As JobKeeper is reduced, startups look to the future

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// With the initial 6 months of JobKeeper payments set to end next week for many, or be reduced, we asked local startups what effects this could have on them and their sectors …

For many local startups, the COVID pandemic was just another disruption, albeit a major, sudden one, among a whole host of disruptions they have to deal with.

But when a global pandemic comes along, do they take the positive or the negative route?

Accentuate the positive

Overall, among the hundreds of local startups that Startup News contacted and then responded, twice as many drew positives out of Covid, than negatives.

Here are some of them…

“I like a government handout as much as the next guy, but we weren’t eligible for JobKeeper. Good startups shouldn’t have been eligible, and with the majority of startups being digital, there are more opportunities in the pandemic than ever.” – Chris Dorian, Buildsort.

“(We won) a significant number of new clients – we’ve done in this quarter what we did the whole of last year.” – Dr Sue Bahn, Tap into Safety.

“As we had completed our recent raise, we had no need for JobKeeper and would not have qualified. We tripled business and staffing during Covid.” –David Pettit, Picture Wealth.

“Some people have taken time of Covid and JobKeeper to actually get their startup off the ground! … there’s also been more collaboration, helping each other out.” – Dylan Lamb, Holonic.

“WFH was pretty straightforward, we are a tech business, and our customers are in tech too, we are B2B SaaS and sales continued a steady incline.” – Graham Hughes, Docmosis.

“We’ve actually seen banks begin to loan, which is encouraging…” – John Wright, Metabolic Health Solutions.

“Our sales are all online and [they] increased during Covid, which meant we could grow the team and invest in new markets.” – Glenn Richmond, FieldMagic.

“Covid coincided with me working full time on my new venture.” – Elizabeth Knight, Purposeful.

“Providing flexible use of space for work, training, more local meetups etc… is something we’ve seen in the booking reasons that hirers are providing. We’ve seen increased activity.” – Jeremy Hurst, SpacetoCo.

“We continued to grow, were profitable, and did not qualify for JK, and it was not for us anyway; we kept all our staff, which meant less anxiety for them, and the market seems quite healthy at the moment.” – Brad Rees, Higher App.

“I’m of the view that (as a startup) if you rely on Jobkeeper to keep the doors open, then you have bigger problems.” – Chris Braine, Cellr.

Eliminating the negative

For many startups though – as in all businesses – there was a sudden, major shock to the system in March and April, after which there was some recovery. Lingering doubts remain with some over the medium term effects as the economy slowly comes out of the pandemic, if that is what it’s doing currently…

“We suffered 80% fall in revenues (see chart below) but has since rebounded.” – Nick Lonie, Kin Sitters

KinSitters monthly revenue during Covid. Supplied, with thanks.

“Initially business was grim, but monthly sales have since gone to levels double that of February before Covid”, said Suzanne Dodds of Complete Home Filtration, “We found it hard to fill roles; and with JobKeeper coming off, what impact will have on our B2C sales?”

“Being related to tourism industry, it was tough but we were able to adjust quickly, JobKeeper was very welcome.” – Paul Rowsthorn, Airguides.

“Australian revenues are now back to normal, but most of overseas revenues will be depressed for some time.” – John Wright, Metabolic Health Solutions.

“… reducing the salary component covered by JobKeeper due to the ATO ruling was disappointing and it’s pretty obvious that this will have a bigger impact for those who will not only see JobKeeper payments drop but also less coming back from their R&D claims.” – Neil Prentice, Soar.

Thank goodness for JobKeeper

Most people agree that the government had to act quickly, and did.

JobKeeper, along with associated announcements on JobSeeker, CashFlow Boost and others, were implemented early, and were the government’s way of putting money in people’s pockets to keep the economy going.

“The [Job Keeper] package was an amazing lifeline for People Diagnostix just when we needed it. With expected sales being pushed back as customers took stock of their own financials and investors holding onto their capital in light of economic uncertainties, the payments allowed us to keep developing our product without having to shed staff. This will enable us to bounce back strongly as clients return to business as usual.” – Jason van Schie, People Diagnostix.

“Startups are grinding anyway, so the budget is tight and we are having to constantly work towards break even and profit point. Job Keeper was an essential stop gap for businesses who had to stop overnight due to Covid restrictions. However, needing to rely on Job Keeper now that the WA economy is working towards normality, is a sign the business model wasn’t robust to start with.” – Amanda Walker, WA HomeStay

“I was not expecting it, and thrilled to receive it, so I could focus on new areas.” – Karen Dennett, Engaging Education.

“Most WA businesses that can recover in these times … so Jobkeeper has largely done its job. I have two businesses that are currently on Jobkeeper and we will not be reapplying for the next tranche.” – Barkley Day, Akora.

We’re not out of the woods yet

It’s been quite a year, and it’s not over yet. Some startup founders warned about over complacency. Anyone with a world view can see what’s been happening in Melbourne, or India, or the US, or parts of Europe.

An outbreak could happen here, and locking things down again could be really hard. In WA, we’ve been used to relatively unrestrictive, almost ‘normal’ conditions for a while.

Anyone shaking hands (or fists, or shoes) recently has often been met with smiles – “Are we doing this?” – or even criticism – “Agh, there’s no covid here mate!”

Could our ‘She’ll be right mate’ attitude turn around and bite us? Are we actually still sailing into Covid, not out of it?

“I don’t believe anything I’m saying here is new, but perhaps Australians have not got their heads around how quickly the world can turn in a bad direction given that the good times have lasted so long in this country… by definition we are nowhere near the end of the epidemic.” – Brendan Murphy, WillHQ.

“Some sectors are really struggling, so taking [JobKeeper] off now can be disastrous.” – Amanda Walker, WA HomeStay

“It could be touch and go, without [JobKeeper], although it’s better than it was; certainly a 2nd or 3rd wave could be disastrous.” – Nick Lonie, KinSitters

“The withdrawal of JobSeeker funds in September will hit the economy. Instead, if it is continued till March it will help business recover and stabilise.” Sekar Nagarajan, OrderPoint.

“My general view is if you can help people save money, focus on these benefits in your product or service, we’re going to in for choppy times ahead before we see a reopening of the economy more broadly.” – Dan Jovevski, WeMoney.

A Final Word

WA startups can be proud of what they’ve achieved in 2020. It was not the year they – or anyone – had planned, but sometimes you get cards you’re dealt, and just have to play them.

We’ve all been in the same boat, and we’ve managed to get the first wave under control. Time will tell if we are behind this thing, or have a way to go.

Startup News has reported on fund-raising, launches, acquisitions and other good stuff just as in any other year. For now, we urge you all to stay safe and well, keep innovating and doing that voodoo that you do so well.

Entrepreneurs and scalable businesses are going to help get us out of this, and for that we salute you.

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Photo by Yaroslav Danylchenko from Pexels.

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