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moreWhat the rising cost of living in Australia means to small business
How will the October Budget impact the growth of small businesses?
Treasurer Jim Chalmer’s first Budget in October left no-one in any doubt: Australia is now officially in fiscal repair mode.
The ATO kindly confirming the fact with recent warnings to small business against lodging excessive tax claims for home-based operations, or not declaring COVID payments as income. It was a clarion call to small business.
Get your finances in order because things are about to get a whole lot tougher.
Inflation is expected to rise to 7.75% by the end of 2022 and still be sitting at 5.75% by mid 2023. Couple this with projected lower economic growth, and that ouch we’ve all been feeling in our hip pockets lately, will continue as the cost of living continues to rise. Thankfully, the Budget wasn’t all doom and gloom for small business.
The Treasurer announced big financial cash incentives to help small business grow, adapt and get greener. Multi-million-dollar incentives energy efficiency, mental health support, workplace equality and respect initiatives, more childcare places, increased TAFE and vocational educational places and an accelerator program to encourage innovation within the start-up community were unveiled.
And then there were monetary pledges to improve small business mobile and broadband connectivity, relax overseas visa holder requirements and get more older workers back into the workforce. The biggie though for Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman, was the $15 million commitment for mental health support.
“For many small and family business owners, their identities are interwoven into their business and the stakes are so much higher than just a job. Many people have invested a lifetime, and in some cases their family home, into building up their business, which amplifies the emotional challenges.”
Take back control and act today
Of course, when it comes to mental health, financial stress and distress are major drivers. And sadly, as RSM’s Jerome Mohen, Restructuring and Recovery Partner puts it, no amount of ignoring your small business debt and worsening bottom-line is going to help, “The first step is to acknowledge your business is facing financial difficulty, even though the situation can feel out of control,” advises Jerome.
“No matter how out of control however, we can help you work through your financial challenges if you face up to them. Step one is to take back control and act today.”
Book in a free, confidential phone consultation with our experienced Restructuring and Recovery team on 1300 263 816 or start with the RSM Options Hub.
Thanks for reading our monthly e-news. We hope you found it insightful.
If our Restructuring and Recovery team can be of assistance, please don’t hesitate to pick up the phone or send us an email. Until next time, have a happy and healthy festive season and I look forward to reconnecting in 2023.
Best regards,
The Restructuring and Recovery team
Using your small business as a bank can be taxing
When business owners feel the pinch of unexpected expenses and price rises, it can be tempting to take money out of the business, or use its assets for private purposes. The result is often further financial distress.
We spoke to Jerome Mohen, RSM Restructuring and Recovery Partner based in Perth, about the often blurred line between business and personal expenses for SMEs and the potential for serious financial implications if there is not a clear definition between the two.
Collapse in construction businesses: what are the lessons?
With reports that at least 15 builders have collapsed since November last year, with more expected, businesses in other sectors are asking what can be learned.
The probability of default for the construction sector remains steady at 3.7%, with smaller operators most likely to be affected by late payments and reduced demand(Creditor Watch).
The contagion is likely to continue as businesses aligned with the property and construction industry are likely to feel the impacts of rising interest rates and falling demand. Supply chain issues affect every business, in one way or another: it’s important to build in safeguards.
Managing exposure to credit risk will be essential as supply chain disruption creates the risk that stakeholders will default. Businesses with fixed-price contracts, without the opportunity to pass on increasing costs, will need to take action.
Higher labour costs are problematic, as is inability to attract and retain staff. If you haven’t already, it’s a good time to consider employee retention.
The greatest lesson? Avoid a world of pain by reaching out for help. You have options.
Our local team is here to help explore the choices available, including restructures and mergers. Contact us today.