Parramatta businesses at high risk of going bust

PARRAMATTA might be a booming real estate centre, but small businesses in the area are folding so fast the suburb has become one of the riskiest spots for start-ups in Australia.

Ben Pearce had to close his clothing store Geedup after three years in Parramatta. Picture: Peter Kelly

• First time buyers take a break from Parramatta sales
• Rockpool Bar and Grill and Saké to open in Parramatta

PARRAMATTA might be a booming real estate centre for developers and investors alike, but small businesses in the area are folding so fast the suburb has become one of the riskiest spots for start-ups in Australia.

A report released by SVPartners, an accountancy adviser firm, has suggested from a total 15,408 new businesses there is a very high chance that 638 will fail in the next 12 months, with a staggering 3853 businesses with a moderate to high chance of failure.

Study director Ian Purchas said the predictions were based on previous year trends along with low-consumer confidence in the area.

Parramatta Chamber of Commerce president David Hill said the figures were a concern.

“The results suggests to me that the consumer expenditure is low, people are not going out to the restaurants, they’re not getting accommodation, not spending money in shops. I think on an overall basis people are not interested in spending in the area,” he said.

Nationally Parramatta sits third behind Sydney city and inner Melbourne for business failures.

Last year saw 625 businesses at high risk of failing, with an additional 13 set to close by the end of the financial year, according to the projections in the report.

Ben Pearce is the co-owner of Geedup Clothing, which, until six months ago had two stores operating in Darlinghurst and at Westfield Parramatta.

After three years at Parramatta, the store found the rent and size were not proportionate to the brand’s growth, opting to save money from rent and invest heavily in their online business.

“For the amount that we were paying for such a small space, there came a point in time that we were surviving, but we weren’t seeing conducive growth within the business,” Mr Pearce said.

“Our label was outgrowing the space that we’d contracted into, the rent was inflated, and we were limited creatively with what we could do inside of the store.”

The food service industries are at the top of the list for failures.

Parramatta Chamber of Commerce president David Hill said the rate of business failures in the area was a matter of “high concern”.

“The chamber has made a submission to the Commission For Sydney asking that they ensure there is a focus on supporting business growth ... (we are) lobbying the city of Parramatta to ensure the draft economic plan supports all existing businesses in Parramatta.”

The construction and the food service industries are at the top of the list for failures, with a lack of planning and “insufficient working capital” labelled as the main harbingers for failure.

While Mr Pearce’s Darlinghurst store remains a strong business he wouldn’t rule out a return to the western Sydney suburbs, but would like to see small businesses given greater incentives to stay, with appropriate rent prices.

“With so much money being spent for development in many areas, it’s pushing the rent higher for small business owners who now have to compete with huge international brands or corporates.”