Planning for the Road Ahead in 2025
The latest research paints a challenging picture for Australian small and medium businesses (SMEs) in 2025 — but it could provide an opportunity for SMEs willing to invest in smarter strategies to rise above the tide.
A recent study by Small Business Loans Australia predicts that business failure rates will increase to levels not seen since 2020 — the height of pandemic disruption.
The return of the Trump administration in the US means drastic changes can happen overnight, impacting businesses worldwide, so agility will be key.
The seven biggest challenges expected to hit small and medium businesses are:
- Tighter Employee Laws & Payroll Compliance
- Late Payments & Cash Flow Pressure
- Increased Competition from Side Hustles
- Financial Services Fees & Unnecessary Costs
- Cyber attacks & Data Security Risks
- Carbon Accounting & Sustainability Reporting
- Navigating Global Volatility
1. Tighter Employee Laws & Payroll Compliance
New workplace laws are creating compliance headaches for business owners. As regulations change, businesses must keep up with a growing number of requirements related to employee rights, workplace safety and fair pay.
These changes often require business owners to invest time and resources into ensuring they meet legal obligations, which can be especially challenging if your business has limited administrative capacity. Failure to comply with these laws can result in costly penalties, legal battles, and damage to your business reputation, adding further pressure on SMEs that are already struggling with tight margins.
We can help streamline the compliance process and reduce the risk of penalties, giving your business the peace of mind to focus on growth rather than legal headaches. Check out our Payroll Services or complete our enquiry form.
“Navigating tighter employee laws is a constant balancing act for SMEs.”
2. Late Payments & Cash Flow Pressure
Late invoices and shrinking cash reserves are a brutal reality for many businesses. Nearly half of all businesses surveyed were forced to reduce their income in 2024, while 31% had to dip into personal funds to cover business expenses.
Even more concerning, one in five businesses had zero cash reserves, leaving them highly vulnerable to late payments and reduced consumer spending.
Our bookkeeping and management accounting services don’t just track your finances — they help you build smarter cash flow strategies, so you can anticipate shortfalls and make confident decisions.
3. Increased Competition from Side Hustles & Start-ups
With more Australians starting small businesses and side gigs, the competition for customers is fiercer than ever.
According to the research, one in two Australians is thinking about starting a business in the next five years, with 38% planning to run a side hustle alongside their main job. Most are driven by the need to supplement income as inflation and interest rates squeeze household budgets.
This explosion of microbusinesses and part-time operators adds another layer of competition for existing SMEs, especially in industries like retail, e-commerce and professional services.
With our support in cost management, pricing strategy and financial forecasting, your business can stay ahead of emerging competitors and identify opportunities to differentiate and grow — even in crowded markets.
“As side hustles and start-ups increase, SMEs must adapt to thrive.”
4. Financial Services Fees & Increased Costs
Many SMEs lack the time, resources or expertise to shop around for the best rates on bank fees, transaction costs and loan interest rates. As a result, businesses end up paying more than necessary for financial services.
These hidden costs can add up quickly, eating into already limited profit margins. For businesses operating with tight cash flow, these extra expenses can become a significant burden that limits their ability to invest in growth or operational improvements.
To overcome this challenge, SMEs need proactive management of their financial services, focusing on reducing unnecessary costs wherever possible. When you partner with us, we help your business identify inefficiencies and streamline financial processes. Check out our bookkeeping or management accounting service.
5. Cyber Attacks & Data Security Risks
Cyber security isn’t just a big business problem — 43% of cyberattacks now target small businesses, and the number of reported incidents has been climbing steadily since 2019. With limited resources and expertise, many SMEs are easy targets, and the financial and reputational damage can be devastating.
Phishing attacks, ransomware and data theft are just some of the dangers that can cripple a business, leading to significant financial losses and reputational damage. For many SMEs, the impact of a cyber attack can be devastating, potentially causing irreparable harm to customer trust and business operations.
Ensuring robust data security and implementing proactive measures like regular security audits, employee training and secure payment systems is crucial.
“Strong cyber security protects your business, reputation, and customer trust.”
6. Carbon Accounting & Sustainability Reporting
With environmental regulations tightening and consumer preferences shifting toward sustainable businesses, carbon accounting is fast becoming a must-have capability for SMEs.
By measuring and reporting on carbon emissions, businesses can gain a clearer understanding of how their operations contribute to climate change. This allows them to identify areas for improvement and implement strategies to reduce emissions, whether through energy-efficient practices, adopting renewable energy sources or optimising supply chains.
Carbon accounting not only helps businesses meet regulatory requirements but also positions them as leaders in sustainability, appealing to environmentally-conscious consumers and investors.
Many businesses have no idea where to start — but with our expertise in carbon accounting, you can track, report and manage your carbon footprint, turning compliance into a competitive advantage.
7. Navigating Global Volatility
The global economic and political landscape is becoming increasingly unpredictable, creating challenges for Australian SMEs operating in an interconnected world. With the return of the Trump administration in the US, businesses must prepare for shifts in global trade policies, tariffs, and economic uncertainty.
Trump’s past presidency saw trade wars, supply chain disruptions and regulatory rollbacks, all of which had ripple effects on businesses worldwide. A renewed focus on protectionist policies could lead to market instability, affecting currency values, interest rates, and the cost of imported goods and services. For SMEs, this means heightened risk exposure, making agile financial planning and contingency strategies more critical than ever.
To remain resilient, SMEs need to build flexibility into their business models, incorporating scenario planning into their financial strategies. This includes diversifying suppliers, securing stable financial reserves and having contingency plans in place for potential economic downturns.
Businesses should also leverage expert financial guidance to model different economic scenarios and create risk-mitigation strategies. By staying proactive, SMEs can avoid being caught off guard by sudden market shifts and ensure they are well-positioned to navigate uncertainty, no matter how global events unfold.
“Uncertainty is inevitable—smart businesses plan, adapt and stay resilient.”
Conclusion
In 2025, Australia’s SMEs are facing a perfect storm — economic pressures, regulatory burdens, cyber threats and rising competition. But the businesses that survive — and thrive — will be the ones that invest in expert financial management, strategic planning and operational efficiency.
We offer exactly that — we’re a trusted partner with expertise in bookkeeping, payroll, management accounting, software selection and carbon accounting. Together, we can cut through the noise, control your costs, and make smarter decisions with confidence.
The challenges ahead are real — but with the right support, Australian SMEs can face 2025 with resilience and clarity.
Want to know more?
We’re more than happy to have a chat about your business and what’s involved with getting started with any of our services. Give us a ring on (02) 8188 9019 or complete our enquiry form.
We provide Bookkeeping & Payroll Services, Management Accounting, Carbon Accounting, and Software Selection & Implementation.
We work with Ecommerce & Retail, Import & Distribution, Manufacturing, Not-For-Profits, Professional Services and Software Developers.
