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Let’s Talk: The end of JobKeeper and what it could mean for your business

[This is a repost and slight edit of our January 2021 article, to provide some insight as Australia’s JobKeeper scheme comes to an end.]

The Australian Government’s JobKeeper scheme has been of great support to businesses nationwide during the pandemic. With JobKeeper now finished, Let’s Talk about what it can mean for businesses…

Rob Smith, Partner, McGrathNicol

Let’s Talk: The end of JobKeeper and what it could mean for your business

JobKeeper has been the most significant and successful COVID-19 business support measure, providing substantial cash and employment support to impacted businesses across Australia through 2020.

Without significant new government financial support, many businesses that continue to be adversely impacted by COVID-19, particularly in the tourism, travel, wholesale and retail industries will come under renewed liquidity and employment pressure from April this year.

We anticipate that asset-light small to medium sized businesses, with less funding options available, will be most affected. Solutions may be to permanently reduce employment, seek further concessions from suppliers, landlords and lenders, or to take more drastic measures such as closure or insolvency. Such actions will have a knock-on effect, impacting employment, liquidity and working capital through industry value chains and the broader economy.

Tracey Dunn, Associate Director, RSM Australia

Let’s Talk: The end of JobKeeper and what it could mean for your business

While some businesses were hit hard by COVID-19 lockdowns, many have already transitioned away from JobKeeper in the second round. Most other businesses will have been planning in advance for the end of JobKeeper.

Businesses that are experiencing cashflow issues at this point may need to look at the business more broadly. It’s possible that underlying business issues were compounded by the COVID-19 crisis, magnifying and accelerating the impact of these issues for those businesses. If small businesses are likely to struggle to meet their overheads without JobKeeper, they should speak with their advisor to identify options. Restructuring could help the business emerge from this crisis stronger than before. In some cases, unfortunately, it may be that the business needs to be wound up.

Small businesses owners who are concerned about the end of JobKeeper should speak with their business advisor or insolvency advisor as soon as possible to maximise their chance of success.

Tom Cornell, Head of Assessments APAC, HireVue

Let’s Talk: The end of JobKeeper and what it could mean for your business

For many businesses, the end of JobKeepers will require a reassessment of their talent needs in order to ensure that all current and future hires can be adequately supported.

This may lead to HR teams having to make difficult decisions. However, the core thing to bear in mind is the long-term health of the overall business. The current optimism around economic recovery is based on a range of factors, including the effectiveness of COVID-19 vaccines. Hiring talent into an unstable and potentially short-term environment comes with its own set of challenges and HR teams would be wise to take a cautious approach in the coming months. 

On the flip side, companies fortunate enough to be in a position to hire, will have an expanded pool of talent to draw from, so will need to effectively assess potential candidates to ensure they are securing the right fit for the business. Either way, this is not a time to be making knee-jerk decisions, but instead to be acting strategically.

Gordana Redzovski, Vice President APAC, Vend

Let’s Talk: The end of JobKeeper and what it could mean for your business

Few industries were harder hit by the pandemic than retail, so for many who relied on it, the end of the government’s JobKeeper program represents a daunting cliff edge. Despite that, though, the local retail industry has, and continues to make strong strides, with the proliferation of ecommerce, the “shop local” sentiment and easing social distancing restrictions representing a platform that could alleviate some of  the concerns about its conclusion.

That’s not to say it’ll be easy, though, so ensure you have a solid understanding of your business’ current financial position. Look at the past 12 months as a whole and then identify where you might be able to cut costs or implement more cost- and time-effective processes. If, for instance, you’re wasting time on manual admin tasks, consider how you might be able to adopt digital systems and processes to save both time and money in the long-run. Consider, also, whether flash sales, loyalty programs or discounts for recommending friends could incentivise a short-term spike in custom.

Jonathon Colbran, Partner, RSM Australia

Let’s Talk: The end of JobKeeper and what it could mean for your business

Government stimulus funding has kept Australian small businesses afloat during the COVID-19 disruption. JobKeeper was a highly effective cashflow measure but, although it was extended a number of times, it was always intended to be finite.

Unfortunately, it’s not clear that business owners have proactively planned for this. In an environment where many significant creditors have deferred debt repayments, businesses need to prepare for the time when these debt repayments will re-commence or return to pre-COVID-19 levels, since most debts were only deferred, not forgiven. Now that this government stimulus has stopped, this is likely to affect cashflow.

Businesses continue to face risk from COVID-19 and other, unforeseen disruptions. It’s essential to work with a business advisor to plan for uncertainty, find ways to protect cashflow and explore all options such as restructuring to protect and improve the business.

Dunya Lindsey, COO, Wiise

Let’s Talk: The end of JobKeeper and what it could mean for your business

The end of JobKeeper should be a sign that everything is getting back to normal. But as any business knows, “normality” is still a long way off. Australia has so far weathered the impact of COVID-19 better than many other nations. But certain industries have been particularly hard hit by continued travel restrictions. Travel and tourism, international education, freight and logistics will still be severely impacted even as JobKeeper ends.

