Garry Pinch is the founder and business services director at Accounting Professionals. He says despite the global pandemic many businesses have generally remained strong.
“There is high demand in certain industries where goods and services are in demand due to lock down.
“Meanwhile, businesses forced to close during lock down are bunkering down and preparing for a strong recovery.”Garry Pinch
For those businesses that have prepared well there is reason for cautious optimism for the remainder of 2021 and beyond.
Here’s Garry’s snapshot of the impact on business across the key strategic areas for business including some of the tactics used by the most successful businesses to survive and, in some cases, thrive.
Employment and wages
- Businesses in lock down have put many of their employees on stand down. Many of these employees are receiving the Covid-19 Disaster Payment to supplement part time work.
- Businesses trading strongly due to lock down are generally not recruiting with the expectation the surge in demand is not a long-term trend.
- Generally, there has been no significant changes in overhead costs, and some businesses are receiving commercial landlord rental assistance.
- Where product and material supplies are short, prices are climbing. For example, building materials and in particular timber prices are escalating 40% plus.
- Many businesses are implementing strategies to avoid, offset or pass on price increases
- In businesses that are closed due to lock down, sales have stopped so prices are not being discounted. Through a combination of government assistance and business resilience, the business has gone into hibernation and ready to wake when lockdowns end.
Investment and financing conditions
- With interest rates remaining low, business and individuals are still looking for opportunities to borrow and invest.
- Asset prices continue to climb – Property (Commercial & Residential), Shares (ASX & offshore), Business assets (new & second hand), Personal use assets (the toys – new & second hand)
- The Federal & State Government messages to support business and the focus on employment growth, sets a strong scene for business recovery
- NSW Government message that NSW will open at 70% vaccination (18th October) and open to international flights at 80% (mid-November 2021) provides the confidence for business to start planning to gear up leading into a Xmas/New year resurgence.
- COVID assistance in 2021 is not as generous as in 2020 but AP’s business clients have become more resilient, more strategic, more innovative and there is confidence the vast majority will survive 2021. With recent announcements of re-opening by the NSW Premier, 2022 is looking very positive.
Innovation, Pivots & Business resilience
- Strategic pivots should have a focus on long term sustainability
- Short term pivots can be a costly waste of resources.
- Technology pivots have added new revenue streams to traditional revenue streams, which are anticipated to return after lockdown is over
Business experiences over the past year and what is expected for the year ahead
- Commitment from business owners to do the right thing by their employees, customers, and community – obey lockdown orders, commit to Service NSW guidance & regulations
- Plan to be in the best place when business returns to normal – pivot where possible, seek out assistance where available, use technology to remain connected
- Maintain a positive mindset about the future
- Ongoing support during lockdown
- React quickly as opportunities arise
- Continue to support and connect with core business and regular customers
Impact of lockdowns on businesses at different lifecycle stages
- New business start-ups have slowed but are expected to recover very quickly with some employees not returning to full time work but using the lockdown to start new business planning
- Some new businesses and new business channels being born out of lock down.
- For some businesses COVID has been a bonanza, sales are higher, margins are higher and profits greater i.e., emergency trades, nurseries, home improvements, online retailers.
- Some businesses have been negatively impacted by COVID – entertainment, cafes/restaurants, gyms, etc.
- Most businesses negatively impacted by COVID have mitigated their loses through managing costs and accessing govt assistance.
- Some businesses have grown substantially during lock down, generally because their goods and/or services are in demand due to lockdown i.e., online retailers, others have pivoted to take advantage of trends i.e. click & collect, online takeaway & delivery.
Retirement & Succession
- Significant increase in activity in sale, mergers & acquisitions due to:
- Low interest rates are driving up asset prices
- Increase equity in home ownership has created borrowing capacity
- Baby boomers retiring from business ownership
At Accounting Professionals, we’re experienced in working with clients at all stages of the business life cycle.
We can offer you expert advice, analysis, and guidance to help you to make the right decisions for yourself and for your business at every stage.
Contact us today to find out more about how we can help you to make the right calls.