2020 Vision

I can see clearly now the year has gone. 

(with apologies to Jimmy Cliff)

 Lessons from a year in lockdown

As we move into 2021 and the end of summer, let’s look back at the realisations that came from the year that was 2020.

Yes, the headings are song titles. Let’s have some fun with this. 
(Artists listed at the end. Can you guess them all without peeking?)

 1. If you want it, here it is, come and get it…

Twelve months ago, we could see that the virus was going beyond being a ‘small problem somewhere overseas’ and could disrupt us on more than just a personal scale. But we were being told to ‘keep calm and carry on’. What really needed to be said was that we all had to be ready for substantial changes and that everything could and would shift in a moment.

While Federal government support was promised and eventually provided, it was always after the event. It was not provided to help businesses and individuals deal with the coming problems, but rather to try to ‘rectify the problem’ after the event.

JobKeeper, cashboost etc., were all contingent on businesses being ‘prepared’ in advance – if you did not have all of your ‘paperwork’ in order before the assistance was announced, it was too late to step up. You had to pay staff before the funding was provided. And the support was going to be paid a month or more in arrears – and in some cases up to 6 months later.

The State government support was very much the same. The early rounds of support were released with little information and explanation, and no recourse for later follow up. In some cases, payments took six months from application to payment. This was not what was needed – help was needed right away, not ‘on the never never’. If you were not able to cover your needs upfront, you either had to borrow the money or dip into reserves to survive until the cavalry arrived.

It’s easy to say that the support was arranged in a way that favoured larger businesses, but in my experience, that was the case. Cashflow management is crucial in small businesses (and it’s important in all businesses!), and the support of banks was lacking at the small business level but was far more possible with a business ‘of size’. In our experience, larger organisations found the banks were more willing to “extend credit”, but the same arrangements were not there for the “solo operator” or any business with less than $1 million in turnover.  This often meant that business owners were struggling or had to make employment choices that were not beneficial to them or their staff. The ability to rebound was also affected as a result. The catch-up process to recover from this could take years for some people.

In virtually all cases, the government support was contingent on a business (or sole trader) being correctly registered – all tax registrations, Super, WorkCover etc., in place before the problems started. (For many small businesses, these registrations were often considered voluntary and somewhat unnecessary and costly). And accounting and financial systems all need to be in place so that the data needed was on hand at all times. The difference between having this in place and not doing so (and hence qualifying for support) could be measured in the tens of thousands of dollars for most small businesses in Victoria. In some cases, this was the sole factor between survival and bankruptcy, and business income fell by 75 – 100%. As we move out of lockdown and into a post-vaccine economy,  the lessons to be learned from this are to have your business arrangements in order from the start – the proper business structure, accounting, payroll and reporting in place – and understanding what the numbers mean for you and your business. And be in regular contact with your advisors, so you know what you need to do, then take action quickly, as the opportunity to rebuild stronger and better in 2021 and beyond become more evident.

The lesson from this – be prepared. Structure your business as if it is ten times the size it is today. And get some help in doing this!

 2.   I get by with a little help from my friends

For many in business, the only way through the tangle of support was hand-in-hand with their advisers – accountants, lawyers, planners and mentors. Over the last 12 months, the reality that all our businesses do not ‘operate alone’ – even when you think you ARE in a one-person business – has never been more true.

There is an old saying is that it takes a village to raise a child. In the same way, I believe that you need a ‘village’ to help grow your business. Legal, financial, corporate, tax advice is usually turned to at various times, but you also need to look at assistance in the way that you manage the business, balance your personal and business time and life, and how you keep the focus on the important things. How do you market and promote? Having gone back into a coaching process with a trusted business coach and taken some time to review and refocus on the important elements of health, family, as well as business values and goals, I can only highly recommend to you that, as you plan to grow your business, don’t think you have to try to do it ‘all on your own’. (And I can highly recommend my coach to you!)

One focus I have this year is to provide you with a team of people that can help in key areas – of course in accounting and financial (bank and finance) aspects, but also with financial planning, legal, and business development sides. These are people that I trust with what I do, and I am sure that they can help you in the same way.

