Nearly half of all regional businesses see growth opportunities ahead thanks to some solid market openings, but business competition and the cost of essential services such as energy are worrying them.
Online marketing represents a significant part of the competition challenge, but also a growth opportunity, according to feedback from a Commonwealth Bank of Australia study.
About 27 per cent of regional firms listed competition as their biggest current challenge and likely to be their biggest worry in the next five years.
The high cost of essential services such as power and fuel, and government regulations or lack of government funding support rated in second place as priority concerns (at 24pc) – just ahead of increasing worries about a lack of skilled staff.
CBA’s Regional Business Insights report found 49pc of all regional businesses saw potential growth, however one in five thought there was no opportunity or were unsure of what the opportunity might be.
A growing population, Asian demand for our high-quality food and consumer products and increased infrastructure spending are underpinning optimism in regional areas
- Grant Cairns, Commonwealth Bank
The survey canvassed 470 businesses early this year spanning rural service providers and manufacturers to the tourism, mining and mainstream retailing sectors.
The report also found regional businesses were just as innovative as their metropolitan counterparts as they looked to capitalise on growth opportunities.
CBA’s latest Innovation Index is sitting at 32.2 for regional Australian business – up from 25.5 a year ago.
It is based on 15 measures of management capabilities and entrepreneurship, ranked on a scale from minus 100 to 100.
Queensland, Tasmania and NSW regional businesses are currently the most optimistic about growing their enterprise and/or employment numbers (about 52pc), while Victorians are most bullish about growth and financial opportunities in the next five years (65pc).
CBA’s regional and agribusiness banking executive general manager, Grant Cairns, said businesses cited strong markets, growing populations and improving infrastructure as underpinning their expansion potential.
“Australia’s growing population, Asian demand for our high-quality food and consumer products and increased infrastructure spending are underpinning optimism in regional areas,” he said.
Infrastructure spending helps
This was creating a knock-on effect of new openings for a range of business sectors.
A quarter of regional businesses believed strong markets or industry performance had created opportunities, 21pc said population growth was creating opportunity and 14pc felt increased infrastructure was an opportunity.
However, the research showed regional Australia could achieve even better results with greater clarity around how to achieve meaningful growth.
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Mr Cairns said the online business boom was proving a double-edged sword in regional Australia.
“While it opens up the potential to trade outside local boundaries, e-commerce also gives competitors greater access to regional communities and that’s a significant challenge for many regional businesses,” he said.
Also, while regional businesses tended to think broadly about potential openings, they had much sharper insight when it came to challenges.
Competition, input costs and red tape were topping that list.
Innovative staff
Meanwhile, nearly two thirds of regional businesses now evaluated employee creativity and innovation skills as part of their staff appraisal process.
More regional businesses also reported they had employees who were not afraid to take risks and fail.
“Businesses are recognising their staff have valuable insights into what customers are looking for and where there may be opportunities,” Mr Cairns said.
“They are trusting their employees to try new things in order to better meet the needs of their customers.”
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
