An insolvency practitioner's perspective during a recession.
Since March this year, our economy has encountered unprecedented challenges arising from the COVID-19 pandemic. We're now experiencing our first recession in nearly 30 years, the severity of which has resulted in the Federal Government delivering a budget for 2020/21 that has been labelled the most important in 75 years.
On initial inspection, the budget has focused on economic recovery through business support. The government has sought to overcome the recession's challenges by creating opportunities for businesses, such as expanding instant asset write-offs, providing business concessions regarding tax losses and cutting personal tax rates.
From an insolvency practitioner's point of view, Worrells have identified additional opportunities that might be available to many businesses and worth considering to overcome the challenges of the current economic climate. The following suggestions are by no means exhaustive and the potential opportunities are unlimited to the extent of a business proprietor's opportunism, entrepreneurialism, and creative thinking:
- Consolidate your debt to release growth opportunities.
- Review your business to weed out any bad habits.
- Get to know your business broker.
- Acquire a like-minded business.
- Revisit onerous contracts and renegotiating a better deal.
- Get to know an insolvency practitioner you feel you can trust.
- Expand your team when others are downsizing.
- Upskill your team in the quiet times.
- Explore government incentives and tax breaks (federal, state, and local).
- Innovate and automate—creating new revenue streams (e.g. online sales).
- Restructure a business through a formal administration process.
- Review your costs and outsource if financial beneficial to do so.
- Get to know your clients and your community—Marketing 101.
- Consider partnership and joint venture opportunities.
- Buy the assets of an insolvent entity.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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