Why have ‘just’ one superhero on your side, when you can have the whole Marvel Universe?

3. I am, you are, we are… dependant on each other

Its always interesting – and a bit of fun – to debate the role of Government and taxation in modern society. How as a population, we are overtaxed, or undertaxed, should all fend for ourselves, should look (or not look) to the Government to provide basic essentials to us, etc.

And just what is ‘essential’ these days? Besides air, that is – as everything else has a ‘price’ on it now and can be obtained from ‘non-government sources’. But is that the way it should be? Does this provide an opportunity for ‘everyone’ to achieve their fullest potential or only the fortunate few?

At a minimum, health and education services should be a high priority for all of us, just like roads and communication (Internet / NBN access). None of these should be left purely ‘to the market’ as the market will always favour some over others,and value profit over service or access. And in a society that promotes equality and opportunity, that is unfair.

Post-Covid, what do we see as being important now – wealth or health? Individual success or collective achievement?

With Covid, the people we have come to depend upon the most are the front-line people: Medical services to test and treat us; security, cleaning and protective staff to keep things managed in such a way as to protect the affected and minimise the impact on everyone else in society.

And the demands on retail staff, hospitality staff, drivers, delivery people etc. has never been greater. We need them to feed us, clothe us, bring things to us and protect us. And yet, these people have often been maligned, underpaid, and put into temporary positions with little or no security, training or respect. This needs to change on many levels.

I have always suggested to clients that tax is an expense of business – not something to be avoided, rather, to be minimised but accepted as being a cost of business and a societal cost of living. It is a cost of business operations that is necessary to provide services that would otherwise have to be paid for anyway – and may otherwise be completely unaffordable.

For me, the Government’s role has always been to provide the base on which our society can survive, grow and prosper (you cannot have an economy without a society unless that is an economy of machines). No matter who you are, what family you were born into, what abilities you have in your head, hands, face, voice, body or feet, your success is as a result of not just what you have done individually, but also the support you have got from the society and the government-funded or supported schools, health services, roads, police and all the rest that is provided by the taxes that we all pay. Paying tax is not a ‘burden’. It’s a contribution towards providing all of that to you and everyone else around you.

How the Government uses that money to support us – now that is another topic altogether!

4. Ch-Ch-Changes

When action needs to be taken, do you do nothing and hope it goes away, or do you make a change quickly?

Over the year, there has been plenty of debate about how soon action needs to be taken, how much action, and for how long.  We saw this ‘post-GFC’ as well as with Covid.

Looking back over the last 12 months, I believe that this is what should have happened:

a)     Lockdown of the economy should have happened earlier, minimising the risk of spread, and continued until a full eradication happened. This could have been done in the same timeline as New Zealand did.

b)     Government financial support needed to start in February, not announced to start in April and paid in May. Yes, people should have been paid to ‘stay at home’ on a substantial percentage of their salaries, not just a basic ‘supplement’ to help businesses maintain employment. And this should have been done in a way that was equitable and supported small businesses, sole traders and creatives, especially those in itinerant roles and positions.

c)      Front line staff needed to be employed directly and paid and trained properly. Covid and quarantine should have been treated as a medical problem, not a security one.

d)   There is an opportunity in every crisis. Facilities should have been built (and should be now) to house those at risk or needed quarantining or return to Australia, manage them safely and protect them and everyone around them. These facilities could then be used for other ‘relief matters’ – be it post a natural disaster, support for displaced people, or for cross border quarantining of itinerant workers for the agriculture and mining industries. The construction of these facilities would employ many trades during construction and operation and redeployment of the facilities on an ongoing basis. 

     The current use of ‘hotel quarantine’ should be stopped, and as the lockdowns ease, hotels can return to their normal corporate and tourism-based activities. Use these facilities for the role where they are ‘fit for purpose.’

There has been a great reluctance to make ‘large changes’ to how things have been done, and planning always seems to have been an afterthought instead of a forward-looking, confident process. There was little leadership shown in taking the country forward together with a cohesive process to overcome the problems. It was more a reaction than taking action.

