100 days until JobKeeper ends – are you ready?

By Sarah Stowe | 16 Jun 2020 View comments

Just 100 days till JobKeeper ends. So it’s time for franchisors and franchisees to ask themselves the hard questions and plan for the future.

Andrew Spring, partner at national insolvency solutions firm Jirsch Sutherland, says business owners need to take action now.

“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,” he says.

“As a business owner, you know your strengths and abilities well, but you should also know when to call on the expertise of others.”

According to the Australian Bureau of Statistics (ABS) 72 per cent of businesses have lost revenue because of the pandemic. An almost equal number of businesses, (73%) have accessed support measures such as wage subsidies, deferred loan repayments and renegotiated rents.

The crucial question to ask is whether the business can survive without these props.

“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,” says Spring.

“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, says survival plans are crucial now.

“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,” he says.

Lang advises SMEs’ cash-flow planning should work to the worst case scenario.

“Before JobKeeper ends, business owners should determine what expenses can be reduced to minimise the cash flow impact on their business, invest in further digitisation, particularly e-commerce and digital marketing.

“Most importantly keep healthy, talk to other business owners and family, keep close to creditors and involve them in their plans,” he adds. “It’s also crucial to get professional advice.”

8 questions for business owners to ask themselves now

  1. Cash flow: What is my cash-flow situation like now and what will it be like after stimulus ends?
  2. Revenue streams: Will my revenue streams recover and are there opportunities for new streams?
  3. Staff: Can I afford to keep staff on post-JobKeeper?
  4. Deferred liabilities: Can I meet deferred payments? (e.g. rent, mortgage)
  5. Tax obligations: Do I have the money to pay tax when it falls due?
  6. Superannuation Guarantee: Do I have enough money to meet the next superannuation payment?
  7. Worn out/no mojo: Do I want to hang on or have I lost my passion for the business?
  8. Personal guarantees: Are my personal assets at risk? (e.g. personal savings, house, car)

 “It’s crucial to understand 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.

“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,” says Spring.