JobKeeper: 84% of small businesses depended on it to survive. So, what comes next?
A whopping 84% of small businesses that were eligible for JobKeeper said the wage subsidy kept them afloat during COVID-19, new research has found.
The JobKeeper program was first introduced in late March when the pandemic was threatening to topple over the Australian economy. Under the scheme, businesses could apply for subsidies of up to $1,500 per employee to be paid out every fortnight.
But with this lifeline set to end in September, the road ahead looks bumpy for many small to medium-sized enterprises (SMEs).
The latest figures from MYOB’s long-standing Business Monitor show that for just over a quarter of SMEs, recovery from COVID-19 could take a year or two, at least.
A further 24% of respondents said they may not survive the pandemic at all, with their business either already closed or due to close permanently.
These findings draw on surveys with over 1,000 Australian SMEs between mid-April and mid-May of this year.
Revenue takes a hit
The MYOB report also suggested disruptions to cashflow have been a major culprit of these tough times.
Almost two in three respondents said their revenue was affected by COVID-19, while around half expect their business income to continue falling over the next three to six months - by a staggering 20% or more.
“The impact of COVID on the small business sector is hard to overstate, as evidenced by the data,” MYOB’s head economist, Jon Manning said.
He says that small business owners and managers have tried to make up for lost revenue in a few ways. Besides accessing government support packages like JobKeeper, their second most common tactic was cutting their own pay, followed by reducing employees’ shifts and hours, and then not paying themselves altogether.
“What’s pleasing about this is that owners and managers are actually putting their staff first. They’re bearing the brunt of some of this turmoil and trying to protect their employees a bit,” Manning said.
How to recover in the long run
But the next big challenge for SMEs will be figuring out more sustainable ways of staying afloat, especially given the uncertainty around what comes after JobKeeper.
“There’s a cliff in less than 100 days in September, and I think people are now realising how close that is and wanting some clarity from the government as to what might be happening,” Manning said.
As another recent report revealed, while many small business owners are confident they can make it through the worst of COVID-19, they feel far less sure about long-term survival.
Manning says a couple of strategies could help small businesses bounce back faster and stronger.
Embrace contactless payments: With a growing number of Aussie consumers going cashless in 2020, whether to curb the spread of COVID-19 or for convenience’s sake, it’s a good idea to hop onto that bandwagon as a business too. If you haven’t already, consider accepting contactless credit card payments at checkout. Manning said this method is also more secure and efficient than cash and can “increase the velocity at which money circulates around the economy”. In other words, you’ll receive contactless payments more quickly, so your suppliers and employees can also get paid faster, which then helps to improve cashflow.
Understand the customer: Consider how customer needs are shifting with the times, and how you can pivot your goods or services to fill those gaps. As Manning puts it, that means asking yourself, “is my product still essential to [customers] or has it become a discretionary purchase now?” Whether it’s alcohol companies using their production lines to make hand sanitiser instead or cafés and restaurants moving to contactless home delivery, this is the time to think about new ways of doing business.
For other examples of small businesses pivoting, read the stories of how three SMEs have adapted to COVID-19’s challenges and opportunities and thrived. Or check our article on how to boost cashflow for even more tips.