In the same way, in our businesses and our personal lives, we need to look at what we are doing and identify what changes we need to make – and make them now!

a)   How important is it for us to be ‘in the office’? Can we operate from anywhere else to do our work? This won’t apply to everyone, but what changes can or must be made to simplify the processes for all?

b)  Is your business set up in the right way? Is it able to grow or change as needed in the future?

c)  Is your information (accounting, financial, data services, ideas, materials etc.) up to date, accurate and relevant to what you are doing?

d)  How do you promote what you do? How well do you use the Digital environment to tell the world what you do? It’s not just ‘social media’ – It’s a new way of promoting and doing business.

Let’s talk about what you need to do and set up a plan for your future.

5. Are ‘Friends’ Electric?

The way that we ‘connect’ with friends, family, and business changed for many of us in 2020. The ongoing lockdowns of last year and the ‘snap’ actions seen a few times already in 2021 point to the fact that much will change in the future.

How will this affect what you do – and how you do it?

For many years, we have been told that the internet will be the backbone for almost everything in our lives – communication, entertainment, information, etc. I think that what 2020 has done more than anything else is accelerate that realisation (and implementation) for many of us.

From home-based primary, secondary and tertiary education, to on-line music, art or language lessons, telehealth appointments, endless Zoom meetings, Houseparty dinner gatherings and drinks with friends and family around the country and the world, our world has expanded while it has been consigned to a 24 inch (or phone sized) screen. We truly do have the world in our pockets, so why are we limiting our opportunities to our local suburb, region, state or country?

 Office spaces are coming home – or out of the CBD sprawl, and the need to commute has diminished. How does that affect what you do and how you do it? What opportunities does it open up for you, and what you can do?  Are there benefits from establishing ‘community hubs’ with flexible workspaces for people to go in and out of (with appropriate social spacing and health requirements) that facilitate both ‘office /creative work’ and remote work options? Would larger employers use these facilities instead of towers full of employees in the future?

 And what does this ‘new world’ mean for infrastructure – do we need a new model for ‘home development’? e.g. apartment or residential developments with dedicated ‘workspaces’ available for periodic use? How does retail change – and will there be more “Uber deliveries” instead of bricks and mortar retail. What does that do to the shopping centre environment? The Amazon experience could grow, reducing the need for ‘the Chadstone experience’, replaced by a flotilla of flying delivery drones (or a fleet of star track vans) instead.

For many, 2020 is the year that the world has changed, and the need to adapt to a “Brave New World” has become significantly clearer.  Is work our main focus?

 6.  Crushed by the Wheels of Industry

Is work our sole focus and the most important thing in our lives? 

Really, is that it?

Just how much do we need, how fast do things need to be?

For many, the ‘extra’ time at home and with the family has been a good opportunity to review what the priorities in life truly are.  To walk the streets in our limited exercise hours, read those books, watch those movies, and talk with friends and family and reconnect. And to reflect and think.

The pause may have allowed you to revisit your priorities and perhaps let go of what was once ‘so important’ to you and focus instead on what is ‘truly’ important.

2021 can (and perhaps should) be the year to look at what your priorities are – business and personal – and perhaps work on the truly important things, not just the things that ‘need to be done’. Find the “Why” you do “what” you do.

No-one gets this all ‘100% right’. Over the life of my business, I know I have not done so! But the process of doing something, getting the results, seeing the errors, correcting and doing again is all part of the process.

And the more we understand the “why”, and the more we do it, the better we get at it (hopefully!).

No one really gets it right without effort, and practice, and repeated action.

We do it, stumble, dust ourselves off (or have our team help us dust ourselves off)  and ‘get back in the fight’.

So, let’s talk about your ‘fight’ for 2021 and beyond – and let’s get on achieving your goals!

Comment here, or email or call and lets talk about what the year looks liek for you, and how we can take action.

Stuart Smith

Director

Fiscal Artisans

And the arists are:

1.       1. Badfinger

2.       2. The Beatles

3.       3. The Seekers

4.       4. David Bowie

5.       5. Gary Numan & Tubeway Army

   6. Heaven 17