Weekly Digest – 23 October 2020
Hello again – welcome to the latest edition of our Weekly Digest. Lately, economists have been talking about a “K-shaped” recovery from the current recession.
As this article in The Conversation explains, this kind of recovery happens when different parts of the economy recover at different rates. White-collar workers who can more easily work remotely may have an easier and faster path to recovery than blue-collar and service workers who must be physically present to do their jobs.
Moving forward is the only option we have to get through this crisis. Read on for this week’s updates and some ideas that will help us all move forward.
PM Ardern to Prioritise Small Businesses for COVID-19 Recovery
After winning the election for her second term, Prime Minister Jacinda Ardern has emphasised that support for small businesses is one of her immediate priorities to drive economic recovery.
The PM wants to extend support via small business loans and $300 million in cash incentives to hire the unemployed by the end of 2020. Other plans include a flexi-wage scheme and changes to the small business cashflow loan scheme.
The flexi-wage scheme will subsidise businesses an average of $7500 and up to $22,000 by employing unemployed Kiwis. The $311 million scheme is expected to support up to 40,000 jobs.
Meanwhile, the small business cashflow loan scheme will be extended until the end of 2023 and the interest-free period of one year will be doubled to two years. To extend greater support for small businesses, the criteria for the loan will also be expanded beyond core expenses to include investment in digital infrastructure and new equipment, as well as measures to adapt to the impacts of COVID-19.
If you need help in applying for these government support schemes, feel free to drop us a message. We will be more than happy to assist you in your business recovery.
Financial Help For Small Māori-owned Businesses Extended
The $10 million Māori Trustee Top-Up Small Business Cashflow Loan Scheme, which has paid almost $1 million to Māori-owned small and medium-sized enterprises, has been extended until 31 December 2020.
Māori SMEs can apply if they have already received Inland Revenue’s Government Small Business Cashflow Loan. If they can prove Māori ownership and meet other criteria, they can apply for a further 50% of that loan amount from the Māori Trustee.
No repayments were required for the first two years, but the loan had to be repaid in full within five years.
If you need assistance with your application or would like to take advantage of other financial help you are eligible for, contact us today so we can guide you in considering your options.
Consumer Travel Reimbursement Scheme Opens to Travel Agencies and Wholesalers
Travel agents and wholesalers can apply for the Consumer Travel Reimbursement Scheme which was put in place to help Kiwis get back the money they are owed from cancelled international travel plans due to COVID-19.
The travel sector and the Ministry of Business, Innovation and Employment (MBIE) estimate around $690 million of New Zealanders’ money is locked up from cancelled travels, with around 85% related to overseas travel. Through this scheme, travel agents will be incentivised to recoup these funds for consumers.
Approximately $47.2 million will be allocated for this scheme, which involves paying NZ-based travel agents 7.5% of the value of all cash refunds they manage to recover for their customers and 5% of the value of all credits secured or rebooked for international travel.
Survey: Business Confidence is Improving
The latest Quarterly Survey of Business Opinion by the New Zealand Institute of Economic Research (NZIER) shows that business confidence has improved, showing an increase in demand over the September quarter.
A net 1% of businesses reported an increase in their trading activity, showing improvement from the net 37% reporting a decline in the past quarter. Companies are also more positive about hiring and investment. As demand increases, businesses are more optimistic about expansion and 16% are also looking to increase headcount in the next quarter.
If your business is still struggling, don’t hesitate to reach out to us so we can work out a plan for you to bounce back stronger.
Remind Your Customers to Use NZ COVID Tracer App
As a new COVID-19 case involving a marine engineer from Auckland who was believed to be infected through his work on a ship emerged in the community, businesses are urged to remind customers to use the NZ COVID Tracer App.
While this is not a silver bullet, the app is one of the tools that we can use for faster contact tracing and to prevent another wave of the virus.
As a business owner, you should take it as your responsibility to prompt your customers and remind them to scan the QR code displayed in your business premises.
Business Events Get Green Signal Across NZ
The confirmation of Auckland’s move to Alert Level 1 is awesome news for the business events industry. As Kiwis have been given the green light to meet, business events such as conferences, seminars, workshops, or team recognition events are now allowed.
In line with this, the Conventions and Incentives New Zealand has opened registrations for BE Reconnected, which is a free industry exhibition and networking day in Auckland on 1 December.
Business Restructuring and Redundancy
We understand that these are challenging times for everyone. In certain cases, the impacts of the pandemic are too significant that it calls for business restructuring or redundancies. However, you should be reminded that restructuring or planning redundancies come with legal obligations to follow the proper process.
Defining ‘Restructuring’ and ‘Redundancy’
Restructuring means altering your business’ operational set-up to improve your business. You’ll need to have genuine business reasons before you proceed, such as financial constraints, changes in market demands and consumer behaviour, outsourcing, or a merger.
Redundancy means reducing your workforce because certain jobs are no longer required or there is a need for a different skill set. The Employment Relations Act 2000 requires employers to act in good faith when making redundancies. For instance, you should not make an employee redundant and then replace them with another in a substantially similar role.
Before You Consider Making Redundancies…
If you believe that a new structure could improve the way your business operates, you might want to explore restructuring. While redundancies may still happen when you restructure, it might also mean the same employees remain but their roles change. It is also important to note that employment laws protect some groups of employees such as cleaning, catering, and laundry staff in certain restructuring situations.
As an employer, you must follow the proper redundancy process, as failing to do so may result in hefty fines. Get in touch with us so we can help you assess your situation and work out the best way forward.
Transforming Economic Challenges Into Opportunities
Since early this year, global economies have faced unprecedented challenges due to the COVID-19 crisis. Now, many of the pandemic-ridden countries are experiencing their first recession in decades.
Governments focused on driving economic recovery through business support and cutting of tax rates. Besides these government-backed schemes, here are additional opportunities that you can consider for your business to overcome the current challenges:
- Review your business and revisit contracts which can potentially be renegotiated for a better deal.
- Consolidate your debts to be able to take advantage of growth opportunities.
- Acquire a like-minded business or consider partnerships and joint venture opportunities.
- Upskill your team during less busy times.
- Innovate and automate your processes. This is the time to explore new revenue streams such as online sales.
- Restructure your business when you see fit.
- Check your expenses, cut down on unessential costs, and outsource if it will lead to cost-savings.
- Slower business activity means you have more time in your hands than normal. Spend your time knowing more about your target market and revamp your marketing.
If you need some guidance in doing all these things, flick us a message so we can work out a plan and share our expert advice tailored specifically to your business.
Get in touch
Contact us if you have any questions or want to discuss the next steps for your business.