Firm failure: 508 on brink
GOLD Coast businesses are slightly more likely to succeed than they were this time last year – but 3.4 per cent are still at risk of insolvency, new data shows.
Research by insolvency firm SV Partners suggests 508 of the Gold Coast’s 40,000plus businesses are teetering on the edge, including nearly 250 with annual revenue of more than $1 million and another 37 with turnover of more than $10 million.
The number is slightly lower than indicated in last year’s data, which showed a staggering 527 Coast businesses, or 3.6 per cent, were likely to fold within a year.
The data shows the Gold Coast has the highest number of likely business failures in the State, and the fourth highest nationwide, behind Sydney, Melbourne and Parramatta.
SV Partners director Matthew Bookless said decreasing infrastructure spend after the highs of the Commonwealth Games preparation could contribute to a decline in other sectors.
“The period following the Commonwealth Games will provide businesses with some clarity about their financial position and prospects, without the significant unknowns surrounding the Games and the benefits they will bring to businesses,” he said.
“While infrastructure spending is likely to be lower than in the lead up to the Games, investment is expected to continue with M1 upgrades, Cultural Precinct development and Gold Coast Airport upgrades to continue building on the lasting legacy left by the Games.
“Despite this continued investment, it is expected that small to medium sized construction businesses, particularly those operating in finishing trades will feel the effects of reduced activity post Games, with 88 construction businesses currently facing imminent collapse.”
The report said local restaurants were also under pressure, with some showing signs of distress after being issued statutory demands by the ATO and penalty notices for directors.
Mr Bookless, currently the liquidator of collapsed firm Future Urban Residential, said the outlook was brighter for tourism-related industries.
“For accommodation and food services the risk of insolvency dropped from 7.3 per cent to 7 per cent in 12 months, while retail services shrunk from 4.4 per cent to 4 per cent,” he said.
“It will be interesting to see whether tourism numbers receive a material bump or remain steady in the six, 12 and 18 months following the Games, and the effect on discretionary spending.”
The company’s findings claim a total of 12,338 businesses or 2.4 per cent of incorporated Australian businesses across all industries were at high to severe risk of financial failure over the next 12 months.