Are you an Essential Business in Australia?

By - CTL
May 20, 2020
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An essential delicatessen

By Mike Canavan

What makes one business more essential than another? If indeed “we are all in this together”- surely it stands to reason that every business has an essential role to play in restarting our fractured nation.

In an effort to reboot the Australian economy, reports in newspapers recently said: “NSW pubs and clubs have been given a last-minute lifeline and will be allowed to open attached restaurants for up to 10 sit-down customers at a time from Friday”.

This government backflip on their previously announced policy government’s puts pubs and clubs in line with cafes and restaurants under new relaxed restrictions.

The decision followed a day of high-level meetings, including conversations between Premier Gladys Berejiklian and Chief Health Officer Kerry Chant.

But before you break out the champagne, the reality is very different. In an interview this morning, the well-known Sydney restauranteur Luke Mangan who owns Salt Grill, the organic chicken burger restaurant at Chifley Plaza in Sydney CBD and Sydney International Airport, Coast Café + Bar and Bridge Bar, Sydney International Airport, Luke’s Kitchen and Glass Brasserie at the Hilton Hotel Sydney. “We have a number of venues capable of seating in excess of 400 people. It is a joke to suggest that we can stay in business and operate profitably by seating 10 people in anyone sitting”.

Again today there are dire warnings in the hospitality and tourism sectors. “Australians will have to wait years for overseas travel to return to normal, with an industry authority revealing that won’t be until 2023”.

International Air Transport Association chief executive Alexandre de Juniac revealed overseas travel would resume “later” than previously thought.

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“We have published today a new forecast about the potential recovery of the air traffic, and what we see is that things should come back to normal in 2023, which is later than our previous forecast,” Mr. de Juniac told Breakfast News Radio.

“I can’t see, I have no vision at the moment on the current international scene where international border measures of some very strong vigour won’t be necessary,” chief medical officer Professor Brendan Murphy said.

He went on to say: “There is no clear road map out of this. Local border restrictions are less important than international travellers, particularly from Europe and the UK, where there are widespread cases.”

This got me thinking; what is an essential business? How might you become one? What is the engine room of the Australian economy? If our Government is serious about re-starting the economy where should they start?

According to the Australian Tax Office, small businesses make a strong contribution to the Australian economy and play a critical role in our tax system. Small businesses:

  • employ around five million Australians
  • contribute around 30% of all income tax collected.

According to the ATO figures, total Commonwealth revenue in 2019–20 is estimated to be $513.7 billion, representing a 3.6 per cent increase from 2018–19.

For Small Businesses this equates to $154.1 billion. It stands to reason, that the essential businesses should now be reclassified as small businesses. That is of course if they are serious about restarting the economy.

The unemployment numbers are horrifying. The ABS will define people paid through the JobKeeper scheme as employed, even if they have been stood down.

There are about 5 million Australians being supported by JobKeeper, with many of those not working at all. Small businesses employ around 5 million.

However at the start of this calamity, the Australian Government released a list of restrictions on non-essential businesses.

The Governments list were made up of businesses that provide a service or product that is necessary for the health and well-being of the public.

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Essential Businesses Remaining Open:

  • Shopping centres and other shops not specifically told to close.
  • Medical centres.
  • Pharmacies.
  • Schools until the end of term, with some pupil-free days to plan distance learning.
  • Petrol stations.
  • Waste industry.
  • Utilities companies.
  • Banks.
  • Convenience stores.
  • Freight and logistics.
  • Food delivery.
  • Bottle shops.

Banned Businesses:

  • Registered and licensed clubs.
  • Licensed premises in hotels and pubs.
  • Casinos.
  • Night clubs.
  • Cinemas and entertainment venues.
  • Auctions and open house inspections.
  • Personal services, such as beauty therapy, tanning salons, massage parlours (excluding physiotherapy), and tattoo parlours.
  • Outdoor and indoor markets.
  • Amusement parks and arcades.
  • Indoor and outdoor play centres.
  • Galleries and museums.
  • Libraries.
  • Swimming pools.
  • Gyms and indoor sports venues.
  • Overseas travel.

In accordance with the government’s lists above; we are really “not all in this together”.

