The strength and resilience of small businesses
Without a doubt, a large number of Australian businesses have been hit hard by the COVID-19 pandemic, but in a testament to their strength and resilience, many are already fighting back. There are indications emerging that the vast majority of SMEs have continued with their insurance cover, despite suffering significant financial losses. In fact, instead of an expected contraction in early 2020 (predicted prior to the pandemic), we have started to see signs of positive growth towards pre-COVID-19 levels. This resurging growth and the continuation of insurance policies to protect their business and employees is a tribute to the fortitude of Australian SMEs in troubled times.
Australian SMEs show signs of early recovery
All of these signs suggest that SMEs (where able) are starting to open their doors again and regain some sense of normalcy, given ongoing social distancing restrictions. We can’t forget however, that many businesses have become insolvent and will never open their doors again. Around Easter we did note a reduction in new business enquiries and purchases, which is totally understandable, given the circumstances many SMEs were with faced at that time. However, we also saw that instead of cancelling their policies (although a small number have done so or reduced their coverage), many SMEs made operational changes, such as lowering employee hours, encouraging remote working and streamlining their costs.
So whilst there have been some negative results of the economic crisis and a number of SMEs have closed their doors, by far the biggest trend is towards resilience in the face of a potential economic impacts. While Treasurer Josh Frydenberg has confirmed that Australia is now in a recession, ending nearly thirty years of steady growth, SMEs may well be bucking this recession trend with start-ups are opening and established SMEs recommencing trade as restrictions continue to ease across most of Australia.
States and territories must also share some part in the recovery, offering financial assistance to SMEs in the form of asset write-offs, free financial counselling, JobKeeper payments, and cash grants. We also expect that some of these new start-ups will be owned by employees who lost their jobs due to COVID-19 and making a new career move into the world of SMEs.
IA and our advisers are dedicated to our clients
We have noticed an increasing trend where SMEs are speaking to their IA advisers and asking for help. This assistance generally relates to how SMEs can adjust their operations to ensure their policies are still relevant to their ongoing business. This is because they understand the importance of business insurance and don’t want to expose themselves to greater risks as restrictions start to lift. In fact, SMEs that have suffered the most financially have been twice as likely to call our IA advisers than SMEs who have coasted though the pandemic.
So we encourage you to get together with your IA adviser to discuss strategies that will reduce your business’s financial risks and lower your exposure over both the short and the long term. Talk to an insurance specialist today, contact Gail Findlay.