Australia’s economic conditions are wrecking havoc on companies big and small. It seems each week brings news of another Aussie business going into administration.
Victorian home builder Porter Davis collapsed in April, along with start-ups Providoor and earlier this year, luxury fashion label Alice McCall and food delivery service Milkrun.
Figures from the Australian Securities and Investments Commission show there were 828 insolvencies in March, compared to 464 at the same time last year.
While each business faces its own unique struggles, the impact of the COVID pandemic continued to haunt many, said Chris Green, business coach and author of Business By Design.
“Cashflow is the life blood of business and post-COVID, many businesses have struggled to generate sufficient revenues and margins to meet their obligations,” he said.
The current surge of businesses going under can also be attributed to a difficult economic climate. These range from global supply chain issues influenced by the war in Ukraine to Chinese trade bans, and factors closer to home.
“Internationally, we have seen global supply chain issues that have resulted in significant material and equipment delays,” Mr Green said.
“If you can’t get the raw materials or goods in country the fact is, for many, they can’t generate revenues.
“Domestically, we have had record low unemployment that has led to a significant skills shortage. This has been further exacerbated by the lack of skilled migration to Australia during COVID. If you haven’t got the people and skills, you cannot access market opportunities no matter the demand.”
While the 2023 federal budget will bring energy bill relief, cashflow support and an extension of the instant asset write-off, the business community thinks it hasn’t done enough.
Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the Albanese government should curb spending to avoid a severe inflation breakout.
“With business investment in a free fall for more than a generation, a 12-month extension of the instant asset write-off for small business is welcome,” he said.
“This will provide renewed confidence amid souring economic conditions.
“Unlocking these much-needed funds can help kickstart capital investment as rising interest rates, soaring energy costs and a cooling Australian economy batter small and family firms.
“However, much more must be done. ACCI will continue to advocate for a long-term agenda that expands incentives for all businesses to encourage them to invest, to capture new markets, and to realise their entrepreneurial aspirations.”
