Talking Point: Only those with skin in the game know what it’s like to see your dream die

Small businesses in Tasmania need our help, writes SUE HICKEY

MAKEOVER: It must be time to review insolvency and bankruptcy laws to protect small business.

MANY people aspire to take up the challenge of owning their own business and be self-employed. However, I am positive they would be grateful they had not taken that leap this year.

Small business was my life for more than 30 years and I started my last business during the recession of the 1990s with money borrowed from my father. Like most small business people, I was buying myself a job. Only those who have ridden the highs and lows of business know what it is like to pace your floorboards at 3am, when your accountant and lawyer are asleep in their beds.

Only small business people know what it is like to mortgage your house for your dream and the opportunity to build a business, which may or may not employ others. Small businesses can be a micro business, employing the entrepreneur and maybe their partner. Usually small business is defined as an entity with fewer than 20 employees and a turnover less than $10 million.

In reality, most small businesses would be lucky to employ five to 10 staff and they have a turnover well under $2 million. Regardless of the size, it takes a certain type of person to manage the risk and the complexities of modern trade.

Small business is the biggest creator of jobs. It also creates wealth for those who succeed and sometimes jobs for their family members.

As a small-business owner, I never felt I was employing a single person, rather I was helping put food on the table of their whole family.

You usually spend more time with your employees than your own family. Letting go of good staff in tough times is the hardest thing you will ever do in your career. You would do anything to keep them employed but you risk bankruptcy, losing your child’s home and creating years of debt, let alone legal action, if you fail to act. You understand the part the person played in your success in the good times but they sometimes struggle to understand you cannot keep them in the bad times.

COVID-19 is a bad time. It has put the whole world on hold. It has been catastrophic for most small businesses and the stress on the owners is horrendous as they look at their empty restaurants, their empty tills and their potentially broken futures.

SNOWBALL EFFECT: Most small businesses rely heavily on cash flow. Once this is disrupted, the struggle is real.

Most small businesses are undercapitalised and rely heavily on cash flow. Once this is disrupted, the struggle is real. It also has a snowball effect, where one business cannot pay its suppliers and then they cannot pay theirs. This creates a recession, which increases unemployment and this stops the spending money merry-go-round. People then cannot pay their rent or feed their families and everyone suffers.

These are unprecedented times and it has been impressive to see both federal and state governments step up so fast with JobKeeper, JobSeeker and other stimuli, plus rental freezes.

Clearly, the alternative of no action would have seen the economy fall over the steep cliff. These actions have helped hibernate some small businesses, but for how long?

According to Small Business Australia, six Australian small business owners took their life in the first week of July. Recession, marital breakups and mental illness are a lethal cocktail, so avoiding household and business insolvencies for as long as possible can save lives and family legacies. People need to maintain their dignity and their connections, which are critical in a crisis.

Government action to date may have protected some from the reputational, financial and legal issues associated with possible bankruptcy. For this, I applaud governments. These are uncertain times and governments are pondering the sustainability of these programs.

It must be time to review Australian insolvency and bankruptcy laws to protect those who have failed for reasons beyond their control. I will be raising this issue with my federal counterparts and asking our Premier to do the same at the National Cabinet.

Small Business Australia is championing a COVID Business Closure option which could be simply implemented by the federal government. It would involve a fair and rapid finalisation of an existing business, where the owners and creditors share the financial pain, with the owner, when ready, in the future being able to get started in business again without legal and emotional costs of being made legally bankrupt. Another possibility is for the period of bankruptcy to be reduced in these circumstances to 12 months.

There is typically a stigma attached to business insolvency, but this is not a typical recession.

Some businesses have experienced growth, such as chemists, hardware stores, gardening, craft shops, supermarkets and corner stores, but many have simply had to shut their doors due to regulations. Others have found ways to innovate, such as changing their whisky distillery to hand sanitiser manufacturing or those who make acrylic safety counter screens. Many have found a digital presence or could do takeaway service to keep the till turning.

However, these are the lucky ones.

The Tasmanian government has just opened Round 2 of the Small Business Continuity Grant program. This is part of the $20 million COVID-19 Small Business Sustainability and Recovery Assistance Package. The Tasmanian government has invested more than $80 million in its Small Business Support and Stimulus Package, making it the largest in Tasmanian history.

I encourage all small business operators to apply for every grant they are eligible for and to seek free business advice from Enterprise Centres Tasmania. Please visit https://www.business.tas.gov.au/covid-19_business_support_packages

We can all play a role in supporting our small business sector and I encourage my fellow Tasmanians to buy local, shop local. You’ll be surprised what you might find. Visit https://buysomethingtasmanian.com.au/

Sue Hickey is a Liberal member for Clark and the Speaker of the Tasmanian House of Assembly.

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