Stimulus or buying time?

For many businesses the federal and state government stimulus packages will turn out to be nothing other than putting off the inevitable to another day.

Australia Bureau of Statistics data shows that our productivity as an economy has not grown in more than a decade, and have forecast that over the next 20 years, real wages in Australia will fall on average at 2% per year. What I’ve seen over the last decade however is wage rises of 3 to 5% per annum on average that have not been related to productivity, but rather have been related to the shortage of people and skilled labour  available in the economy. It has been my belief that this is unsustainable over time and finding ourselves now in the middle of a global pandemic and economic collapse, there is, and will continue to be, great adjustments taking place across global economies.

It is likely in my view then, that while many private businesses will ask us and make use of these stimulus packages, they also at the same time need to dramatically change their business models to reflect a new global reality. Already, we’re seeing the advantage that digitally-prepared businesses are wielding over those who had yet to make the pivot. What happened yesterday is no guide as to what is going to happen tomorrow.

These stimulus packages are vital and necessary to keep the gears of the economy turning, but I worry. After the rollout, private business owners will have to continue to run operations that they may well find ill-suited to a distinctly different economy and market. The demands for yesterday's wages may continue and any accrual of debt over this period will hang like a heavy weight around their neck, a weight that many will struggle to pay off.

So what to do? Think hard before taking on additional debt in an economy that is completely uncertain and look first instead to your business model and cost base and see if you can automatically re-engineer your business. Government can do a lot to assist private businesses and individuals during these catastrophic events however it will still be up to us as business owners and entrepreneurs to rethink the future and see if we can devise even more compelling solutions for our clients.

There’s a huge range of announced measures out there, and we’ve pulled together all the details on these into one place, as well as providing some very helpful checklists to apply to your business right now. To see what stimulus measures your business can access at this time and to download our Essential Actions Checklist, visit our website.