This is according to Business NSW regional manager Kellon Beard, who said this is also a concern across the State in the wake of the COVID-19 pandemic.

On the other hand, many businesses are looking to expand their capacity to meet demand, with more prioritising expansion rather than downsizing.

The Business NSW December business conditions survey stated that businesses have shown their resilience and optimism in the past nine months but this confidence can be quickly eroded by lockdowns and border closures.

"The survey, conducted right across NSW, shows that business confidence was positive for the first time since June 2018, however much of the survey was completed prior to the Christmas lockdowns," Mr Beard said.

"What this survey clearly shows is the resilience and optimism among the business community in NSW."

He said the NSW government has listened to the needs of businesses and responded by easing restrictions and opening up communities.

"However, since the survey results were finalised, we've heard from business owners on the Northern Beaches and in border communities about how quickly confidence can be eroded with swift decisions like lockdowns and border closures," Mr Beard added.

The first quarter of 2021 will be crucial for businesses as several government support packages are reduced or finished.

"Despite overall increases in confidence, 23 per cent of businesses claim they are at a high risk of failure when supports such as JobKeeper, tax relief, interest waivers and other measures conclude," Mr Beard said.

"This vulnerability will hang over the small business sector for much of the year and will need to be factored into decisions about withdrawing support measures."

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