This year has seen extraordinary challenges for business. In March, Australia faced the COVID-19 crisis collectively – with every state and territory implementing similar restrictions on business and the movement of people. The effectiveness of these restrictions has varied from state to state, resulting in very different stages of economic recovery across the nation.
Clearly, Melbourne’s economy is performing poorly under Stage 4 restrictions, while other local economies around Australia are performing relatively well. Member feedback indicates the Western Australian economy is performing well, as is the Northern Territory and parts of Queensland.
But now is not the time to be complacent, even for businesses that are performing well. Melbourne’s current business restrictions may impact access to key supplies throughout Australia. Consumer spending and business investment remains fragile and may decline after government support measures are withdrawn.
The Melbourne experience also shows that second and third waves of COVID-19 should be expected and businesses should have plans in place.
There is no one-size fits all approach to how businesses should respond to rapidly changing circumstances and the emergence of new risks. Businesses will be best placed to navigate the road ahead by taking the time to plan, remaining agile and flexible to evolving circumstances, and by accessing professional advice.
CPA Australia has been listening to, and working with, our members to develop resources to guide businesses in how to respond to the challenges of COVID-19 and update these resources regularly. Our toolkit has a range of resources to help small business respond, and develop plans to adapt to shifting conditions. Our members can share these resources with their clients, work through them together or adapt them for their clients’ use.
These resources are designed to assist businesses at each stage of their response to COVID-19 – from the initial shock, including the forced closure of many Melbourne businesses on 5 August, through to responding to their changed circumstances, recovering from closures and declines in revenue, and re-inventing and re-imagining what their business will look like after the crisis is over.
CPA Australia’s Roadmap to Recovery is another resource to help businesses as they navigate the current and future challenges . The roadmap acknowledges that recovery is not a linear process and that businesses have options and opportunities along the way to choose the path that is right for them.
A central principle of the roadmap is to encourage businesses to constantly re-evaluate. Re-evaluating and reflecting on how the business is performing will help small business owners determine the direction they want to head, identify new opportunities, re-imagine their businesses or choose a different path altogether.
If business could do one thing better at this time it would be to constantly monitor their cash flow. Cash flow is a key determinant of financial health and will influence how businesses can respond, recover and re-imagine.
If cash flow forecasting shows a business is in financial distress, then it is essential that they seek professional advice early. The longer a business waits to seek advice, the range of exit options available shrinks, to the point where there can be significant long-term ramifications for the business owner.
For some small business owners whose business is in distress, exiting the business may be their best option. Some may feel that this is an admission of failure – it is not; far from it, especially at a time of such deep economic shocks. Exiting the business gives business owners the opportunity to explore new opportunities and reflect on the lessons learned for future business ventures.
Accountants also play critical roles in helping businesses access government support to assist them through this current difficult period. While most of the attention is on JobKeeper, the federal, state and territory governments have rolled out a series of other stimulus measures to support business and save jobs. Accountants are well placed to assist small business access these measures.
Dr Gary Pflugrath, CPA Australia Executive General Manager of Policy and Advocacy said CPA Australia, along with other tax and accounting bodies, has been calling for government support to help businesses afford critical professional advice during this time. “Businesses need to access professional advice to help them make the best decisions for the future of their business, themselves and their staff. With many businesses remaining in distress, government can encourage them to access that much needed advice through funding a business advice voucher.”
It is also important that accountants consider the mental health of their clients and their own health and wellbeing. CPA Australia has developed a mental health toolkit to help accountants and their clients through these challenging times and to help build resilience.
While there is still much uncertainty, it is vital to remain connected with others and focus on the road to recovery.