• Cashflow and profitability the top concerns keeping small business owners awake at night
• Worries about inflation, the cost of doing business, staff turnover and red tape begin to ease
• Small business owners making timely tweaks to meet challenges like seeking better supplier terms, increasing marketing and investing in training, talent and customer communications

More small business owners have identified cashflow and profitability as the biggest worries keeping them awake at night, but they are making timely tweaks to their operations to tackle growing challenges.

Other concerns about inflation, the cost of doing business, staff turnover, labour shortages, and red tape have begun to ease from the high levels 12 months ago.

The latest SME Business Insights report for Q1 2025 from NAB Economics released today highlights the biggest challenges amongst more than 600 small business owners:

• Cashflow was the top concern for small business owners (43%, up from 34% in Q1 2024).
• Profitability was also identified as more challenging (38%, up from 30%).
• Inflation and concerns about the cost of doing business have eased (30%, down from 33%).
• Concerns over staff turnover and labour shortages (29%, down from 35%), government policies and red tape (27%, down from 35%), and interest rates (10%, down from 16%) have eased.

For the first time as part of this survey series, small business owners were asked what they were doing to tackle these challenges:

• One in two (50%) small business owners are looking to cut costs where possible and seek better terms with their suppliers.
• Almost four in ten (37%) are planning to increase their marketing efforts.
• Around three in ten are reviewing their cashflow and working capital processes (29%), investing in new training, talent and people (28%), changing their pricing strategy (28%) and improving their customer communications and management (27%).

While the uncertainty of global tariff changes continues to loom, NAB small business executive Krissie Jones said small business owners all over the country remained resilient and brought new, innovative ways of thinking to tackle ongoing and emerging challenges head on.

“The last 12 months have been challenging for many small business owners. Cashflow and profitability have become even more pressing concerns and are the big things keeping them awake at night,” Ms Jones said.

“Much like consumers embraced ‘thoughtful spending’ to manage the higher cost of living, small business owners are responding to ongoing challenges and emerging uncertainty, especially with tariffs, by making ‘timely tweaks’ to lower their operating costs while maintaining their ability to flex quickly.

“Small business owners have certainly welcomed lower inflation, and that first interest rate cut, while their concerns around staff turnover, labour shortages and even red tape have eased slightly.

“Many small businesses say they are keen to make timely tweaks like improving supplier terms, boosting marketing efforts, investing in their people with new training and talent and even improving the way they communicate with customers,” Ms Jones said.

National Safety Products, a small business based in Adelaide, employs 15 people to produce road signage and safety products for national infrastructure and road projects. Director John Klopp said they’d invested in their equipment and people to take advantage of the boom in transport infrastructure.

“Staffing was definitely a challenge for us after COVID, but in the last 12-18 months, it has improved. We need a wide range of skills given our business, from operating complex cutting and printing machinery through to software, graphics, and artwork,” Mr Klopp said.

“We’ve really focused on developing our current staff and building out our core values and vision which has turned our employees into great advocates and, in turn, has helped us recruit new staff through word of mouth and their personal networks.”

“We’re looking to expand into new market locations, driven by Australia’s growing infrastructure boom. Beyond the projects we’ve secured in South Australia, like the Main South Road duplication, we’re looking at growing into the ACT, which is exciting.”

“We try to use Australian-made products as much as we can but some overseas components, like the reflective material from Germany and the aluminium processed in China, are unavoidable. We have seen an increase in costs, especially aluminium, and we’re keeping a close eye on the tariff situation as it unfolds. When there is uncertainty, it’s crucial to maintain close relationships with our Australian suppliers, importers and overseas manufacturers,” Mr Klopp said.

Notes to editors

• Data sourced from NAB Economics SME survey Q1 2025 of 600 SME owners.