New data on just how many businesses are struggling is grim. Very grim.
I think I would describe the current mood as ‘delusional’.
People are feeling brighter about the outlook. Covid concerns are easing and things are looking up. And it’s true, there are reasons to be optimistic.
But to a point.
And I think we got conditioned – we spent so long focusing on the worst case scenario that now we’re looking at the not-quite-the-worst-case scenario, it’s looking pretty good in comparison.
But it’s not looking pretty good. It’s looking awful. Yes, it’s looking better, but it’s still looking awful.
I mean, take a look at what’s happening to businesses around the country. Simon Reynolds, the founder of The Fortune Institute, says that we are, “heading for a small business disaster”:
“We are heading for a small business disaster”…
“The government has offered them temporary money, but that will run out fast.
“In biblical terms, the government is handing out fish, instead of teaching small business owners how to [catch] fish.”
Reynolds said what small businesses desperately needed was training on how to rebuild, or the government risks tens of thousands businesses biting the dust.
“Covid-19 will kill 1000 times more Australian businesses than it will kill people,” Reynolds said.
“We need more than JobKeeper. We need ‘Business Keeper’. We’ve got to have a program that teaches Aussie small business how to recover from the virus”…
I think this is probably right. This is a massive change to the business landscape. The game has changed. Most small businesses are just trying to keep on top of their cashflow.
They don’t have time to step back and assess the bigger picture. They don’t have the resources to strategize and reposition.
But that is what they’ll need to do.
But this is not just a small-business problem either. According to a special survey by the ABS, almost three-quarters of all businesses, including medium and large businesses, are dealing with major revenue disruptions.
COVID-19 has forced 70% of Australian businesses to change how they operate and 72% have suffered revenue declines…
By employment size, 71% of small businesses (i.e. 0-19 persons employed) reported that revenue had decreased as a result of COVID-19 compared with 78% of medium businesses (i.e. 20-199 persons employed) and 73% of large businesses (i.e. 200 or more persons employed)…
The largest proportions of businesses that reported operating under modified conditions were in the Information media and telecommunications (96%), Health care and social assistance (93%), Accommodation and food services (92%) and Education and training (91%) industries.
The survey also found that almost three quarters of businesses accessed support measures as a result of COVID-19. This included accessing wage subsidies (55%) and other government support measures (38%)…
That picture is grim af.
Three quarters of the economy is on some kind of government life-support.
Given we know you need to have seen major disruptions to your revenue to be eligible, we’re talking about three-quarters of the economy going through a life-threatening disruption to revenue.
They’ll survive… but perhaps only as long as the money is flowing.
At some point we’ll have to face up to the challenge of getting three quarters of the economy off government life support.
That’s not going to be easy and its certainly not going to be painless.
And so yes, things are looking better. We’ve avoided the worst-case scenario.
But let’s not kid ourselves either.
There’s a long road ahead.