Rolling Lockdowns, Uncertain future for businesses, the Advisers and What it Means for your client’s

The world has changed – Australians are locked down and facing challenging restrictions. What that means is that businesses (your clients) could be severely impacted.

The world has changed – Australians are locked down and facing challenging restrictions. What that means is that businesses (your clients) could be severely impacted. Whilst there have been some new support packages, the amounts provided are not enough for businesses to survive extended lockdowns.

​ So how does a business manage to avoid liquidation and yet survive through this unpredictable environment? ​ The changes we are seeing are:

  • business owners relying on their accountants and/or advisers
  • significant growth in the use of technology to run businesses
  • product or service evolution occurring as a result of changing customer behaviour

The strong businesses are either surviving because they have either been fortunate enough to sell products or services which consumers are demanding through lockdowns or are successfully evolving their businesses to generate revenue and/or manage costs. Online sales for retail, remote access for office workers and financial services through the use of tech savvy apps, are just a few examples of what we as an economy have witnessed in the successful businesses that are adapting. ​

Adviser Support

As advisers, your clients will turn to you for support. It is important that you continue to provide the essential businesses services – assisting businesses with their applications for government incentives, for grants and for refinancing. But you can provide even more support, through taking a more active role in your client’s business affairs. Here are some strategies that we have found useful:

  • Make sure they have a realistic strategic plan in place.
  • Ensure that their strategic plan has been adapted to the changing economic conditions.
  • Challenge them on their product and service offering – is the revenue being maintained or is it declining?
  • Ensure legal and accounting agreements are in place to properly protect and manage the business;
  • Weed out those unprofitable parts of the business and act on them now;
  • IT systems – are they still relevant – what is missing – where do I need an upgrade to meet current customer expectations;
  • Workplace – has it evolved into a hybrid – is working from home on a more permanent basis really the most effective way forward – is it an expense saver, for the safety and health of your staff and for the culture of the business.

What are the options if my client’s business is in financial distress.

We recommend that business owners in financial distress always consult their accountant or adviser and also seek the involvement of a restructuring practitioner to understand the available insolvency and restructuring options. ​ The earlier the advisers engage with their clients, the greater the likelihood the business can survive. ​ There have been many experiences whereby, as a restructuring and insolvency practitioner, the proactive accountants have reached out to me to hold a discussion with their business clients. More often than not, if they act early, there is a solution that will avoid the need to restructure. What is usually required is a commercial resolution of some form – but understanding the restructuring options can often lead a business owner to undertake those commercial solutions with vigour knowing if they do not, then the insolvency options become more real. ​ However, there will be circumstances that a restructure, distressed sale, distressed private equity, safe harbour, or even an insolvency are necessary. And now with the introduction of the small business restructure for businesses with less than a $1m in liabilities, the options available to business operators is broad. ​

Advisers should ask themselves, what can I do to help and protect my business clients from the unpredictable economy we now operate in. For a fresh perspective – we are available to help identify those solutions.

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