Research reveals half of Aussie small businesses believe their cash reserves will only sustain them until December
Allianz Australia research reveals the resilience and agility of small businesses, despite the devastating impact of COVID-19 over the last six months, and a promising commitment from Aussies to “support, shop and spend” to aid in their recovery.
According to the research, 84 per cent of Australian small businesses, the largest proportion of businesses in Australia, have faced financial, operational and emotional challenges as a result of the pandemic. Concerningly, half (51 per cent) of small businesses believe without support their cash reserves will only sustain them until December (the equivalent of 1,161,000 businesses) and almost two-thirds (62 per cent) doubt the long-term viability of their business.
In response, two-thirds (66 per cent) of small businesses have adapted their business most commonly by utilising cash reserves to maintain minimal business operations until revenue increases (22 per cent), reducing staff hours (22 per cent), or enabling remote working for employees (19 per cent).
In fact, one in five (20 per cent) have altered operations entirely, ranging from adding new delivery services to creating unique discounts for pensioners and those unemployed; and even providing materials that Australians can make their own soap and sanitation products from. Others have invested in digital operations (18 per cent) leading to improvements in web, social media and e-commerce, making it easier to help more Australians support small businesses in new ways.
Changing businesses operations can have a larger impact than just goods and services, it can affect your insurance policy. Nick Adams, Allianz Australia Chief Market Manager, said he wants to make sure Allianz’s small business customers continue to have the peace of mind knowing they are covered should anything go wrong, and is encouraging businesses to check their policy still meets their needs.
“We recognise and applaud the entrepreneual spirt of small businesses and how they have both adapted and ‘been there’ for Australians during this time; now we want to be there to help small businesses in their recovery. We encourage any small business customer who has made changes to contact us for a free policy health check to make sure their policy still meets their needs,” Nick said.
But it isn’t just the agility and resilience of Aussie small businesses that has been both inspiring and admirable, reassurance about the future of Aussie owned and loved small businesses comes from Aussies themselves. In fact, 78 per cent of those polled showed greater motivation to support local small businesses over larger companies in the wake of COVID-19.
While the majority of Australians acknowledge how vital small businesses are for the economy (68 per cent), support for local business isn’t just about the products and services they buy, it’s about supporting the community. 65 per cent of people want to spend with Australian businesses, especially those close to their homes (63 per cent), but the biggest motivation for shopping with small businesses was supporting the staff from their neighbourhood that are employed locally (70 per cent).
“Nearly half of Australian small businesses have experienced reduced revenue due to COVID-19 and a further one in five are not earning any income currently. These businesses carry great economic value, but also incredible practical and emotional value to the communities in which they are located across the nation. We all play an important part in helping them get back on their feet. That means revisiting, spending and shouting about the businesses we know and love,” Nick concluded.
As Australia enters different phases of recovery, the findings show that there is mutual dependence between businesses supporting Australians and Australians supporting businesses. And although, for many businesses, there is a long road ahead, business owners may take some comfort from the nationwide awareness of the challenges and commitment to helping overcome them.
Allianz small business customers can call 1300 131 000 for a free policy health check. For more information please visit: https://www.allianz.com.au/about-us/covid19-faq/support
About the research
Allianz commissioned YouGov to conduct a consumer survey and a small business decision-maker survey in June 2020 to help understand how COVID-19 has affected small businesses, as well as how consumers are responding. The consumer survey was a nationally representative sample of 1,076 Australian adult respondents (18+) and the small business survey was a nationally representative sample of 500 small business owners and managers from businesses with 1-49 employees. Both surveys were carried out online.
- 84 per cent of Australian small businesses have faced challenges as a result of COVID-19
- Over half (51 per cent) of small businesses believe that their current cash reserves will only sustain them for six months
- Two-thirds (62 per cent) of business leaders now questioning the long-term viability of their businesses
- Two-thirds (66 per cent) of small businesses have adapted their business
- Small businesses have adapted their business most commonly by utilising cash reserves to maintain minimal business operations until revenue increases (22 per cent)
- Small businesses have adapted their business by reducing staff hours (22 per cent)
- Small businesses have adapted their business by enabling remote working for employees (19 per cent)
- One in five (20 per cent) have altered operations and changed service offering for customers
- 18 per cent have innovated through web and social media and new e-commerce platforms
- 78 per cent of Aussies pledge their support for smaller businesses over larger corporate companies in the wake of COVID-19
- 68 per cent of Australians acknowledge how vital small businesses are for the economy
- 65 per cent of consumers say they are more inclined to buy products and services from businesses based within Australia
- 63 per cent pf consumers say they are more inclined to buy products and services in their local neighbourhood
- The biggest motivation for ‘shopping Australian’ was supporting the staff from their neighbourhood that are employed locally (70 per cent)
- 49 per cent of small businesses are experiencing reduced revenue
- 20 per cent of small business owners / managers have lost their entire income
2019 Gold Mansfield Award for Overall Excellence in Claims – Mansfield Awards
2019 Australian General Insurer of the Year – Insurance Business Australia Awards
2019 Employer of Choice for Gender Equality – Workplace Gender Equality Agency
2018 Large General Insurance Company of the Year - Australia & New Zealand Insurance Industry Awards
Allianz Australia delivers a wide range of personal, commercial and corporate insurance products and services to more than 3.5 million policyholders. Allianz Australia also insures over 25 per cent of the top 200 ASX companies, making us one of the leading private workers compensation insurers in the country. In the last 12 months, Allianz’s motor customers gave their claims experience a satisfaction rating of 4.4 out of 5.
 Businesses with 1-49 employees
 Based on data from Australian Bureau of Statistics, 2019, there are 2.3M small to medium businesses, representing 99.4 per cent of all businesses in Australia (based on YouGov’s survey size of 1-49 employees)
 Based on data from Australian Bureau of Statistics, 2019, there are 2.3M small to medium businesses, representing 99.4 per cent of all businesses in Australia. 51 per cent of those said they could only last up to 6 months in the current trading conditions without exhausting their cash reserves, which equates to 1,161,000 (based on YouGov’s survey size of 1-49 employee)
 49 per cent of small businesses are experiencing reduced revenue