As we edge closer to the last quarter of the year, it’s time to start planning ahead. With Christmas literally just around the corner once again, ensuring that your business is “Christmas ready” is very important. What are the top 10 challenges facing small business in Australia in 2024? Let’s take an in depth look at the issues small businesses are facing and how you as a SMB owner can action things NOW to make it a smoother ride.
1. Staffing Challenges
It will come as no surprise to you that staffing challenges ranks highly in the number 1 position. According to the Australian Bureau of Statistics and the Australian Chamber of Commerce, nearly one – third of Australian businesses are facing severe staffing shortages. The worst hit being the building trade, clerical staff, sales personnel and hospitality workers.
So why is this the most significant issue facing small business in Australia in 2025? Challenges in recruiting talent have occurred due to a lack of applicants and applicants not possessing the required skills.
Many small businesses have noticed it’s taking longer to find the right people for their positions. With the nature of job vacancies in SMBs being skewed towards lower skilled positions and more applicants seemingly more interested in qualifying for Centrelink benefits, it could be a long road ahead.
2. Economic and Regulatory Pressures
Coming in at the number 2 position for the top 10 challenges facing small business in Australia in 2024 are economic and regulatory pressures. What does this mean exactly?
As inflation rises, costs inevitably follow. According to ACCI’s Small Business Conditions Survey 2024, costs have risen by up to 80%. With the skills and worker shortages, government regulations, profitability concerns and economic activity challenges, these pressures are weighing heavily on the SMB owner.
There seems to be more red tape compliance issues facing SMBs. Compared to 12 months ago, SMBs are spending more time and money complying with these regulations.
3. Financial and Profitability Concerns
It was recently reported by the ACCI that nearly 40% of small businesses anticipated a reduction in profits in the 2023-2024 financial year, compared to the previous year. With that now behind us, will we see any improvement in 2024-25?
Cash flow is becoming a bigger problem daily. As mentioned earlier, SMBs are facing rising costs, which are significantly affecting them. These stress factors add even more challenges and obstacles.
With the unsteadiness, many businesses owners fear losing customers if they raise their prices, even though their costs are increasing. This leaves them in a precarious situation, leading to diminished profits.
4. Marketing and Customer Acquisition
Number 4 in the top 10 challenges facing small business in Australia in 2025 are marketing woes. Always a dark horse for many business owners, marketing can either make, or break you.
With over half of small business owners feeling overwhelmed by the rigours of marketing, it’s no wonder it’s a tough road to walk down. Maintaining consistency and producing quality content is an ongoing nightmare for many SMBs. Creating content, planning a marketing strategy, determining what is working / measuring performance and posting on social media is what consumes most of their time.
Many SMBs procrastinate when it comes to these marketing tasks. This is one of the reasons why Homer Digital Marketing focuses in these areas. The good news is, that despite the challenges, there are companies like ours out there who can help you. With 39% of small businesses planning to increase their marketing budgets this year, many may seek services that can help them improve their channel mix and work more efficiently.
5. Technology and Digital Transformation
Leveraging technology, particularly AI, is becoming more crucial for SMBs to reduce costs and increase productivity. AI is helping the smarter SMBs differentiate themselves in the marketplace. However, it’s surprising to find that only 25% of business owners are using AI tools regularly.
The other major concern in technology and digital transformation is Cybersecurity. With 43% of business leaders emphasizing the need to protect their businesses from increasing cyber threats, this is a serious concern. SMBs are consistently facing such issues as Cyber risk, Hacking, Phishing and Ransomware, just to name a few of the daily threats. This is something that is definitely keeping many SMB owners up at night.
6. Mental Health and Work-Life Balance
Ever present in today’s society is the awareness of mental health and that elusive life work balance. The blurring of work and personal life boundaries often leads to mental health issues. In fact, it has been reported that nearly half of respondents in a recent survey recognised this as an issue.
So, why is it so difficult to find that balance between work life and personal life and why are there so many mental health issues present? In today’s world, many things seem to be harder than they used to be. Before, if you wanted to promote your business, you’d just pop an ad into the Yellow Pages. Depending on either the name of your business, or the amount you spent, you’d appear closer to the front of the listings. Keeping your ad factual and showing what you did was all you needed to do.
