The challenges of opening a business in a regional town

Shelby Tooms, a hairdresser, moved from Adelaide to Broken Hill, a remote outback town in New South Wales, with dreams of starting her own business. "After moving to Broken Hill, I found there weren't many hairdressing job opportunities," she said. "So, I had no choice but to open my own shop."

Despite the many challenges of running a business in a remote town, Ms. Tooms says it's the "best decision she's ever made." Initially, she rented a small shop, but within 12 months, she was ready to move to a location with higher foot traffic.

Ms. Tooms says that managing rising operating costs, such as rent, while maintaining "country prices" for customers is a challenge. Like Ms. Tooms, Abigail Hughes is also grappling with the challenges of expanding her business in Broken Hill. After successfully running a coffee business out of a van, Ms. Hughes decided to take the plunge and contacted the owner of a vacant shop near Broken Hill's main street.

Ms. Hughes said, "I was just sitting in front of the shop a few times a week, for a few hours each time, counting the foot traffic with a counter, thinking, 'Hey, this might actually work.' I wanted to cater more to the locals, mainly to be their community coffee shop." Despite finding the ideal location, Ms. Hughes says that renovating and setting up the shop was a challenge.

"You can't always get tradespeople, equipment, or materials as easily or affordably as you can in a big city," Ms. Hughes said, adding that her husband and father often drove three hours to Mildura to buy renovation materials. "Often, they didn't even have the materials we needed, so we ended up having to go to Adelaide."

Clifford Wren, a real estate agent in Broken Hill, says that shopfronts on Argent Street, the city's commercial precinct, can be expensive for businesses, but some parts of the street are more affordable. "In the main central area, there are two blocks where most of our merchants are concentrated, so prices are slightly higher than in most places, but overall, there are varying levels of affordability across different areas."

Mr. Wren said, "There are some vacant commercial shops on Argent Street, and some ordinary families want to open a pie shop or a fashion shop or something like that. We're talking about small numbers, a purchase price of AUD 150,000, so if the bank requires a 70% loan, or a 30% down payment, then it's affordable because they have enough assets in their homes to buy these properties." Mr. Wren says that in his 20-plus years in commercial real estate, he has seen about three out of ten commercial loans "get approved."

"It comes down to the ability to pay the bank, and the bank's sufficient risk satisfaction with the assets or business you're running." Paula Martin, Executive Director of Business NSW Regional and Visitor Economy, says that three main obstacles affect business owners in the state. "What you're seeing is rising business costs—the cost of starting a business is high. The cost of hiring employees is high, the cost of insurance to run a business is high, and the cost of energy to run a business is high."

Ms. Martin says that regional businesses face more challenges, including finding employees with the right skills, network connectivity issues, increased transportation and freight costs, growth costs, and connection to supply chains. But she says that regional business owners are also more innovative. "They are slightly more innovative because they have to work harder to make sure customers find them, customers get to them, and they can actually ship their goods out in a cost-effective way so that customers can afford them."

Amanda Murray and her husband, Liam, purchased the Broken Hill Bookstore in December. Ms. Murray says she has noticed the camaraderie among shop owners on Broken Hill's main thoroughfare. "In retail, I've always tried to help other local small businesses and buy their products as much as possible."