Small Business challenges, June update, 2025
Aussie small businesses are doing it tough – But there are steps you can take
Increased strain. Rising costs, falling customer demand, and seasonal slowdowns are just part of the picture. And now artificial intelligence (AI)_- adding both opportunities and new pressures.
If you’re running a small business, you’re not imagining it: things are harder than they’ve been in years. But there are practical steps you can take to adapt and move forward.
What’s Putting Pressure on Small Business?
🔹 Wage Increases:
While recent wage increases are essential for helping the lowest-paid workers manage the rising cost of living, they’re also putting pressure on business owners. For many, higher payroll costs can’t be absorbed and must be passed on through price increases — at a time when customers are already spending less.
🔹 Seasonal Slowdown:
Winter often brings a dip in foot traffic, especially for hospitality, tourism, and some retail sectors. Combined with rising overheads, this seasonal lull can push cash flow to the brink.
🔹 Consumers Are Spending Less:
Australian households are tightening their belts. Mortgage repayments, grocery bills, and utility costs are eating into disposable income. Discretionary spending is down — and that directly affects cafes, shops, and service providers.
🔹 Operating Costs Are Up:
Electricity, insurance, stock, freight, rent — everything costs more. Many small businesses are running on profit margins below 5%. Some are dipping into reserves just to keep the lights on, while others are making the heartbreaking decision to close their doors.
🔹 The Impact of AI:
AI is reshaping industries at a rapid pace. For small businesses, this presents both a risk and an opportunity. Large companies are adopting AI tools to automate tasks, cut labour costs, and improve customer service. That’s raising the bar for small operators, who may struggle to compete without similar technology.
At the same time, AI can empower small businesses — by reducing admin, streamlining marketing, improving inventory management, and even generating content. The challenge is knowing where to start, and how to implement it without major expense or disruption.
What Can You Do? Practical Steps Forward
Here are some strategies small businesses can use to stay resilient and competitive:
✅ Cut Costs Without Cutting Corners:
Review your expenses line by line. Can you reduce energy use? Are there alternate power companies you can switch too? Cancel unused subscriptions or consider more cost-effective alternatives.
✅ Reassess Your Offerings:
Introduce value-oriented options to suit budget-conscious customers. Bundle items or products to encourage higher average spend. Small changes can make a big difference. Consider the lead of Corporate fast food and the ‘meal deal’ for consumers, what could this look like?
✅ Use AI to Your Advantage:
Explore free or low-cost AI tools that can support your business. For example:
Use AI to write social media posts or product descriptions.
Automate customer replies through chatbots.
Use AI-driven inventory and sales tracking to make smarter restocking decisions.
Start small, and build as you go.
✅ Boost Your Online Presence:
A strong digital presence is no longer optional. Ensure your website is up to date, regardless of how small your business might be, and is easy to navigate on mobile phones. Stay active on social media and connect with your community.
✅ Build Customer Loyalty:
Give people a reason to return. Offer loyalty programs, special offers for repeat customers, or personalised service that bigger chains can’t match.
✅ Collaborate Locally:
Team up with nearby businesses for joint promotions, shared events, or bundled services. Consider attending community events to showcase your products. Greater visibility + community support = stronger business.
✅ Ask for Help:
Don’t go it alone. Reach out to business advisors, local chambers, or mentoring programs. Many offer free guidance and resources tailored to small business needs. Look at government (Federal/state/Council) grants and support for small business.
✅ Look After Yourself Too:
Running a business is demanding, especially in tough times. Make time for rest and mental wellbeing. YOU are the most valuable asset your business has. Delegate tasks to others to free up your time. Dont be the only one who knows how to do everything in the business.
You’re Not Alone
These challenges are real, and they’re hitting small businesses across the country. But there’s also strength in the small business community — in your adaptability, your creativity, and your connection to your customers.
