In Australia, 2019/20 was characterised as a year of flat/little growth, tight margins, and a long drought followed by the worst bushfire season in Australia’s history.
The arrival of the COVID-19 virus in 2020 has been followed by significant (and necessary) public health measures to reduce or eliminate the transmission and effect of the virus on the general population. In Australia, hospitality, tourism and retail have been largely shut-down, while many other industries and businesses have been negatively impacted by reduced traffic and sales activity. The initial impact in NZ was even more significant, with all businesses except essential services being locked-down.
The impact of the necessary measures to contain or control COVID-19 placed further negative pressure on a business sector that was already struggling to survive.
In early responses to the pandemic, many businesses in both Australia and NZ found that their activity/revenue had dropped significantly and they could not continue without major cost/operating reductions. They were forced to either stand-down or terminate many of their employees. Most employees who were initially stood down registered for unemployment benefits. The employer/employee subsidy programs like Job Keeper implemented in both Australia and New Zealand, then attempted to reduce the frequency and number of people joining the unemployment ranks, which had been trending towards the international average of 15% (from less than 6%). Present forecasts now suggest that by December 2020 Australia may have up to 1.2 million unemployed, an unemployment rate of 10% (at least 5% lower than other industrialised countries) and business activity may have contracted by up to 20%. Business confidence in Australia is forecast to remain negative until at least July 2021.
In the meantime, NZ and Australian governments have rolled out a number of stimulus packages to attempt to keep businesses in business. As these incentives are withdrawn, business owners will be finalising their thinking on:
whether they re-start,
when they re-start,
how to reposition their business for sustainability and then growth,
who needs to be part of the team as they rebuild the business, and
how to ensure their cashflow supports their start-up plans, without emptying the bank.
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