Start Planning For a World After JobKeeper
Everywhere I turn, people are speculating about what’s going to happen with JobKeeper. Will be it extended? Won’t it? Will it continue in a modified form? Or will it be extended for severely effected industries?
The answer is, who the hell knows! The government don’t even know. They’re almost taking a watch and act approach. Depending on how things progress with the virus and economy over the next month will determine their course of action. That however provides little comfort for business owners, who are in this strange holding pattern, where the lack of visibility around what the future brings, means they have no idea how to plan for what’s coming next.
All we know for certain is that JobKeeper is ending in September. So we have two options, 1. Is to be sitting ducks and wait for Scomo to bail us out or 2. Actively plan for the end of JobKeeper. Given the early termination of JobKeeper for Childcare workers announced a couple of weeks ago (aka, they had the rug pulled from under them), we wouldn’t recommend going with option 1.
But then, how the hell do you plan for an end to JobKeeper, when we don’t even know what the world is going to look like in September? Will restrictions be lifted? Will your business be able to operate? Will sales be on the rise? Anyone got a crystal ball?
The best advice we can offer is to plan for multiple scenarios. Examples could be as follows:
Scenario 1 - Restrictions tighten and trade is restricted
Scenario 2 - Current restrictions on mass gatherings remain in place and your sales remain at current levels
Scenario 3 - Sales increase but are still down on pre Covid levels.
Scenario 4 - Restrictions are eased and sales are back at pre Covid levels
Then, for each of your identified scenarios put together some financial models aka an example Profit and Loss and Cash Flow Forecast based on different sales levels. Eg, if sales are xxx, applying your current gross margin and operating expenses, what does your profit look like? If your sales are lower what happens? If sales are higher, how do things look?
Next step is to do a bit of a deep dive into each scenario and assess what actions need to be taken to improve profitability and make the business viable. Here are examples of questions you can ask yourself:
Are you profitable? Breaking even? Making a loss? If it’s the latter what needs to change in your business to stay afloat?
Can you improve your margins? Renegotiate freight costs, fine alternate suppliers, use different materials?
Can you reduce overheads? Renegotiate contracts, downsize premises/sublet under utilised space, review discretionary spending.
Can you afford your current workforce without JobKeeper? Are they fully utilised? Do you need more or less staff to continue operating?
Where can you improve efficiencies?
Can you increase flexibility in your cost structures? Reduce the number of long terms contracts, use temporary labour ect
Ok, if you saw this list of questions and started to freak out, don’t. Break it down into small parts. One day for example focus on your margins, another day, look at your fixed costs/overheads ect.
If all else fails hit us up. This is our jam. We can help you work through the various scenarios and plan for the unplannable.
Doing something is better than sitting around and waiting for the government to take action.