Drop in risky business
Fewer enterprises stare down insolvency
THE number of Cairns businesses at risk has dropped by more than one per cent since August 2017.
The encouraging trend still indicates 110 businesses at high risk, the SV Partners Commercial Risk Outlook Report shows.
The report shows 2.2 per cent of local businesses are at high to severe risk of insolvency in the next 12 months, lower than the 3.2 per cent of businesses at risk identified in August 2017.
“While there has been a lot of talk about a recovering economy in Cairns, local businesses will still need to focus on cash and operational efficiencies in the short to medium term,” SV Partners associate director Frank O’Neill said.
The report found the industries most at risk in the region were accommodation and food services, and retail, with 23 and 16 businesses facing financial distress respectively.
“Accommodation, food and retail are under pressure – they are significant employers in Cairns,” Advance Cairns CEO Nick Trompf said. “This is far from Armageddon – but retail is vulnerable and will continue to be in the future.
“To compete with online stores, retailers need to find a point of differentiation with their product offerings in their outlets.”
He said the resources sector was contributing to a “slow steady recovery” in the region.
“We are not back in the halcyon days of 2007, far from it,’ Mr Trompf said.
“The pick-up in resources has also provided extra activity in Cairns, particularly from engineering firms producing materials for far flung states, and labour hire firms hiring staff for the resource sector.”
Earlier this month New Century Resources announced the New Century Mine would be reprocessing waste tailings, with fly-in, fly-out operations based from Carins.
Nick Loukas of the Cairns Chamber of Commerce said business confidence was growing despite slower than normal domestic tourism.
“The fluctuations in tourism that we see normally is always something that is quite difficult,” Mr Loukas said.
“Domestic tourism is a bit flat at the moment with the reductions in capacity of flights to Cairns.”
He said business owners facing insolvency should not make emotional decisions.
“They should speak to an accountant or get financial advice,” Mr Loukas said.