Much of the arts and entertainment sector, which employee somewhere near 600,000 people – mostly in a casual position, will fall through the cracks in the new re-start three step plan. Estimates are up to 40% of people in this sector will not be re-employed in the near future.

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Marketing and advertising are another story altogether, both these industries seem to fall between the cracks, and will potentially be decimated.

IBISWorld’s analysts constantly monitor the industry impacts of current events in real-time. They predict the Advertising Agency industry is expected to be impacted as a result of the global COVID-19 pandemic:

Demand for advertising services from the industry is projected to decline substantially in the second half of 2019-20 as many client businesses and other organisations put advertising projects on hold as a response to COVID-19.

A large number of advertising agencies are likely to reduce staffing numbers in the second half of 2019-20, resulting in a decline in industry employment for the year. Furthermore, some firms in the industry are anticipated to close down as client demand falls.

The numbers are starting to come in. The new data comes from job listings site Seek.

The Job listings for ‘marketing and communications’ were down 60.9% in April compared to March, while ‘advertising, arts and media’, was down 60.5%.

The Future?

Yet, what of the future? How do we become an “Essential Business”?

For better or worse business and corporate executives must come to grips with the consequences of people being shut in and business shutting down.

One pan Asian telecommunications provider lost more than three quarters of its content centre agents as operations in the Philippines and India were instantly shut down due to Government regulations.

What has become frighteningly apparent is that there is a radical acceleration into the digital future. Does our government understand this? There is no evidence at this stage that it does.

Consider the sea change in consumers behaviour and expectations that the past few months have raised.

Prior to the lockdown consumers were on the move and enterprises stayed still. Now consumers are house-bound, and sellers must find ways to connect with them.

Face-to-face collaboration has slowed to almost a stop. People are forced to work in environments not set up for normal work practices. This will need to be dealt with moving forward.

Trust and reliability are more important than ever before. Housebound consumers are now relying on trusting deliveries from suppliers, demanding a greater safety chain and reliability from sellers than ever before.

Beyond parcels and pizza’s; companies are providing everything from kitchen appliances to garden plants, all with contactless operations.

There will be greater credit issues in the future. How will companies treat consumers who can no longer meet payment obligations? How will they maintain consumer loyalty with consumers having access to multiple vendors available due to the digital platforms they are all now using.

Digital channels and tools will form the heart of an effective response to these society-wide shifts.

Whilst teleconferencing was something that we had to do at a pinch in the past, the recent lockdowns have caused many executives to rethink the need for so much travel in the future.

What started out as a no contact food and booze delivery service has expanded into no contract mortgaging, car sales, and even estate planning. Many companies resisted this in the past… until they were forced to change.

These developments present both the challenge and an opportunity for forward thinking business planners. Many consumers will find a way to meet their needs digitally, through their current suppliers or perhaps another company that might do a better job. This offers the challenge between digital leaders and laggards, generating better results for consumers, employees and shareholders alike at significantly reduced costs.

Delivering simple customer services and experience, possibly on a digital platform may become central for continued growth in many industries. Sadly it would appear that the timeframe to achieve this has compressed dramatically. It is becoming apparent companies must jump years in a matter of months to satisfy the new needs of a changing community.

Standout industries that are already experiencing massive growth spurts such as home entertainment, home fitness, home delivery and telecommunications may well have changed forever.

Businesses such as travel, hospitality, restaurants and clubs will most likely take a great deal more time to bounce back. Quite possibility with a much-reduced size in numbers and volume.

What is becoming necessary is that business executives must compare themselves against traditional competitors, as well as upstarts and cross-category technology leaders that set consumer expectations. Peloton, (is an online American exercise equipment and media company that stream any type of exercise experience you desire),

Is disrupting gyms. Affirm, (is a privately held financial technology company headquartered in San Francisco. Founded in 2012, the company operates as a financial lender of instalment loans for consumers to use at the point of sale to finance a purchase) is disrupting credit cards. Amazon and Alibaba are also disrupting many industries.

Without question a new playing field has emerged as a result of the ghastly pandemic we have all been suffering from. The question is, are we ready for it?

The greater question- which I doubt has been considered by our political masters is – what the future of our new society will really look like? More importantly how may they assist in a real and meaningful way in supporting our road to recovery? Should they get this wrong future generations will have to pay an unnecessary heavy price.

 

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