What does a ‘new normal’ look like for small businesses?

From bushfires and floods to the ongoing economic and social impacts of COVID-19, 2020 has demanded Australian businesses become more resilient than ever.

For some that’s proved extremely difficult, others have managed to adapt their businesses to meet the challenges.

Unfortunately, the pressures Australian businesses and households are currently facing won’t ease anytime soon. The passage to a ’new normal’ will be a challenge for many businesses, regardless of size and industry.

In today’s podcast I speak with Isaac Rankin, Managing Director of Commercial Banking here at ANZ. Isaac has a long history in banking, both at ANZ and internationally and - like me - recalls the lessons learned from the Global Financial Crisis (GFC).

“It's been a long time in Australia since we've had prolonged downturn or a recession here,” Isaac says. “Even in [the] GFC the recovery was quicker than people expected. We didn't actually go into recession technically and normally recession follows boom conditions. So, this is a bit different.”

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Go with the cash flow

Right now, businesses have support from government and banks. Initiatives like JobKeeper assist businesses to keep staff employed and ready to work once restrictions ease. Banks across the board have also offered business loan and mortgage deferrals, allowing businesses or home owners to defer payments for up to six months.

“This really kept cash in the pockets of businesses but took some of that pressure away. If you're not paying the staff, if you're able to reduce and defer some rent… that's given people time to respond,” Isaac says. “It doesn't fix the fundamentals but it just keeps cash in your pocket and pushes it out later.”

Since the original support package was announced in March 2020, ANZ has provided repayment deferrals on more than 100,000 home, personal, small business and commercial accounts.

ANZ has already begun the process of working with each of its impacted customers to assess their ability to begin repaying their loans.

For customers that continue to face financial hardship due to COVID-19, ANZ will work with them to restructure their loans and in some circumstances will provide an extension to loan repayment deferrals of up to four months.

Customers on existing loan repayment deferrals who have not been financially impacted by COVID-19 will be required to begin making normal repayments at the conclusion of their six-month deferral agreement.

Customers who are yet to apply for loan repayment deferrals are still able to access the original support package.

You can find out more about the decision behind the deferral here.

Playing to your strengths

The current situation does provide businesses and industries with an opportunity to make changes they otherwise might not have had the chance to make. A few weeks ago when I spoke with Shane Delia, a prominent Melbourne chef and restaurateur, he had some interesting insights for where the hospitality industry was and where it needed to get to, and he’s helping to make changes not only for his business, but others too.

Just like Shane has thought about his business, every business owner has the chance to reflect on where their business is positioned right now and where they could be. Some businesses are currently in a good position and their products are facing increased demand. Others are going to have to make changes to better service customer needs, which might be in different ways to what they've done in the past.

In the podcast, Isaac spoke about businesses who’ve successfully adapted. “We've seen businesses who have pivoted their business by saying ‘We manufacture garments, we now can do some PPE [Personal Protective Equipment],’” he says. “That looks initially like a very short term play, but more local content might be required on an ongoing basis.”

“We're seeing some of that with particular markets or supply lines which had just stalled and now they're thinking about how they would change that to make the business more robust. But it's actually opened up some new ideas about products which are adjacent to what they do now that can provide more diversity.”

Planning for the future

Now is the best time for business leaders to have conversations and see what opportunities or potential setbacks may be headed their way.

“Get advice, from your accountants or from your financial advisor - whoever you take financial advice from - sit down with them and get really on top of the numbers,” Isaac says. “Certainly speak to the bank about your liquidity requirements, what the bank can do. Get things sorted before the urgency to extend the deferrals in place.”

Talking to advisors and your bank isn’t the only important conversation. In the last month I’ve spoken to many business leaders and experts and they all agree it’s imperative we communicate with our teams and ensure they feel supported.

Isaac agrees: “It's really important that people are looking after their teams and looking after themselves and their families. It's not only physical health, but mental health and mental wellbeing is so important. We've had a very stressful time, but I think business conditions are going to be pretty tough for the next year or two.

“It's important that people take time to think about how they personally navigate through so they're in the best position they can to make sound and balanced decisions as how the economy opens up.”

Listen to the podcast above to hear the full conversation.

For more stories from ANZ small businesses and how they’re managing COVID-19 visit ANZ News.

For the latest information on COVID-19 and how we can support your business, visit anz.com/covid-19.