There’s plenty of reason to be optimistic about 2021 – and the business outlook is better than you might think. The leading banks, including Westpac and the CBA, have revised their gloomy economic forecasts. Meanwhile, the State and Federal Government have both announced ongoing support for small and medium-sized businesses.
[There is] “plenty of evidence creeping into the data that signals strong outcomes next year are more likely than not” – Gareth Aird, Head of Australian Economics at the CBA.
There are quite a few factors that make 2021 a year for optimism and innovation. Let’s dive into them:
The State of Savings in Victoria
Victorians saved more than usual between March and September this year.
In December last year, the percentage of household income the average Australian saved was 5.3%. Between March 2020 and June 2020, the savings ratio ballooned to 22.1% amidst the uncertainty of the pandemic. This means Australians were saving more than one fifth of their household income over these months. The rate of saving dropped to 19% in the following quarter. (You can see the stats here.)
In fact, Australians have saved an additional $100 billion since the pandemic began.
The data for the September – December 2020 period isn’t available yet, but a small drop is likely. We expect to see larger drops in the new year.
What this means in practical terms is that spending is likely to pick up again in Victoria in 2021. When this happens, consumers will have more savings behind them to make some larger than usual purchases.
Both the State and Federal Governments recognise the important role that small and medium-sized businesses play in Australia’s economic recovery. The support provided by the State Government alone in response to the pandemic will exceed $6 billion.
A Focus on Job Creation
The State Government’s 2020/2021 budget includes $836 million in tax relief for small and medium-sized businesses that:
- rehire staff,
- restore their hours, or
- create new jobs.
Under the New Jobs Tax Credit scheme, small and medium-sized businesses will pay less payroll tax when they make new hires. This support is in addition to the payroll tax deferrals already on offer.
The Federal Government’s JobMaker Hiring Credit provides further incentives for businesses to hire in newly-created roles. You can read more about it here.
What Is The Business Outlook For Victorian Businesses?
There are plenty of reasons for you to be optimistic. Victorians, on the whole, look set to increase spending in the future. Meanwhile, hiring incentives for eligible businesses mean it’s a great time to consider employing additional staff.
Overall the message is that businesses have a real opportunity to be innovative in the delivery of services and products and in their customer service. Here are a few practical ways you can capitalise:
Build Your Business Online
Now is a great time to create an online store for your business. The State Government has set aside $20 million for small businesses to access digital programs, like Shopify, for online operations. You can also access training for these programs.
Doing so will equip your business to provide seamless and safe customer experiences, while offering opportunities for you to innovate.
Invest In Your Business
Where you have the access to cash, now is a great time for eligible businesses to buy assets. Tax incentives are available for certain businesses for equipment purchases, via the instant asset write-off threshold increase and the backing business investment incentive.
Where additional assets may allow your business to innovate, it’s worth considering investing within the 2020/21 financial year.
Invest in Your People
Much of the State and Federal support aims to tackle unemployment. If new hires are the key to unlocking innovation in your business, there’s plenty of support available to you now.
Sharp Accounting is Here For Your Business
If your business could benefit from financial guidance or information about the support available, please reach out. The Sharp Accounting team offers free 20-minute consultations to businesses currently facing difficult business decisions.
Find out more about our business advisory services.
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