Small business bounce back vital to Illawarra’s economic recovery

While Covid-19 lockdown restrictions have eased, allowing many small businesses to re-open, Accounting Professional Director of Business Services Garry Pinch believes innovative thinking by small business operators and further government assistance will be necessary to avoid small business failure and damage to the local economy.

“With 7 out 10 people in the Illawarra employed by small business, ongoing support for the sector is vital to the Illawarra’s economic recovery,” Mr Pinch said.

“Many would have closed their doors for good and unemployment would have been significantly higher without government assistance packages. JobKeeper, Cash Boost, and the NSW Government Grants have saved many businesses and jobs.”

Even with Government assistance he says business owners are still borrowing, drawing on reserves, and running up debt to keep businesses open and jobs available.

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“I estimate small businesses are losing between $5,000 to $30,000 per month, even after government assistance.

“Even when a business is closed and in hibernation, they still have loan payments, rent, and overheads to pay. For a small business, this can amount to $5,000 per month borrowed against housing loans.”

Government stimulus important

Over half of Accounting Professionals 350 Small business clients are receiving JobKeeper with the Shellharbour-based firm lodging JobKeeper claims for almost 1,000 employees.

Mr Pinch predicts many of these JobKeeper jobs will be lost if the scheme ends in September without any other stimulus measures.

“Without government assistance packages at least 30 percent of these JobKeeper recipients’ jobs could be in jeopardy.

“Just in our client base alone, that would amount to a further 330 unemployed and on JobSeeker,” he said.

Time to pivot

Many of the firms’ SME business owners are being very entrepreneurial, changing their business models and investing more in their business, to meet the ever-changing demands of their customers, while also balancing the needs of employees, suppliers, and other stakeholders.

“Certainly, for most small businesses the next 12 months will be very challenging and require all the amazing skills small business owners have displayed so far.”

“Depending on how the economy recovers it is still hard to imagine some small businesses surviving without further government assistance.