Despite signs that the economy is picking up, Australia’s small businesses are running on empty, with half saying they will run out of cash reserves by December, according to new data from Allianz.
Nonetheless, the research found Australia’s small business owners are a resilient bunch, with more than eight in ten business owners admitting they had faced challenges as a result of COVID-19, while two-thirds said they had adapted their business model in response to the virus.
In fact, one in five (20 per cent) have altered operations entirely, ranging from adding new delivery services to creating unique discounts for pensioners and those unemployed; and even providing materials that Australians can make their own soap and sanitation products from. Others have invested in digital operations (18 per cent) leading to improvements in web, social media and e-commerce, making it easier to help more Australians support small businesses in new ways.
Still, 84 per cent of Australian small businesses, the largest proportion of businesses in Australia, have faced financial, operational and emotional challenges as a result of the pandemic. Concerningly, half (51 per cent) of small businesses believe without support their cash reserves will only sustain them until December (the equivalent of 1,161,000 businesses) and almost two-thirds (62 per cent) doubt the long-term viability of their business.
In response, two-thirds (66 per cent) of small businesses have adapted their business most commonly by utilising cash reserves to maintain minimal business operations until revenue increases (22 per cent), reducing staff hours (22 per cent), or enabling remote working for employees (19 per cent).
Nick Adams, Allianz Australia Chief Market Manager said Australian businesses have exhibited great ingenuity to stay afloat in these challenging times.
“We recognise and applaud the entrepreneurial spirt of small businesses and how they have both adapted and ‘been there’ for Australians during this time; now we want to be there to help small businesses in their recovery.”
But it isn’t just the agility and resilience of Aussie small businesses that has been both inspiring and admirable, reassurance about the future of Aussie owned and loved small businesses comes from Aussies themselves. In fact, 78 per cent of those polled showed greater motivation to support local small businesses over larger companies in the wake of COVID-19.
While the majority of Australians acknowledge how vital small businesses are for the economy (68 per cent), support for local business isn’t just about the products and services they buy, it’s about supporting the community. 65 per cent of people want to spend with Australian businesses, especially those close to their homes (63 per cent), but the biggest motivation for shopping with small businesses was supporting the staff from their neighbourhood that are employed locally (70 per cent).
“Nearly half of Australian small businesses have experienced reduced revenue due to COVID-19 and a further one in five are not earning any income currently. These businesses carry great economic value, but also incredible practical and emotional value to the communities in which they are located across the nation. We all play an important part in helping them get back on their feet. That means revisiting, spending and shouting about the businesses we know and love,” Adams concluded.
This post was written by Cec Busby for Kochie’s Business Builders and is republished here with permission.