Regional divide: Aussie businesses pessimistic as drought bites

Drought conditions and a lack of digital literacy in regional areas are causing difficulties for small business owners in regional and remote areas as new research reveals ongoing pessimism about current conditions.

A Scottish Pacific report published Monday has tracked a two-and-a-half-year spike in SME revenue expectations, although regional businesses continue to lag behind. 

The survey of 1,000 small business owners suggests the divide between metropolitan and regional firms continues to grow, with less than half (47.3%) of the latter expecting positive revenue growth in the fourth quarter, compared to 57.7% of metro businesses. 

Since 2014, the proportion of regional SMEs forecasting positive growth has fallen 10%, compared to 6% for metro businesses.

In contrast, about a fifth (18.1%) of metropolitan businesses are expecting a decline by about 5% on average.

Regional business owners are also more likely to expect revenue to decline over the next three months, with more than a quarter (27%) expecting to experience an average dip of 6.8%.

The NSW Business Chamber has also been tracking pessimism among regional business owners recently, finding in a March report that measures of revenue, profit, staff numbers and capital spending were trending downwards for regional firms across the state.

Regional business owners SmartCompany has spoken with in recent months have routinely attributed difficult business conditions to the ongoing drought, which has taken its toll on regional communities across the country in recent years, particularly in western NSW.

Regional business coach Simon Harris says businesses across the country are going to extraordinary measures to make ends meet, including offshoring administration roles to save money.

Harris tells SmartCompany an increasing number of regional firms are opting to hire virtual assistants in the Philippines and elsewhere to keep costs down as the drought bites.

“The offshoring of menial tasks into the virtual assistant world is an increasing trend,” Harris says.

Research commissioned by Harris and his business partner Jeremy Hutchings has found more than 70,000 regional businesses went bust last year as drought conditions continue to be the “talk of the town” in many areas across the country.

“If your feet are close to the fire it hurts, there’s just no rain around,” he says.

“There’s a downstream effect too where ancillary businesses suffer.”

Regional businesses are also missing out on development opportunities their metropolitan counterparts have been adopting en masse in recent years, Harris says.

“There are thousands of apps out there that make business so much easier that people in regional areas don’t know about,” he says.

“What’s missing is the ability for regional small business owners to understand the app marketplace.”

While it is expected the rollout of the National Broadband Network (NBN) to regional Australia will increasingly address the digital divide holding many firms back, the Department of Industry last year identified digital inclusion in regional and remote areas as an area in need of additional focus.

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