Unpaid taxes, rising costs and staff shortages are three major challenges facing Logan businesses, is the warning from a leading insolvency expert.
Chris Cook, Principal of Worrells Accountants, said business owners ‘should not continue with their head in the sand’, and be prepared to face up to the challenges.
“It is the Australian way, to fight to the death, and that is very admirable, but now is the time to address these challenges, do not continue with your heads in the sand,” Mr Cook said.
“They need to be proactive, talk to their accountant, get them to talk to the ATO on their behalf.”
While tax issues are a major factor, Mr Cook said two other challenges, rising fuel prices and staff shortages, are also a major problem.
“If they are a transport business, and fuel increases by 20%, that is a 20% increase in the cost of operations, the same goes for food and produce, for cafes and restaurants, if the price of produce increases, your costs increase.”
The question is whether they can absorb increases, or should they be passed on, Mr Cook said.
“Communication is key, they have to talk to customers, don’t just absorb increased costs, see what customers can absorb.”
As liquidator of Pivotal Homes, with many Logan clients, Mr Cook said this is a good example of not being able to pass on increased costs.
“We have many builders in Logan, Pivotal were constrained by fixed price building contracts, they could not just pass on cost increases.
“It can also be a six to nine month process, if prices increase in that time, but they have quoted on previous prices, they are facing a major problem.”
Mr Cook said while contracts have some variation for ‘rise and fall’, if the increase exceeds this amount, builders can be working at an unsustainable loss.
“There are also constraints on customers, they may not be able to afford increases, especially if they are locked into a mortgage.
“Businesses must be aware of increasing costs, they cannot afford them.”
Staff shortages are also a major issue, while there can be plenty of consumer demand, if there are no workers, then a business cannot open.
“If a cafe can’t get a barista, then no matter how many people want their coffee, they cannot provide it, but they have to keep paying electricity and rent, we have lost many transient workers to COVID, these issues are all impacting businesses.”
With the situation not likely to improve in the next 12 months, Mr Cook urged owners to act now, to protect their businesses.
“Your accountant knows your business, talk to them, get them to help, and you have the best chance to save your business.”
