Ross Greenwood answers NSW lockdown small business questions

Business expert Ross Greenwood answers small business questions on dealing with lockdown.

Business expert Ross Greenwood answers small business questions on dealing with lockdown.

Q: Should I hold on to my business or invest my money elsewhere?

A: This is the hardest question of all … and for many business owners, it is an emotional and a financial decision.

After all the hard work, all the money you have invested, to simply walk away can be harrowing.

The biggest question is whether it’s worth hanging on.

Is survival better or worse, emotionally and financially, that the indignity of shutting up shop?

If you do survive, are you going to see a bounce-back?

If you’re struggling with these questions, it’s time to have a frank talk with your accountant or a business restructuring or insolvency expert.

Q: Will we ever be able to recover and get back to normal business? If so, when could it happen?

A: The answer here depends on what business you’re in. Many businesses, before this latest lockdown, had improved their position compared with the pre-Covid times.

One big problem this time is that if you close down temporarily — to save costs — then it might be harder to find staff.

Without JobKeeper to support staff and business, it will be much harder to retain staff.

But Australia has shown that, for most, recovery from lockdowns is swift.

Australians have been happy to travel within our borders and to increase their consumption.

And recovery is almost always as close as the borders reopening.

Q: How can I protect my business?

A: One of the big fights raging in our courts at the moment is about Business Interruption insurance.

This form of insurance is supposed to protect you if you have to unexpectedly close.

But here in Australia, in the UK and the US, test cases are rumbling through the courts trying to test whether insurers are obligated to pay claims in times of a pandemic.

A couple of weeks ago, our High Court refused leave to appeal a decision of the NSW Court of Appeal.

The NSW Court of Appeal held that insurers were obligated to pay out on their own fine print.

In this case, a change from the Quarantine Act to the Biosecurity Act a few years ago was not picked up in the fine print of the insurers.

The Court of Appeal ruled in favour of small businesses who tried to claim from insurers who had not updated their paper work.

It is suggested there are almost 250,000 policies and up to $10 billion worth of claims in the pipeline.

That said, all insurers will no doubt exclude the impact of pandemics in future policies.

Q: Ease of access is a stumbling point for small business when it comes to state government support/access. Is there any pathway to streamline or make it easier for small businesses with few employees to access government support schemes?

A: In actual fact, Service NSW’s site and support has been nothing short of excellent.

Though it might not be enough to save every business, there are schemes for the hospitality and catering industry, for the taxi industry, for independent brewers, for those in certain areas (the Northern Beaches and Southern border region among them), for exporters and for others.

Grants of between $5000 and $10,000 can be applied for … along with relief from government charges and utilities, including payroll tax.

There is also a Business Concierge service established by the government to help with business inquiries.

You can find them at https://mybusiness.service.nsw.gov.au/concierge or call them Monday to Friday on 13 77 88.

Just on those grants: there are three different amounts $10,000 if your business has suffered a 70% drop in turnover because of the lockdowns; $7000 for a 50% drop and $5000 for a 20% drop.
There has also been an extension of the Dine and Discover program.

Q: Can small businesses apply for a rent reduction or any form of rent support?

A: You can as, but whether you get anything will depend on the landlord … and the depth of their generosity and their pockets.

The NSW Business Chamber has exhorted big landlords, especially in shopping centres, to cut deals with their tenants to keep them alive.

Q: Can small businesses which pay sole trader tax access any form of relief?

A: Yes … but there is a bit of a proviso here.

While the government grants of up to $100,000 do apply to companies and sole traders alike … the business needs to have traded for more than 12 months … and to have a turnover of $75,000 a year or more to qualify.

In other words; if your sole trader business had an annual turnover last year of $74,000 … then no support for you.

That said, you can still apply for $1500 from the Small Business Fees and Charges Rebate scheme.

* The advice is general in nature and individuals should always get their own advice.

* Ross Greenwood hosts Business Weekend on Sky News at 1pm this Sunday July 11 and on Sundays at 11am from July 18, the program is dedicated to business news, finance issues and the property market.