WA business owners say they are preparing for the end of JobKeeper by scrutinising every aspect of their business and building a “war chest”.
JobKeeper is set to end in September after Prime Minister Scott Morrison warned on Monday keeping wage subsidies in place for too long would damage the growth needed to pull the country out of crisis.
About 844,000 businesses have accessed JobKeeper, delivering payments to about 3.5 million workers.
Jocelyn Derecourt, owner of South Perth-based Cove Spa, decided to take a hands-on position in the business post-COVID, after stepping away for 10 years.
“Because of the financial situation that we’re in after being closed for three months, in order for us to claw our way back, I’ve had to come back into the business working on the front desk and in the treatment rooms,” she said.
“The silver lining is getting back in touch with all the clients and the staff. I think the business will really change direction with me being back at the forefront.”
Glenn Callegari, owner of surf shop retailer Hillzeez, said many business owners would have to face a post-stimulus world.
“How I prepare for that is basically try and rebuild the war chest for my business,” he said. “For some of my marginal sites … basically I haven’t renewed the lease position. You get to a point and go, ‘If things deteriorate you can just pack it up and leave’.
“It’s survival of the fittest and we’ve got to be the fittest. That doesn’t mean cut back your payroll, it just means the value-add has to be there with every team member of your organisation, now more than ever.”
Nigel Plowman, the founding director of WA-based accountants and financial advisers McKinley Plowman, said now was the time for businesses to focus on preparing budgets and cashflow models with “best case”, “worst case” and “probably case” scenarios.
“Businesses should also be reviewing all costs, with a view of ‘trimming the fat’ that typically builds up in most businesses over many years,” he said.
“Focus should also be on tightening accounts receivable policies, processes and guarantees.
“I have concerns that businesses will fail when JobKeeper stops, leaving companies with bad debts. It’s sad to say, however, company liquidators are expecting to be busy.”
Mr Plowman said businesses should not neglect marketing activities, as “often it is a big wheel which takes a while to turn — so start now”.
BDO Perth business services partner, Danny Olsen, said accurate cashflow forecasting was one of the most important things to get right before JobKeeper goes.
“Many businesses have changed the way they operate over the past few months,” he said.
“Now is the time to look at which of those changes will remain in place, what other changes are needed, and what parts of the pre-COVID model can return.
“It won’t be as simple as returning to how things were pre-COVID. Businesses need to maintain separate plans which include the instance that virus cases rise again in the State.
“For example, if you need to close again, can your business withstand a period that may not include the level of government stimulus response that we have seen to date?”
Mr Olsen said now was the time for business owners to safeguard their business, with critical issues including “workforce planning, supply chain planning and financial diligence”.