Australia’s small business sector is facing a confluence of pressures, with nearly half considering closure, according to recent data. The challenges range from rising costs and economic uncertainty to mental health strains on business owners, painting a concerning picture for the backbone of the Australian economy.
A November 2025 study by MYOB, surveying 1087 small-to-medium enterprises (SMEs), revealed that 80 percent had experienced either a decrease or stagnation in revenue. Looking ahead to 2026, pessimism remains prevalent, with 31 percent anticipating no change in the economic climate and a substantial 42 percent forecasting a decline.
The pressures are multifaceted. Businesses are grappling with increased costs across essential areas such as utilities and fuel, while simultaneously struggling to remain competitive and manage cash flow. Acquiring new customers is also proving increasingly difficult, exacerbating the financial strain.
Doreen Brown, founder of marketing company Let’s Get Visible, articulated the difficulties faced by many small business owners. “The past two years have been the most challenging for her small business since she started in 2017,” she stated. Brown highlighted the across-the-board increase in operational costs, encompassing software, advertising, insurance, and the general cost of living. She noted that these rising costs are coinciding with a more cautious consumer base, leading to extended decision-making cycles and increased uncertainty in forecasting.
The emotional toll on small business owners is significant. The MYOB report indicated that a considerable proportion are experiencing mental health challenges, with stress being the most common concern (43 percent) followed by anxiety (35 percent). These levels of pressure have remained relatively consistent throughout the latter half of 2025.
Brown emphasized the all-encompassing nature of the responsibilities shouldered by small business owners. “We small business owners are doing everything from delivery to administration to marketing, while also carrying the mental load of financial pressure. Many feel like they’re doing all the right things but still not getting traction.” This constant pressure, she argues, is exhausting.
The sentiment of potential closure is widespread. Matthew Addison, chair of the Council of Small Business Organisations Australia (COSBOA), revealed that almost half of SMEs have contemplated closing or exiting their businesses in the past year. Addison clarified that this isn’t necessarily indicative of long-term inviability, but rather a response to the immediate pressures of rising costs and pervasive uncertainty.
COSBOA’s Small Business Perspectives Report further underscored the financial difficulties, finding that 64 percent of small businesses reported lower profits over the past year, and a concerning 60 percent had, at times, been unable to pay themselves.
Despite the challenges, Addison noted a degree of resilience within the sector. “Most owners remain committed to their staff and communities, adapting through digital tools and efficiency measures. They’re cautiously optimistic about demand improving.”
The Australian government is responding with a series of measures aimed at supporting small businesses. Minister for Small Business Dr. Anne Aly stated that the government is focused on reducing red tape, increasing funding for small business support through the Fair Work Commission and Ombudsman, extending the instant asset write-off scheme, and improving payment times to small businesses.
However, many believe more targeted support is needed. Brown argued for a simplification of compliance and reporting requirements, improved access to small-scale grants, and tax relief for early-stage growth initiatives. “SMEs need less complexity and more practical support,” she said.
The struggles of Australian small businesses are occurring against a backdrop of differing economic fortunes elsewhere. Recent reports suggest that US small businesses are, comparatively, in a more stable position. While the Australian situation is unique, the global economic climate and inflationary pressures are undoubtedly contributing factors.
The closure of Sendle, a prominent Australian logistics provider, in late 2025, further complicates matters for small businesses, adding another layer of disruption to their supply chains and increasing logistical costs. This highlights the fragility of the support ecosystem for SMEs.
Looking ahead, the future of Australia’s small business sector hinges on a combination of government support, economic stabilization, and the resilience of business owners. The challenges are significant, but the sector’s contribution to the Australian economy and community makes its survival a matter of national importance. The need for policies that foster resilience, ease the cost of doing business, and encourage investment in digital capabilities and skills development is paramount.
