ACCI reports small businesses under pressure

Australia’s small business owners have always been a tough mob, but the latest Small Business Conditions Report from the Australian Chamber of Commerce and Industry (ACCI) shows how hard the past year has been. Rising costs, workforce shortages, red tape pile-ups and stubbornly high stress levels are eating away at confidence, cash flow and in many cases, owners’ wellbeing.

While 82 per cent of owners say they’re confident about the future, the report makes it clear this confidence often reflects sheer resilience rather than genuine stability.

“The pressures on small businesses have intensified”, and far too many operators are “spending time navigating red tape rather than serving their customers,” said ACCI CEO Andrew McKellar.

The small business survival squeeze

The headline finding from the ACCI offers a vision of a small business sector in trouble. Twenty-eight per cent of businesses said they’d seriously considered shutting down in the last 12 months, while 31 per cent are either already in the process of closing or worried they’ll need to within the next year.

Regional operators are particularly vulnerable and the impact of the closure is being felt on a larger scale. When a small business shuts down in a country town, it’s not just one business gone,  it’s a local job provider and often a core community service.

Yet in spite of their concern for the future, many owners say they’re backing themselves and soldiering on. Industries such as financial services and manufacturing are the most optimistic, with confidence at 94 per cent, while accommodation and food services remain the most anxious at just 75 per cent.

Rising costs hit from every angle

The biggest issue hurting small business health is cost pressure. The top expenses keeping owners awake include: rent, energy and utilities (38 per cent); cost of inputs (37 per cent); staff wages and training (36 per cent); admin and overheads (30 per cent) and insurance premiums (27 per cent).

Owners are making tough calls to stay afloat. Nearly a third have slashed investment in equipment, and others have downsized premises, trimmed staff or reduced insurance cover. However, the report warns, these quick fixes come with long-term consequences, including lower innovation and slower growth.

Workforce: Hiring headaches and compliance overload

We all know finding good people is hard, but the report shows just how hard: 35 per cent of businesses say they’re struggling to recruit or keep staff. That figure skyrockets in construction (54 per cent), manufacturing (42 per cent), and healthcare (41 per cent)

Hiring staff is not the only issue. Recent changes to workplace legislation mean understanding the rules is also a battle. Almost half of business owners (42 per cent) say they find termination and unfair dismissal regulations challenging. Casual conversion, award classifications, payslip rules and super deadlines also feature high on the confusion list. With payday super coming in from July 2026, the clock is ticking. Only 63 per cent of businesses are aware of the change, and among sole traders, awareness drops to 38 per cent. Many worry about cash flow and software compatibility once real-time super kicks in.

Stress and mental health issues

The pressures of running a business are increasing for many small business owners.. A whopping 44 per cent rate their stress levels at 7 out of 10 or higher. That number soars to 52 per cent for businesses with 15–24 staff, those stuck in the tricky middle ground of having too many people to stay nimble, but too few to afford HR or compliance specialists .

The top stress drivers? Cash flow pressure (41 per cent), uncertainty about the future (35 per cent); personal financial obligations (35 per cent) and managing staff and customers (33 per cent).

Despite this, 72 per cent of business owners say they’re satisfied with their role. There’s no shortage of passion among Australian businesses. Instead, it’s the pressure cooker environment that’s pushing many to the brink.

Red tape a burden

If there’s one thing almost every small business owner can agree on, it’s this: red tape sucks up time like nothing else. According to the survey, 77 per cent of businesses handle compliance internally, and 39 per cent spend more than six hours a week on it. For businesses with 15–24 staff, that jumps to over 58 per cent spending six hours or more weekly

The financial hit is just as painful:

• 61 per cent spend more than $20,000 a year on compliance
• In bigger small businesses, 57 per cent spend over $50,000 a year
• Nearly half (48 per cent) have been penalised for non-compliance in the past four years

Taxation is the biggest headache (28 per cent say it’s hard to comply with), followed by licensing, environmental obligations and HR rules.

The ACCI warns that complicated regulations and red tape are pushing business owners to the brink of bankruptcy, and they need help.

“Small businesses are not asking for rescue, they are asking for tools to keep fighting, growing, and contributing to their communities,” reads the report.

The tech effect

While many of the findings of the study have been bleak, there’s good news here: 59 per cent of small businesses say technology and AI are already having a positive impact, and 62 per cent expect the benefits to grow over the next few years

Still, tech and AI uptake is uneven. Many sole traders and smaller operators are holding back because of cost pressures. Cybersecurity is also a weak spot, with 71 per cent of sole traders lacking cyber insurance. While 86 per cent of insured businesses feel confident in their cyber readiness, only 73 per cent of uninsured businesses share that confidence

Some industries, such as the arts, education and admin services, are especially hesitant about digital adoption, highlighting there is a need for better training and government support.

Women in small business: under-recognised

Women own 28 per cent of small businesses in Australia, yet are often ignored by policymakers. Still, this hasn’t deterred them from powering ahead in some sectors. Women make up  37 per cent of small business owners in regional areas amd dominate industries such as healthcare, education and the creative arts.

However, in male-dominated sectors, 39 per cent of women say they’re not seen as credible, and many cite barriers around finance, facilities and juggling care responsibilities.

The bigger the business, the bigger the barriers reported. Fifty-four per cent of women in 2–9 person businesses report challenges. Eighty-three per cent of women in businesses with 15–24 staff say the same.

What’s next?

The ACCI suggests small businesses need practical, long-term support. The report claims that less red tape, more certainty, and policies that actually match the reality of running a small operation could have a tremendous impact on small business success rates.

To facilitate this, the ACCI argues the Instant Asset Write-Off should be made permanent, digital adoption should be backed with grants and training, workplace laws need simplification, and mental health and wellbeing programs must be more accessible.

“If policymakers want a dynamic, competitive economy, they must start by empowering small business to thrive” the ACCI proclaims.

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