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Melbourne’s small businesses bunker down for a devastating second lockdown

Melbourne will go into its second lockdown on Wednesday at midnight, leaving many small businesses non-operational and reeling from the financial devastation of the pandemic. With the city’s five million residents staying home, experts are worried that Melbourne’s thriving small-to-medium business sector has been dealt its final blow. 

The six week Stage 3 lockdown was announced by Victorian Premier Daniel Andrews earlier this week due increasing community transmissions of Covid-19 cases in greater Melbourne, including a nearly two-hundred case spike in a single day.  

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Many of the city’s nearly 17,000 businesses will be ordered to shut, at least partially, due to the new lockdown mandate. Under the Stage 3 lockdown, previously reopened hospitality venues serving customers under a limited capacity, such as cafes, restaurants and pubs will return to take-away service only. 

Other recently reopened businesses, including gyms, beauty parlours, galleries and movie theatres must cease operations once again. Small businesses in Melbourne are bracing for the financial fallout of a second lockdown and the uncertain path to recovery.

Roughly 200,000 small businesses in the country stopped trading at the start of the initial national lockdown, according to the Australian Bureau of Statistics. Two out of three businesses still reported reduced revenue in June, with a third of those claiming revenue losses of 50 per cent or more. 

ABF media

The second lockdown could cost the state’s economy anywhere from $1 to $2.5 billion per week, says IFM Investors chief economist Alex Joiner. Treasurer Frydenberg offered a more conservative estimate of $1 billion a week. Either way, the lockdown measure will likely have dramatic and lasting effects on the local economy.

“I suspect this is really going to hurt small business more so than the bigger chains. The large chains stay open but the cafes and restaurants and salons are going to come under a lot of pressure,” said Mr Joiner. 

Frydenberg has stated that government support to individuals and businesses will be extended for Victoria. Likewise, Andrews said his government will be announcing additional support measures for businesses affected by the second lockdown. Andrews said he comprehends just “how significant” the new restrictions will be to local business owners. 

But lessons from the first lockdown have left some clues for how small business in Melbourne can prepare and adapt to survive the challenges of the second lockdown with success. 

“Covid-19 has delivered a harsh lesson that small businesses can’t rely on outdated business models and bricks and mortar stores anymore,” said Kate Carnell of The Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

The digitalisation of businesses operations has been a predicting factor in small business success in dealing with the Covid-19 crisis. Small businesses that used the initial lockdown to update their digital prowess were better off than those who did not. 

Digitalisation saved many small Australian businesses because the lockdown meant Aussies were spending more time online. A NBN Co. survey found that nearly 50 per cent of Australians increased their online shopping during the initial lockdown and 70 per cent of consumers were conscious of supporting local businesses online. 

But to support those small business consumers needed to be able to first find small businesses online, and second, be able to access their services or products through an online platform with relative ease. 

Switching to a digital payment system, improving online web presence, creating digital services and adding digital shops to social media accounts, were just a few ways some small business stayed afloat and even thrived during the lockdown.

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