.
Indika Liyanage owns Ciao Gelato, a busy ice-cream cafe in Brisbane’s inner suburb of Nundah. The business produces “Fit-Lato”, a low-fat ice-cream, for supermarkets.
Four years after starting the business, Liyanage decided to expand by acquiring his manufacturer, Shlix Gelato, just before the outbreak.
Effectively, it’s a big risk buying that company and we bought it in mid-December. We bought on an investor as well. So yeah, it was big call to make that investment but we did and we didn’t see this coming at all.
Liyanage had to come up with a six-month plan to mitigate potential losses from his three business lines.
The ice-cream shopfront lost over half the income in just three weeks. The recently purchased restaurant brand saw a two-third drop in revenue.
Liyanage had to rapidly change his business model as restaurants and cafes are now ordered to only provide takeaway and delivery services.
Peter Strong believes small business owners will eventually need to take drastic measures in order to survive - including retrenching some of their staff.
A lot of small business people do not like sacking their staff. They don’t like doing it but they’re going to have to do it.
Treasurer Josh Frydenberg warns this “economic shock” is going to be “deeper, wider and longer” than expected. The federal government has released a series of measures to generate cash flow for businesses and support retrenched workers.
Around 690,000 businesses with an annual turnover less than $50 million can receive a tax-free payment between $20,000 to $100,000 to keep their workers.
The instant asset write-off threshold has also been increased from $30,000 to $150,000 for businesses with an aggregated annual turnover of less than $500 million until the end of June.
Michael Crocker, tax leader at Chartered Accountants Australia and New Zealand, suggests business owners should determine what they’re eligible for under the federal and their state or territory governments’ support schemes.
Additional cash flow can be found in payroll tax concessions in some jurisdictions across Australia. Crocker recommends contacting your chartered account or tax agent for advice.
Stanley Hsu operated the myCube mini shopfronts in Brisbane and Sydney but had to shut shop last year due to an already weakening economy. He says fixed costs like rent poses a major threat to businesses in the current environment.
If you sign up a lease 12 months or longer ago, I would say these guys have a very tough time because the rent they would subject themselves to would be quite substantial. People will be in trouble.
In what the Prime Minister calls a ‘once-in-100 year’ crisis, the Reserve Bank cut the interest rate to a historic low of 0.25 per cent.
In addition, banks are offering a six-month deferral on all loans for small businesses to keep them afloat.
Peter Strong recommends that business owners struggling to pay rent approach their landlord to work out a solution.
He says that if they are dealing with a big landlord and experiencing some troubles, they can talk to the state Small Business Commissioner in Victoria, South Australia, Western Australia or New South Wales.
There is also a Small Business Champion in Queensland and the office of the Small Business and Family Enterprise Ombudsman.
Michael Crocker says communication is especially important for business owners and their workers as they face significant uncertainty ahead.
Making sure that the employer demonstrates care and compassion for the employees as small business has trouble attracting good people so it would be a really bad outcome if coronavirus interfered with that strong working relationship.
If you’re under stress and need to talk to someone about your emotional wellbeing, ring Lifeline on 13 11 14 or Beyond Blue on 1300 22 4646 for 24-hour support.
You can also ring the Australian Tax Office’s Emergency Support Infoline on 1800 806 218 up to 10 pm Australian Eastern Daylight Time during the week or from 10 am to 4 pm on the weekends.
The Australian Small Business and Family Enterprise Ombudsman information line are open from 8 am to 8 pm Monday to Friday on 1300 650 460.
For language help, call the Translating and Interpreting Service on 13 14 50.
SOURCE SBS SETTLEMENT GUIDE
