New research has indicated 2020 will likely be the “worst year for businesses on record” in Australia, as just 15% of business owners report they have made more profit than last year while 50% suffered a year on year decline.
The findings come from a survey of an independent panel of 258 Australian business owners with employees whose businesses are still in operation, commissioned by online financial information platform Money.com.au.
The research also found 55% of businesses have made serious cuts to their expenses; of this figure, 44% let employees and contractors go – despite JobKeeper being made available to hold onto staff on payroll – 24% made cuts to their own salaries, and 24% froze salaries and did not pay bonuses across their organisation.
However, most businesses held onto their leased premises, despite rent being a significant ongoing expense and generally accounting for up to 20% of operating costs. Just 17% of business owners cut rent expenses this year, by either moving out or negotiating on the lease price.
Notably, the data also showed that, despite the fall in profits and cost cutting, 57% of businesses did not work towards increasing their business income this year.
“It is concerning that half of the businesses still in operation seem to be in survival mode – even while they made major cuts to their operational expenses. It is also concerning that this year has been so unpredictable that more than half of businesses did not bother to regain or grow their income,” said Money.com.au spokesperson Helen Baker.
“A proportion of businesses might have felt adequately supported by the government’s cash flow boost, JobKeeper, instant asset write off and the SME Guarantee Scheme and made the decision to keep their business growth stagnant until the end of the pandemic.”
According to Baker, the lack of proactive growth could also be attributable to fears of fresh lockdowns, a motivation to remain eligible for JobKeeper, or a difficulty in finding new hires.
“Business owners may have found it difficult to find new people, based on community fears of contracting COVID-19 in the workplace,” she said.
“Remote working arrangements have also brought new challenges, particularly when it comes to hiring staff. The culture around working from home is not always conducive to business growth and can prove difficult to onboard and train new employees remotely.”
