Australian small businesses are coming under increasing financial pressure, with almost two in five reporting lower revenue over the past year as higher costs, weaker demand and regulatory burdens squeeze margins.
A new MYOB survey found revenue has declined for a significant share of small operators, reinforcing signs that the broader economy is becoming more difficult despite Australia avoiding a major downturn.
Small businesses have been particularly exposed to higher interest rates because many rely on short-term borrowing, commercial property leases and personal guarantees to fund operations.
At the same time, wages, electricity, insurance and input costs have continued rising.
Costs collide with softer demand
The pressure is increasingly coming from both sides of the profit equation.
Businesses are paying more to operate but face resistance from customers when attempting to pass those costs through.
Households carrying mortgages have reduced discretionary spending as the Reserve Bank’s rate increases flow through budgets, while weaker consumer confidence has made it harder for retailers, hospitality operators and service businesses to maintain sales.
Regulation is another growing concern.
Business owners report spending increasing amounts of time and money meeting tax, employment, reporting and compliance requirements, creating a disproportionate burden for smaller firms without large administrative teams.
The figures arrive as the RBA considers whether inflation remains strong enough to justify another interest rate increase.
For small businesses, another hike would raise borrowing costs just as revenue growth is weakening.
The survey suggests the strain appearing across Australia’s household sector is increasingly spreading into the businesses that employ millions of Australians.