Today, you have to know your exact target audience, their pain points, their likes and dislikes, their preferred social media platform, what will get them engaging plus so much more. You’ve got to ensure that your messaging is on point and that you are consistent with your outreach. There is so much more to do than sticking one ad up in a big yellow book once a year.
That’s just in marketing. So it’s no wonder business owners and employees alike are struggling to find that balance. In fact, 34% of business owners have noticed an increase in mental health issues within their teams. Dealing with this, plus the many other factors SMBs have to deal with these days will be the main reasons this has increased.
7. Government Regulation and Compliance
Government regulation and compliance comes in at the number 7 spot for the top 10 challenges facing small business in Australia in 2025. Briefly mentioned earlier in this article was the amount of red tape businesses now face. The impact of this red tape is having a major impact on their operations, with 61% noting an increased impact in the last 12 months.
21% of businesses reported that they spend between $5,001 and $20,000 annually on compliance, with 20% spending even more. As this becomes more and more of a problem, it’s yet another issue that SMBs must face. Additionally, 73% of respondents reported that they find the conflicting definitions of what constitutes a small business within the Fair Work Act to be confusing.
8. Social and Environmental Concerns
Global conflicts create significant concern amongst SMBs. Geopolitical tensions have business leaders worried about the impact these could have on trade and stability. Unease amongst global governments can lead to trade restrictions, tariffs, sanctions or even embargoes. These disrupt supply chains and increase costs for businesses that rely on international trade.
Political instability in key regions can cause fluctuations in currency values, commodity prices and stock markets. This can lead to delays or shortages, or increased costs in sourcing materials or goods.
Economic uncertainty in heightened geopolitical areas can lead to broader economic instability. This affects consumer confidence, investment decisions and overall business performance.
This doesn’t even take into account the requirements now expected from SMBs towards climate change, carbon-reducing technologies and renewable energy investments. The bar is high for these, leaving many SMBs with ambitious targets to reach.
9. Difficulty in Retaining Customers
Due to heightened competition and shifting consumer behaviours, retaining customers has become increasingly difficult for small businesses. Keeping customers loyal these days is challenging. There are many more choices and businesses now have to jump through more hoops to attract, and retain. This ultimately costs them more in increased marketing costs and retention methods.
So, what can a small business do to keep customers happy and loyal? There are many different ways a SMB can increase their customer retention levels. From better customer service, through to promotions and offers. It’s simply about doing what it takes to make it work.
10. Challenges with Digital Transformation
Rounding up our top 10 challenges facing small business in Australia in 2025 are challenges with digital transformation. Many small businesses struggle with the implementation, understanding and optimisation of digital tools and platforms.
This includes difficulties in integrating new technologies into existing processes and ensuring that staff are adequately trained. Without proper knowledge and training, many SMBs will struggle with these challenges.
Conclusion
In this article we’ve helped you uncover the top 10 challenges facing small business in Australia in 2025 as we slide into the Christmas period. We’ve shared with you the difficulties being faced, and now we’ll help you find some solutions to these challenges.
By leveraging AI tools and affordable technology, SMBs will be able to streamline operations, enhance customer retention and manage compliance effectively. Being open about flexible work arrangements may help SMBs attract and retain talent. Using innovative recruitment strategies to address staffing shortages could also benefit SMBs by standing out amongst competitors in this limited pool of talent.
Focusing on effective cash flow management and successfully navigating rising interest rates carefully will help SMBs maintain more financial stability.
Ensure that new technologies are integrated seamlessly into current systems. Spend time and energy on your staff, so they are fully trained in using the new technologies. These will save you much angst going forward.
Prioritise a strong marketing strategy. Without this, you’ll stay exactly where you are. It only takes one of your competitors to decide to do something differently for a major impact on your business. One move and they could be stealing away your customers and your business.
Consider working with a professional on your marketing strategy so that you get expert solutions in crafting targeted campaigns, optimising digital presence and driving growth in a competitive market. Homer Digital Marketing has over 27 years of experience, so reach out to us today.
We hope that you’ve enjoyed our article on the top 10 challenges facing small business in Australia in 2025. Following for more articles coming weekly. Check out my other articles on LinkedIn.
