Borders are open and restrictions are being repealed, but small business owners are in no mood for celebration.
January proved to be the toughest month for many small businesses pushed to the brink by successive waves of COVID-19, and since then we have seen industrial strikes in February and catastrophic floods in March. It’s fair to say cash reserves are all but depleted for many small businesses — and every day more end up on the threshold of insolvency.
It’s true that we are continuing to “tackle the largest health and economic shock of our generation”, but not all of us have bounced back faster and stronger. Treasurer Josh Frydenberg may have presented a positive face to Australia’s economic recovery, but he’s left small businesses to fend for themselves with little to no meaningful support.
The situation on the ground bears witness to this: according to Australian Retailers Association chief executive Paul Zahra, many small business owners are having to refinance their homes and dip into personal money to keep their businesses afloat.
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When you consider the fact that small business is a huge wealth generator contributing $418 billion or 32% of Australia’s GDP, ignoring their needs hardly makes for the “strong and sustained economic recovery” touted by the government.
“Woefully inadequate” support for small businesses
Almost a year after JobKeeper was wound up in March 2021, with no access to insurance payments, small businesses are continuing to bear the brunt of supply chain disruptions, employee shortages, and reduced productivity.
ABS figures show that in January 2022, 41% of businesses reported decreased revenue compared to 31% of businesses the previous year. Between May 2021 and January 2022, the number of businesses that said their cash on hand could cover three or more months of operations reduced from 43% to 39%.
Between state and federal governments, the patchwork of small business support is woefully inadequate, surrounded by an intimidating layer of red tape. Nice if you can get it. Post JobKeeper, the Commonwealth has little on offer apart from its SME Recovery Loan Scheme, which guarantees 50% of loan amounts for eligible businesses with turnovers up to $250 million.
In New South Wales, sole traders and small businesses can access up to $2000 in rebates to offset costs. For Queenslanders, there are a range of fees and waivers for tourism businesses as well as a COVID-19 cleaning rebate. Canberra has a more generous Small Business Hardship Scheme, which offers up to $10,000 to cover the cost of utilities, commercial rates and other business expenses.
But even $10,000 is not enough to keep some businesses operating for more than a week.
We need a national small business plan
It’s going to take a lot more for small businesses to get back on their feet, and there needs to be a long-term national support plan in place to help them. If the government truly believes that small business is key to Australia’s economic recovery, it must invest more to keep these businesses viable and profitable.
Right now the top issues facing small businesses are recovering a healthy cash flow, retaining staff and securing future economic opportunities. An ABS survey showed that 69% of small businesses were unable to find suitable staff, 44% were unable to afford additional workers and 53% were affected by the availability of existing employees to work.
A good start would be funding businesses to offer free training to upskill existing employees to incentivise workers to choose to work for small businesses. This would be targeted at young employees aged 15-25 who would particularly benefit from exposure to a hands-on work environment.
Businesses have fragile balance sheets but giving larger corporations incentives to tender and sub-contract to small businesses will go a long way in creating more stability through consistent work. Likewise with government tenders. Reversing the trend of favouring large firms over small businesses will even the playing field and give them a much-needed leg up.
Next, reduce the paperwork and red tape that small business owners have to churn through on a daily basis to just exist. Small business owners don’t have time to jump through hoops to gain access to tiny grants but are arguably more in need of them. The government must take this into account and close the loopholes so many businesses find themselves mired in.
Last but not least, the government must support female small business owners, many of whom were left to shoulder the burden of childcare and homeschooling and whose businesses were impacted the most. Business owners often work for years if not decades to build up their businesses, only to lose them in an instant.
Without including the needs of small businesses, we cannot expect to win the strong productivity and low employment numbers that will secure our future prosperity. We must therefore do our best to ensure the interests of our small business community are protected and help them gain confidence in these challenging times. To leave them to their own devices would be a mistake Australia cannot afford.