What’s really worrying small business owners in Australia

According to the findings of the third annual The Big Small Business Survey, Australia’s two million-plus small business owners are navigating a transformed landscape in 2025. Katrina McCarter, one of four Australian business owners conducting the survey, breaks down what’s really worrying small business owners in Australia—and the key insights which could help.

This year’s survey highlights a shift in the concerns of small business owners away from keeping up with demand, managing workloads and maintaining mental health.

Now, rising costs top the list of challenges.

While fewer than one in five respondents cited costs as a significant issue in 2023, close to half highlighted it in 2024.

Other major challenges include finding the right team members, cash flow management, maintaining work-life boundaries, and understanding the best growth strategies. And integrating emerging technologies including AI and leveraging it for growth has become a pressing concern.

Marketing remains a pain point and less than 10% of business owners report they’re worry-free.

Financial challenges are real, with frustration expressed at the high tax burden on SMEs. Still, many business owners are moving forward with energy, identifying opportunities with new partners and scaling operations.

“For small businesses willing to adapt pricing strategies in response to rising costs, invest in staff development and explore partnerships and new technologies, 2025 presents an opportunity to recalibrate for future growth,” said co-author Andrew Griffiths.

This year’s survey was the largest yet, with 646 small business owners from across Australia providing insights into their shifting challenges and opportunities.

Representing diverse industries and demographics, most respondents (69.97%) live in metropolitan areas, 40 per cent report turnovers between $500,000 and $5 million and a third employ fewer than five people.

Five top challenges for small business owners

Staffing

In 2024, 38.39% of respondents had trouble finding qualified candidates, a significant increase from 2023. Keeping existing staff is challenging for 14.86%. Increased labour costs impact 41.18% of businesses.

These workforce challenges are pushing businesses to explore alternative solutions. To bridge staffing gaps, 21.83% of business owners are turning to AI and tech solutions.

“Outsourcing to contractors or offshore staff are also solutions that allow a business to meet demand without committing to the costs of a full-time headcount in Australia,” said co-author Jenn Donovan.

Pricing

Close to one in five (18.27%) respondents report that price increases significantly impact business operations and profitability. Insurance, utilities, rent, and wages are among the primary areas affected. While almost half of businesses feel the moderate impact of the cost-of-living crisis, only 15% have a clear pricing adjustment strategy for 2025 and beyond.

The 10.06% of respondents planning to avoid price hikes entirely risk jeopardizing their profitability.

“Creating a more efficient business and reducing expenses can be helpful, but increasing prices is essential to stay viable in the face of rising costs,” said co-author Andrew Griffiths. “A strategy is required that considers customer expectations.”

Wellbeing

While 58% of small biz owners enjoy the flexibility of running their own business and over 60% value the ability to choose its direction, mental health remains a critical concern. Over 10% worry about providing for their families and nearly 12% struggle to maintain work-life boundaries.

“Small business owners need to prioritize their mental health while supporting those around them,” said a co-author. “Greater access to external mental health and wellbeing resources is essential.”

Marketing

Marketing is an ongoing challenge for respondents. Nearly 45% feel overwhelmed by it, down from 56% in 2023. Key issues include maintaining consistency, understanding effective strategies, and creating quality content on limited budgets.

Almost 40% struggle to keep up with changing marketing trends and technologies, while 43.96% cite consistency as their biggest hurdle. Despite recognizing the importance of marketing, close to 50% of businesses spend less than $5,000 annually on promotions. Over half (50.62%) dedicate only one to three hours a week to marketing efforts.

Investing in the right marketing strategies can attract new business and reduce cost and cash flow pressures. One effective approach is partnering with non-competing businesses that share a similar audience to expand reach.

Technology

An increasingly pivotal role in small businesses is being played by technology and AI tools, with over 63% of respondents saying they have a positive impact. On the flip side, around 20% are apprehensive about it.

In 2024, over 15% of businesses used ChatGPT and other AI tools multiple times daily. Adoption of AI is growing, with almost 47% of business owners investing in AI education compared to 40% in 2023.

Regional businesses are more likely to see AI as a solution to staffing shortages. “As AI becomes increasingly commonplace, businesses that appoint a ‘champion’ who keeps their finger on the pulse of new technology and helps introduce it will be more efficient and productive,” says co-author Tracy Sheen.

Moving forward

The BIG Small Business Survey 2024 underscores that the small business community in Australia will need resilience, adaptability, and innovation to thrive in 2025. Support from the government, particularly in addressing the tax burden, will be crucial for growth and sustainability.

For business owners willing to embrace change and recalibrate, the future holds opportunities for success.

You can access the full report at https://thebigsmallbusinesssurvey.com

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