A new report has revealed that while small-business owners remain determined and optimistic about the future, their capacity to absorb ongoing challenges is being tested like never before.
According to the 2025 Small Business Perspectives Report, prepared by the Council of Small Business Organisations Australia (Cosboa) and CommBank, 63 per cent of small business owners are satisfied with their decision to start their business, with purpose, independence and community connection remaining as strong motivators. Furthermore, 45 per cent expect customer demand to improve over the next 12 months, reflecting cautious optimism about future growth.
However, small businesses are facing numerous economic and regulatory pressures that threaten to erode their optimism. The research found the following insights supporting this:
- 64 per cent of small businesses reported lower profits than last year, a sharp increase from 40 per cent in 2024.
- 60 per cent of small-business owners could not pay themselves at least occasionally, with a quarter regularly dipping into personal savings to stay afloat.
- 72 per cent shared that rising business costs are the single largest obstacle to expansion.
- Compliance is ranked as among the top five business expenses of business owners, who spend more than six hours a week on regulatory tasks.
- Almost three-quarters expect costs to increase again over the next 12 months.
- 76 per cent reported stress or anxiety, and 57 per cent experienced burnout.
- Persistent challenges around workforce shortages, high wage expectations, and the time pressures that limit growth and innovation are cited
“This year’s results paint a clear picture of a sector under strain, but not standing still,” said Matthew Addison, Cosboa chair. “Small-business owners are working harder than ever to keep up with rising costs, workforce shortages, regulatory complexity and the relentless pace of digital disruption.
“Many are dipping into their savings or delaying their own pay to stay afloat, yet they continue to adapt, innovate and serve their communities. What we’re seeing is not a lack of resilience, but a system that needs to do more to support small businesses.”
On a more positive note, small businesses are experiencing efficiency gains thanks to AI, with 46 per cent saying it has improved their business in some way.
“With the right policy settings – fairer tax, targeted skills support, digital investment and meaningful red tape reduction – we can shift the outlook for small business from survival to growth,” commented Addison.
Commonwealth Bank of Australia (CBA) executive GM – small business, Rebecca Warren, agreed on the sense of cautious optimism from small-business customers across the country. “While the operating environment is tougher and more complex than ever, small business owners remain committed to their staff, customers and communities. Their determination continues to inspire us.
“Encouragingly, in my conversations with small businesses, many are telling us they feel more confident about the year ahead,” Warren continued. “Lower interest rates are beginning to support stronger consumer spending, and for those facing challenges, we’re ensuring they have access to the support and tools they need to keep their businesses running.”
“Small businesses are not just economic contributors; they are employers, innovators and community leaders,” Addison added. “With the right support, they will continue to power Australia’s prosperity and shape our nation’s future.”
This article was first published on Inside Small Business.
