Business failure rate in the Mid West forecast to grow as rising costs put pressure on local entities

Rising costs and skilled worker shortages continue to put pressure on local businesses, with data revealing 4 per cent of businesses in the Mid West are forecast to fail over the next 12 months. Both large and small businesses in Geraldton are feeling the pinch of rising costs, with shops closing down due to financial difficulties and leaving locals without jobs. National fashion retailer Mosaic Brands recently axed five of it’s brands, resulting in the permanent closure of Rockmans Geraldton on September 24. Bankwest also closed its Geraldton branch last week. According to CreditorWatch’s Business Risk Index, 2.8 per cent of businesses in the Mid West have closed in the last 12 months, either voluntarily or due to insolvency, while the Gascoyne region had 3.8 per cent of businesses fail. In the next 12 months, 4 per cent and 4.6 per cent of businesses, respectively, are predicted to go to the wall. Mid West Chamber of Commerce and Industry CEO Joanne Fabling said the CCIWA’s most recent quarterly report into business confidence found rising costs and skills shortages were contributing to business failure in the region. “What we’re starting to see now is a slight slow and the cost of doing business is going up,” she said. “There’s been a lot of factors that feed into that and rising costs are one of those. Sometimes people are working so hard in their business that they’re not finding the strength and the time to work on their business.” Ms Fabling said the “sharp rise” in electricity tariffs and fees for businesses, rate rises, and superannuation and wage increases this year made it a challenging environment for business owners to keep their head above water. “I know that some businesses are absolutely reeling from these increases,” she said. As an example, Ms Fabling said one local business’ power bill jumped from an average of $6000 per month in 2021 to more than $10,000 in 2024 after the price hikes and despite installing solar panels. She said new innovations such as artificial intelligence, as well as the joint-Government WA Designated Area Migration Agreement (DAMA), would help to fill gaps in the workforce, but it would take time. “I’ve seen businesses close their doors because they are tired. They want to expand, and they’re trying to, but they just can’t get the skills,” Ms Fabling said. “Geraldton has been pinned as an absolutely beautiful regional city to live in. Yes, we have our challenges, like everyone else, and we’re working across it. “A lot of people have come here for that regional sea change as well, but there’s more that would like to come and we just don’t have the housing.” But it’s not all bad news, with many local firms saying they have been taking proactive steps to reduce business costs and skills shortage impacts. Husband and wife Jaydon and Leah Hirst own two businesses in Geraldton — waste management service Vac West Industrial and heavy equipment repairs service JMH Group. Mrs Hirst said the success of any business drilled down to a rewarding workplace environment and establishing positive working relationships with customers and suppliers. The Hirsts say they have found living in a small community like Geraldton make it easier to build strong connections. “We tend to work together with other business managers through collaboration and sharing our lessons learnt and successes,” she said. “It’s important to have a clear strategy, budget, and cash flow understanding, as well as keeping an eye on current and future trends.” Mrs Hirst said the duo had to adapt to changes in the economy and continuously invest in their team through training and career development opportunities. “We have found that we are constantly pivoting and adjusting our strategies and operations as the economy, industries and our own business needs change,” she said. “The work we have done with our internal and external team have helped us set up systems, processes, reporting and auditing that allows us to forecast potential challenges so we can make any necessary adjustments to our operations to increase revenue or reduce spending early on.”