As I sit down to write this article, another city has again gone into lockdown due to COVID. A reminder of how quickly trading conditions can change despite the best-laid plans.
There’s no time like the present to make sure you’re prepared for the looming end to JobKeeper payments on 28 March 2021.
Here are a few practical steps you can get started on today, so you don’t end up with frayed nerves and a big hole in your bank account. These can apply to any small to medium enterprise (SME) and hospitality businesses.
Review your rostering
With fresh eyes, have a good look at your staffing levels versus current trade. You’ll be scrutinising your rosters and payroll. Ask yourself, are we understaffed or overstaffed at particular times of the day? Do we need to reconsider the way we’re rostering?
Once you have the answers you can re-set your rosters to match what’s happening in the business now, as opposed to weeks or months ago. It’s possible you’ll make only minor changes but those small gains will add up.
Consider this a necessary re-alignment. And do it ASAP so you’re well prepared for the end of those wage subsidies.
Certainly, JobKeeper wasn’t a perfect system. Many business owners initially struggled with the need to pay employees well before they received the reimbursements.
But once the dust settled, there’s no doubt those reliable monthly payments brought at least some ‘cashflow comfort’ to help SMEs ride the COVID rollercoaster.
Forecast your cashflow
This is the ideal time to do a cashflow forecast. This is a relatively simple exercise, which many business owners already do on a regular basis with their adviser or accountant for peace of mind.
A cashflow forecast is necessary to understand exactly how much money is coming in to your business, and how much is going out. You’ll know where you sit in terms of deficit or surplus from month to month.
With this information you can prepare for any scenario. Your business won’t be vulnerable to a crippling cashflow crisis because you were vague about the details of your true financial position.
As we’ve been pointing out since the start of the pandemic, choosing to ‘consciously control’ your cashflow like never before is the key to your business surviving whatever twists and turns the pandemic still has up its sleeve.
Having a budget is vital
Don’t feel like you’re alone if you’ve never had a proper budget for your business. But the end of JobKeeper is the perfect time to prepare a budget — and waste no time putting it into place.
Think of this as an opportunity to target the sales figures you want to achieve, as well as understanding your financial position at any given point in time. Another boost for your peace of mind.
The pandemic has certainly opened some people’s eyes as to the importance of keeping on top of bookwork (including Business Activity Statements and ATO lodgements) simply because that was necessary evidence to qualify for the emergency subsidies.
The federal government has made it clear there’ll be no extension to JobKeeper for now, but realistically we don’t know what’s around the corner. Having a budget and up-to-date books is a smart move, just in case.
Don’t forget to check your eligibility for other support programs
Sometimes it can be easy to overlook the obvious. Have you checked whether your business is eligible for any other schemes such as JobMaker hiring credit or additional support for apprentices and trainees? Talk to your accountant or adviser and make sure you’re not missing out on something small but significant that will help fill the hole left by JobKeeper.
Finally, remember you will pay tax on JobKeeper payments
That’s right, the subsidies will stop but the tax implications won’t. JobKeeper is assessable income so you’ll need to plan for the tax hit, in particular if your business has recovered well financially. Make sure you’re undertaking tax planning and implementing strategies well before 30 June 2021. This is something your adviser can assist with.
For the record, our team of leading accountants and advisers at DFK Crosbie have observed a lot more confidence among business owners so far this year, particularly in the Hunter. It feels good to report some positive news as we all step tentatively towards the end of JobKeeper and the third quarter of 2021.
By Greg Logue, Business Adviser at DFK Crosbie