A quarter of small businesses are worried about the year ahead, with companies in country areas even more pessimistic.
Declining confidence outside the capital cities was a major reason why 24 per cent of proprietors are gloomy, a national survey of 1,000 small and medium enterprises by marketing services group Sensis found.
Sensis chief executive John Allan said a widening gap in small business confidence in the city and country showed an economic rebound would be patchy.
"Regional Australia is doing it tough," he said.
"Confidence levels vary across the states but in general, regional businesses are significantly less confident than their metropolitan counterparts about the coming year."
The November survey, however, also showed that 51 per cent of small and medium businesses were positive about the year ahead, with big city firms upbeat about profitability.
Confidence was strongest in the finance, insurance, business services and transport sectors but manufacturing was the most pessimistic, below retail and construction, the quarterly report found.
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