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A “yawning financial gap” has opened up between metro small businesses and their country cousins, survey finds.
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Regional SMEs ‘fret over financial health, inflation’
15 December 2023
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10 minute read
A third of regional small businesses rate their overall financial health as poor and almost nine out of 10 are anxious about the holiday period due to post office closures, rate rises and fuel prices, says lender to the sector Prospa.
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Its latest research reveals a “yawning financial gap” between regional and metropolitan businesses due to economic pressures.
Prospa co-founder and chief revenue officer Beau Bertoli said regional small businesses felt the economic headwinds more than their city peers and the closure of Australia Post offices – with one-third slated to shut in the next 12 months – compounded the problems.
“The data underscores the disproportionate impact on businesses based outside of major metro areas, particularly concerning stark increases to goods and services costs,” he said.
“On top of ongoing labour shortages and soaring energy bills, the upcoming closure of postal branches in some regional areas could add to inflationary pressures.
“As a result, nearly nine in 10 regional small businesses have shared with us that they have concerns going into the holiday period.”
The survey found regional small businesses were disproportionately feeling the pinch, with 73 per cent worried about inflation against just 64 per cent in cities, and 43 per cent pessismistic about the economic outlook.
The stark divide was illustrated by data from Queensland, where three-quarters of Brisbane businesses felt somewhat or extremely optimistic against just 47 per cent of regional businesses.
Nationally, the top three concerns were lower than expected consumer spending (36 per cent), the cost of utilities (48 per cent), and goods and services inflation (58 per cent).
Altogether, 86 per cent of small businesses experienced mounting worries as they geared up for the seasonal rush.
The most pessismistic industries were hospitality and retail, which were three times more likely to feel not at all optimistic about the economic outlook for the next 12 months compared to those working in beauty and health.
The findings, in Prospa’s latest SME Sentiment Report, showed the need for financial support was growing with nearly a quarter of small businesses preparing to access funds averaging almost $25,000, equivalent to 524,000 small businesses nationally.
Two-thirds would make changes to their business now if they had the funds, with the priorities adapting operations to support growth (39 per cent), or adding technology for better customer service or efficiency gains (43 per cent and 52 per cent respectively).
Funds would also be directed towards hiring fresh skills (30 per cent), training (28 per cent), and updating operations to solve existing problems (23 per cent).
The SME Sentiment Report was commissioned by Prospa and conducted by YouGov during October 2023. It quizzed a nationally representative sample of 502 business owners and primary decision makers.
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