Small businesses are generally seen as the engine room for growth, but they’re also the engine room for jobs.
Small businesses are generally seen as the engine room for growth, but they’re also the engine room for jobs.
In Western Australia, small businesses employ more than 500,000 workers and play an important role in supplying and serving customers across the state’s regions and cities.
So how have small business owners been affected by COVID19, and how are they positioned for recovery as the state’s economy transitions through the pandemic?
Early findings from a new survey of small businesses conducted this month by the Bankwest Curtin Economics Centre reveal some important insights.
According to the survey, employment among small business owners has remained remarkably stable during the COVID-19 pandemic, with as many businesses increasing jobs as decreasing employment over the course of the crisis to date.
And small business owners report that JobKeeper has been the most important single measure supporting them through the worst impacts of the COVID19 pandemic.
Nearly half of small business owners have accessed the JobKeeper wage subsidy, or intend to access the payment in the future, and four in 10 small businesses regard JobKeeper as one of the measures that helped their business the most during the COVID-19 crisis.
The wage subsidy has been especially important to businesses in those sectors that have suffered the most extreme impacts from the COVID-19 pandemic.
Among respondents to the survey, nearly 60 per cent of businesses in the accommodation and food sector, more than half in real estate, and nearly half in construction flagged JobKeeper as having provided the greatest support during COVID-19.
The Australian Taxation Office’s business tax concessions have also proved valuable to businesses during the crisis.
Small business owners almost invariably feel they have a relatively good understanding of the skills necessary to operate their businesses, and to create and implement a business plan.
However, more than a third are uncertain about the availability of government funding and support, but this has decreased from around 70 per cent in 2017, suggesting that businesses are far more engaged with government agencies than ever before.
And how do small business owners view the future, as WA continues to make up the ground lost during the pandemic?
On the optimistic side, more than a quarter of small business owners expect to employ additional workers over the next six months, with only 2 per cent anticipating lower employment.
However, this optimism is tempered by a degree of nervousness as existing government supports are withdrawn, and as deferred tax and loan payments become due.
There is a general acceptance among business owners that JobKeeper payments won’t extend beyond March of next year.
Asked what they expect will happen when these supports are withdrawn, most businesses anticipate that they will have to manage their cash flows carefully, control expenses, and lean into the journey towards a slow economic recovery.
But as small businesses face up to these challenges, there remains a real problem with larger businesses honouring payment terms.
Around a third of small businesses have to manage late payments from the big end of town, with up to 30 per cent facing delays of more than 30 days.
This behaviour adds unnecessarily to the financial challenges and personal stresses faced by small business owners.
We need not just a commitment but demonstrated action by larger companies to support small businesses as they navigate the recovery.
Professor Alan Duncan is Director of the Bankwest Curtin Economics Centre
