Local Government Magazine
LG Magazine

Cutting our cloth accordingly

By Vaughan Winiata, small business advocate.

I recently saw a movie where a character said; “You can’t get money out of the dead.”

This quote rings true with the daunting challenge in front of us. The post-lockdown economic fallout has dealt a severe hit to the income of both councils and small businesses and the ramifications will be evident for years to come.

With a loss of income being a mutually shared problem for councils and small businesses, the timing is right for both to be more forthcoming with each other as we navigate a long road to recovery.

Unfortunately, that’s easier said than done. Both generally share lukewarm relationships, as the two are not that close and never have been. Part of the problem is the sheer size and fragmentation of the small business sector, but the real problem is the wider sector has never had its own focussed leadership.

This is surprising. Regionally, there is no shortage of small business interest groups, associations, and chambers all grafting away in a workmanlike manner. None, however, representing the entire sector. When it comes to leadership, the small business sector is less like a rudderless ship and more like a ship with no compass.

This hasn’t stopped small businesses returning to a marketplace of wary consumer sentiment, and don’t be fooled by brave faces; you can’t hide ‘For Lease’ signs popping up like gravesite tombstones as local high streets become ghost towns. These were formerly rate-paying customers that are now gone for good.

No small business or local council planned for a pandemic. With the exception of pandemic-proof businesses like suppliers of confectionary, fast food, or hand sanitiser, most are cutting their cloth accordingly.

Small businesses and councils alike, are facing their own moments of truth. A council business model of relying upon rates for income is not too different from a small business having its viability tested following a drop in revenue. Dead businesses can’t pay rates.

Councils planning for increases in rates will no doubt be dealing with a contentious issue. A price increase of any type following a crisis is not usually met with glee. Economically, we have yet to hit rock-bottom, all we know is the magnitude of the drop in commercial activity is more severe than in any previous crisis.

The exit path will be precarious. Uneasy consumers will influence markets to exhibit a stop-start rhythm in the foreseeable future that will fuel uncertainty.

In the long run, a small business that survives will have adapted to three trends accelerated by the pandemic: The adoption of new technologies; a retreat from global supply chains; and a concerning rise in well-connected oligopolies.

Watch for the last trend as rising inequality poses to be a real problem for the small business sector. Survival depends more upon the industry and the strength of the balance sheet. Businesses with strong liquidity will be in a position to pursue opportunities, leaving others in the dust. An unavoidable outcome is the rich will get richer, the poor will get the picture.

Small businesses who have been through an economic crisis before know every time the agony is different, and every time we cut our cloth accordingly – finding a way to sniff out opportunities, adapting, and eventually bouncing back.

Small businesses will always be here one way or the other, however, it does raise the question, how are respective local councils cutting their cloth? As councils and small businesses completely review their ways, it makes complete sense to work more closely together.

Working together, the substance of that must amount to more than consultative online feedback, self-serving social media posts, sound bites, and pseudo-empathetic hashtags.

Now is the time to be present at the coalface and be eyeball-to-eyeball with the small business community, that’s what working together looks like in real-time, it’s not a digital fan zone. Councils being present and active at the small business coalface will be both appreciated and a step to providing the direction the sector has lacked historically.

So here is a request, and in fact a wero (challenge) for local councils – the first step must come from the Government as an invite to the small business community to embark on the long road to recovery together.

When a small business is under duress they are not communicative, in fact, they shut down and this will be especially true right now. Many will not be able to see the forest for the trees. In this time of crisis councils shouldn’t underestimate their ability to offer direction.

Councils can play a role in helping this vital sector to better understand both sectors play parts in an intricate system that will only ever be as strong as its weakest link.

The less desirable alternative is a council that is perceived to be inward-facing without a presence at the small business coalface. This will manifest resentment that will linger for years, or at least all the way to the 2022 local elections.

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