This is a crucial time for businesses to take advantage of the right technology solutions. Having robust accounting and ERP software is critical to generating the data and insights needed for smart decision-making. This will boost business agility and help them keep a close eye on cashflow, as well as ensuring there is enough capital to rebuild businesses and meet deferred payments. Employment forecasts seem more positive, with labour force figures showing continued improvement since the depths of recession in June 2020. But the recovery is not evenly spread. For vulnerable businesses, still struggling and exposed to uncertainty, ongoing support measures will be critical.

Simon Le Grande, Director Of Marketing And Product Management, ‎Lightspeed

When it comes to the hospitality sector, if tough staffing decisions do need to be made by business owners, making the right decisions will be paramount. It will be critical to understand how business has changed over the past six months, including: What are now the busiest hours of the day, and days of the week? What is the new order channel split (eg: dine-in vs. takeaway), and how does this vary by hour? Getting the mix of skills and coverage right when rostering will be more important than ever.

Hospitality owners should also consider implementing emerging technology to generate additional staffing efficiencies. Connected, cloud-based POS systems enable access to tools that can bring efficiencies to roster management such as digital ‘order at table’ solutions, and rich, real-time analytics features that empower smarter business decisions.

Ryan Miller, CEO, Keeping Company

Let’s Talk: The end of JobKeeper and what it could mean for your business

Instead of feeling paralysed by worry, businesses should see the end of JobKeeper as an opportunity. It can be the push needed to overhaul your finances and operations to create a stronger, more profitable business.

Start by planning for both the worst and best case scenarios. Restructure and reduce headcount if needed. Forecast cash flow. Scrutinise costs and reduce as many expenses as possible so you’re not dipping too much into your cash reserves. Investigate your profitability on every product or service. This will give you a better idea of where your focus should be. Streamline your payables and receivables process. Build recurring revenue. Look at ways to access credit or introduce liquidity.

Ultimately, minimising the impact of the end of JobKeeper will come down to getting the right advice and taking prompt action so your business can adapt accordingly.

Rolf Howard, Managing Partner, Owen Hodge Lawyers

Let’s Talk: The end of JobKeeper and what it could mean for your business

As JobKeeper closes, many businesses may find they will need to reduce headcount from April onwards to ensure their wage bill remains affordable.

It’s important that businesses commence the restructure process as soon as possible to avoid it becoming rushed or careless.

When making people redundant, make sure you are meeting the requirements for a genuine redundancy, otherwise you could be at risk of an unfair dismissal claim. A position can be found redundant if the employer no longer needs the particular job to be done by anyone or the employer becomes insolvent or bankrupt.

Consult with your lawyer to ensure you’re taking the correct steps in accordance with the law. This will include giving enough notice, calculating and paying out any redundancy payments or entitlements, and of course communicating the changes with exiting and remaining staff.

Peggy de Lange, VP of International Expansion, Fiverr

Let’s Talk: The end of JobKeeper and what it could mean for your business

In these difficult times, the end of the stimulus package will inevitably see some businesses tighten their budget belts or dip into reserves. This could mean more Australian workers taking a pay cut or reduced hours, or in the worst case scenario, losing their jobs.

We will likely see a further shift in employment dynamics in that more skilled, entrepreneurial workers will seek out alternative income sources and provide their services elsewhere, a trend we noticed on our platform with the increase in sign ups throughout the pandemic. Our recent research has found that Australians are seeking better work / life balance, and situations like this could be the push they’d need to make a change to their employment situation.

For small businesses now needing to do more with fewer resources, consider tapping into the freelance workforce or rethinking how teams are traditionally formed and turning to staff augmentation where appropriate. 

Lars Leber, VP and Country Manager, Intuit QuickBooks Australia

Let’s Talk: The end of JobKeeper and what it could mean for your business

While economists argue that the economy is well-prepared for the end of JobKeeper, the reality is that many small businesses across the country are still concerned about their survival. One way for them to safeguard their cash flow is through further digital adoption to optimise their processes, building on the acceleration of their online presence for customers during lockdowns.

The digitisation of key functions like finance can simplify the process for SMB owners and managers, provide greater view over a business’ financial situation and insight into cash flow and upcoming financial obligations. This enables businesses to be on the front foot and frees up time to focus on things like finding new ways to grow their business.

We recognise the value in schemes like the Victorian state government’s Small Business Digital Adaption Program, as a sustainable way to support the sector following the end of JobKeeper.

A disproportionate number of SMBs, compared to larger businesses, ‘counted on JobKeeper to get them through the worst of the pandemic’ and typically have less capital available to invest into tech-led solutions. I encourage both state and federal governments to consider similar longer-term initiatives such as the Digital Adaption Program, providing financial support for SMBs that demonstrate willingness to modernise their operations.

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Guillermo Troncoso

Guillermo Troncoso

Guillermo is the Editor of Dynamic Business and Manager of film &amp; television entertainment site ScreenRealm.com. Follow him on <a href="https://twitter.com/gtponders">Twitter</a>.

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