Small towns, big challenges: COSBOA report reveals regional business struggles

Speaking with Accountants Daily, COSBOA chief executive, Skye Cappuccio, said rising operating costs have emerged as the issue underpinning almost every other challenge identified in the research, with regional businesses facing a combination of pressures intensified by distance, limited supplier options and infrastructure constraints. 

“Regional small businesses are facing a combination of pressures but rising operating costs have emerged as the issue underpinning almost every other challenge identified in the research,” Cappuccio said. 

The survey found that 87 per cent of regional small businesses experienced higher business expenses over the past year, while 73 per cent reported profits had fallen and only 16 per cent experienced revenue growth. 

Just 7 per cent believed their business costs will decrease over the next 12 months, suggesting many operators now see rising expenses as a longer-term structural challenge rather than a short-term economic cycle. 

COSBOA said that fuel, freight, energy, insurance and compliance costs can have a greater impact on regional businesses because they often operate across larger distances, have fewer supplier options, and rely on infrastructure that metropolitan businesses can more easily take for granted. 

The survey found that 37 per cent of businesses are experiencing significant or critical financial pressure from fuel costs, while 70 per cent reported higher insurance premiums and 85 per cent reported increased electricity costs.

Cappuccio said what concerns COSBOA is that when costs continue to outpace revenue, small businesses inevitably become more cautious about employing staff, investing in new equipment or expanding their operations. 

“Regional small businesses are proving remarkably resilient and continue to adapt, but resilience should not be relied upon as a policy solution,” she noted. 

Regional operators are also facing severe strain due to talent deficits; notably, 87 per cent of those attempting to hire encountered obstacles in securing staff, especially within specialised professions and skilled trades.

According to COSBOA, resolving workforce issues requires a holistic approach, as a community's ability to draw and keep talent is heavily impacted by digital connectivity, healthcare, childcare, housing, and overall liveability. 

The survey found that more than half of regional businesses rated local housing access as poor, while 42 per cent rated childcare access as poor. 

Cappuccio said: “Liveability is not separate from small business policy – in regional Australia, it is economic infrastructure.”  

Regulation and compliance were named by 25 per cent of enterprises as a primary source of pressure, while 77 per cent of business owners reported facing anxiety or stress related to their business over the last 12 months.

As per the report, cutting down on superfluous regulatory complexity would enable small businesses to focus more on recruitment and scaling their activities, instead of dedicating time to administrative tasks. 

“Regional businesses have demonstrated they are prepared to invest in their people and communities,” Cappuccio said. 

“Government policy now needs to remove the structural barriers that prevent them from doing so.”