Western Sydney businesses the most at risk of closing: data

Businesses in Western Sydney are the most likely to close down than anywhere else in the country, according to new data, as they struggle to stay afloat amid rising rents and energy prices.

Businesses in Western Sydney are bearing the brunt of massive risk and are the most likely to close down than anywhere else in the country, as they struggle to stay afloat amid rising rents and energy prices.

Nearly seven per cent of the 143,000 businesses in Western Sydney are forecast to close their doors in the next 12 months according to the latest March Business Risk Index from CreditorWatch.

Six of the highest risk regions in Australia are in Sydney’s west, with businesses in Bringelly, Merrylands, Canterbury, Bankstown and Auburn facing a nearly 8 per cent average default rate in the next 12 months.

Additionally, insolvency levels, business failure rates and payment defaults had grown far higher for Western Sydney businesses over the last year then the rest of Sydney, with the hospitality sector the most at risk with a nine per cent closure rate. Retail and construction sectors are also taking a hit with nearly six per cent closure rates.

In comparison, businesses in Sydney’s lower north shore and Northern Beaches had the lowest risk rates, with Ku-ring-gai, Warringah, Lane Cove, Manly and Pittwater under or around five per cent.

For many small business owners in Western Sydney, making ends meet during a crippling cost of living crisis is a daily struggle.

Amjad Hussain has been a business owner for more than 30 years, running ice-cream shop Al-Asr in Merrylands. Mr Hussain said in the last two years he has not been able to make a profit.

Amjad Hussain at his Merrylands ice cream shop Al-Asr. Picture: Tim Hunter.

On top of the $6000 monthly rent, his business was slugged with a $24,000 electricity bill last year, in part due to the high energy costs of keeping freezers and ice-cream machines running.

“The number of customers have decreased but the cost of electricity and food just keeps going up,” he said.

“I would not suggest to anyone to open a small business at the moment, the life is too hard. Over the past two years, because we could not make anything, our savings have also disappeared.”

Pictured is Amjad Hussain at his Merrylands ice cream shop Al-Asr. He says the cost of living has meant he is now unable to make a profit. Picture: Tim Hunter.

Parramatta Chamber of Commerce President Anthony Mazza said it was the first time “in close to a decade” where multiple business members were seeking insolvency advice.

“We’re seeing a number of businesses having those discussions about cash flow and asking what their options are,” he said.

Mr Mazza said insolvency among construction companies was also a major concern, saying that despite the demand for housing the rising cost of materials meant companies had tighter margins.

US President Donald Trump’s tariff agenda has also reduced consumer confidence. (Photo by Brendan Smialowski / AFP)

Business Western Sydney executive director David Borger said with a higher proportion of small businesses and construction companies than any other part of the city, Western Sydney by far cops the brunt of economic shocks.

He said even US President Donald Trump’s tariff agenda would have an impact on investment and consumption in Western Sydney.

“Small businesses rely on consumers and they are spooked at the global uncertainty right now,” he said.

“When consumers see the superannuation they’ve worked hard for all their life go down 10 points overnight, it spooks people.”

Small Business Minister Janelle Saffin said it was good new for small businesses that interest rates are beginning to go down. Picture: NewsWire / John Appleyard

CreditorWatch chief executive Patrick Coghlan said they were expecting insolvency rates to peak in the second half of the year and then decrease pending a second cut to interest rates.

NSW Small Business Minister Janelle Saffin said it was “great news” for businesses that interest rates were beginning to come down and urged struggling small business owners to contact the NSW Small Business Bureau for advice.

‘Western Sydney is the small business engine room of NSW,” she said.

NSW Opposition Leader Mark Speakman said the data showed Western Sydney, the third largest economy in the country was being “punished, neglected and left behind”.

“It builds our homes, drives our trucks, runs our hospitals and keeps the state moving,” he said.

“While families are squeezed and businesses collapse, Labor delivers nothing but cuts and excuses.”

Originally published as Western Sydney businesses the most at risk of closing: data