Businesses in the Illawarra are more likely to fail than most of their compatriots around the country, as the region's enterprises report a pessimistic outlook for the usually booming Christmas period.
According to data from CreditorWatch, a commercial credit reporting bureau, businesses in the Illawarra overall are more likely to be liquidated, be struck off by ASIC or be deregistered in the next 12 months than the national average.
CreditorWatch CEO Patrick Coghlan said regions reliant on younger people with less disposable income were more likely to see higher rates of business failure.
"Setting some regions ahead of others is the average age of the population," he said.
"A higher average income, and a lower or no mortgage means a significant amount more discretionary spend."
The highest risk businesses in the Illawarra are in the Dapto-Port Kembla area, while the most secure are those in the Wollongong CBD and northern suburbs.
Cassandra Bradley opened her boutique Cas & Co on Addison Street in Shellharbour in 2017, selling clothes by Australian designers with a focus on sizes 12 to 20.
"It was about making women of all shapes and sizes feel good about themselves," Ms Bradley said.
The former HR and process improvement professional - who has two Masters degrees to her name - decided to open the store in a career pivot, after finding that clothes sold by chain stores just weren't right.
"When my daughter and I were looking for clothes, all the shops had these ill-fitting, horrible fabrics."
With the support of a "really good" accountant, the business thrived, but after her accountant became ill and passed her books onto a colleague and increasing construction disrupted the Addison Street strip, Ms Bradley decided to go online-only.
"When they closed the road into Shellharbour Village, when they were opening up the road for Shell Cove, a lot of customers bypassed the area. There wasn't as much traffic coming through."
Then, the business was hit by the double whammy of some of the designers Cas & Co stocked going direct to consumer via online stores and customers cutting back their spending as interest rates rose.
In 2023, Ms Bradley closed her store and returned to her corporate career.
"The reality is, the majority of people aren't going to spend from $110 to $300 for a shirt that's produced ethically and environmentally sustainable," she said. "They'll talk about it, but they won't pay for it."
As the region heads into the Christmas period, traditionally a boom time for retailers, many businesses are pessimistic about the outlook ahead.
Data from Business Illawarra's Business Conditions Survey finds that a majority of Illawarra businesses are expecting a slower Christmas in 2023.
"Our members are telling us that interest rate hikes have continued to impact consumer spending and business confidence, but there is hope on the horizon," Business Illawarra executive director Adam Zarth said.
Construction and manufacturing were the sectors most pessimistic, while logistics, media and IT businesses were the most positive.
The number one issue facing Illawarra businesses in the current quarter was the cost of doing business, including insurance, rents, energy, taxes and government charges.
"We are very concerned that the recent interest rate rises also come at a time when the Federal Government is proposing industrial relations changes which will further increase the cost of doing business," Mr Zarth said.
The outlook was brighter for the first quarter of 2024, with businesses more positive about the next quarter than the current quarter. Mr Zarth said reforms by the state government were encouraging, with further action on housing addressing key workforce pressures.
"We applaud the NSW Government for introducing business measures to help in these tough times for those with loans, including changes to procurement rules, moves to scrap the Emergency Services Levy and energy support to small and medium businesses," he said.
"Workforce pressures remain a problem facing local businesses, and our recommendations for providing affordable housing in the right place for key workers will take time to materialise. However, the NSW Government is taking big steps in the right direction for our members whose staff are struggling to pay their rent."
Mr Coghlan said with prospects of a rate cut in the second half of 2024, if businesses can survive the next six months, there may be better times ahead.
"We know this is going to be a fairly short and sharp downturn."