Geelong businesses are less at risk of imminent collapse than their Melbourne counterparts, according to a new national report.
The SV Partners Commercial Risk Outlook Report analysed 6095 of more than 17,000 registered businesses in Greater Geelong.
The report found 1.5 per cent of the 6095 were at risk of insolvency in the next twelve months, compared to 2.1 per cent of Melbourne businesses.
Geelong Chamber of Commerce chief executive officer Bernadette Uzelac welcomed the “positive story“.
Geelong was outperforming Melbourne across many key economic indicators and its population was growing faster than the rest of regional Victoria, Ms Uzelac said.
But the amount of businesses at risk of insolvency in Geelong had increased by almost a quarter in five months, according to the report.
Almost 70 businesses with turnovers of more than $1 million were at risk, including seven with turnovers of more than $10 million, the report stated.
In total Geelong had 94 businesses at risk of insolvency, compared to 76 in March, according to SV Partners.
Ms Uzelac warned businesses to ensure they were not “financially-stretched”, especially during times of growth.
But the report was not reflective of businesses confidence in Geelong, Ms Uzelac said.
The Chamber’s and Deakin Business School’s joint survey of Geelong commercial trends in 2017 found most businesses were anticipating increased sales and profits, she said.
“Our surveys show an optimistic business outlook for Geelong rather than a weakening business outlook as reported by SV Partners,” Ms Uzelac said.
The report failed to analyse all of about 17,000 registered businesses in Geelong, she pointed out.
In its report SV Partners states that many registered business around Australia are not operating, or could be part-time sole traders, contractors or trust entities.
SV Partners executive director Michael Carrafa said the “weakening business outlook“ was a “cause for concern“ for Geelong.
Geelong was experiencing significant growth due to an influx of people moving for more affordable housing, and private and public investment, Mr Carrafa said.
“When businesses get wind of a growing economy, and consequently a growing customer base, they can be tempted to take on excess debt to invest in expansion opportunities.
“This sort of enthusiasm can lead to difficulty, and in some cases, insolvency.”
Geelong’s hospitality and arts sectors had the highest percentage of businesses at risk at 5 and 3.7 per cent respectively, the report stated.
SV Partners is a national firm which provides services including insolvency accounting.
