What’s a zombie business you might ask? They’re the businesses that are propping up due to the Government stimulus’ and will potentially fold in September.
However, those recently-formed businesses may cause more of a problem than originally thought.
New research reveals that 62% of SME (small-medium enterprise) business owners have been on the brink of folding their businesses in the past due to financial and other struggles. While 78% of owners say they have made major sacrifices for the survival of their businesses. If they knew then the challenges they would go through now, only 56% of owners say they would still have opened their business.
Money.com.au asked business owners if they had thought about closing due to challenges within, just 38% of business owners have never considered business closure.
One in three nominated financial issues as the number one challenge; this includes cash flow problems, the most common of all the challenges being inadequate revenue or profit, and poor customer acquisition and retention.
“Understanding the fragility of Australian small businesses can help us gain insight into the potential devastating consequences the pandemic will have on the sector,” says Money.com.au spokesperson and licensed financial advisor, Helen Baker.
“It is important that our governments understand how vulnerable SMEs are to external influences, and yet how crucial the sector is to our economy. Small businesses deliver 35% of Australia’s GPD and employ 44% of our workforce.
“The government and public were shocked to see queues outside Centrelink offices right after business shutdowns were mandated, and today millions are on JobSeeker and JobKeeper.”
Ms Baker explains that, “The survey also gives us insight into the mental, emotional and physical impacts that business owners have dealt with to keep their ventures going. The government should continue to prioritise small business in its support measures throughout the coming months, closely monitoring how the sector is responding to those measures, as well as the shutdowns, along the way.”
The findings come from an independent survey of 261 Australian business owners (88% of which are SMEs), commissioned by free online financial information platform money.com.au.