Many Australian small business owners are entering into a recovery mode, grappling with the economic fallout of the COVID-19 crisis and preparing to forge ahead - but 2022 continues to look uncertain for some.
This month Jonathon Colbran FCA, RSM Partner Restructuring and Recovery, shares his predictions for 2022 and why he believes small business owners and company directors should have a Plan A and a Plan B in place.
Jonathon recently expanded his remit and is now delivering corporate and personal insolvency services in Canberra and in Melbourne.
UNDERSTAND YOUR OPTIONS: Have a Plan A and Plan B
“It makes good sense to play out potential scenarios with financial experts who are informed, respect your confidentiality - and who can take a helicopter view of the situation. Taking a proactive approach tends to provide peace of mind too - because no matter what happens to people that we work with, they have a plan,” Jonathon said.
“I am presently assisting a Board of Directors who are managing a business in the food and beverage sector in Melbourne, to better understand all their options for dealing with financial distress. For now, the Board are focused on restructuring their business and re-negotiating repayment terms with their landlord and the ATO. Their Plan A is to continue in business in 2022 with a limited working capital injection, under new contracts and financial arrangements and a myriad of informal repayment arrangements with creditors. They understand there is some risk involved in this approach, as it relies on others' agreement and the uncertainties in the current economic climate continue to be a daily reality for them.
Thankfully this Board is proactive and they recognise that their Plan A might not work, so they’re exploring all their options. We have been retained by this Board to prepare a confidential options report. This Options Report sets out the pros and cons of Plan A and also maps out a number of different options that are available to the Board as their Plan B strategy should things not play-out as they hope in the Plan A scenario,” explained Jonathon. Find out about our personalised Options Report
IT'S FAR FROM OVER: Business Risk Index
In October 2021 Melbourne surpassed Buenos Aires' world record for time spent in COVID-19 lockdown. Lockdowns may be largely coming to an end in Australia, but the extent of the economic fallout is only just starting to fully reveal itself.
CreditorWatch released a Business Risk Index, covering more than 300 regions around the country - acting as a barometer of the nation’s economic health. The October index ranked payment arrears by industry, the results were:
- Construction: 12.6%
- Food and beverage services: 11.1%
- Transport, postal and warehousing: 10.7%