Three in four small suppliers (76 percent) say they expect further cost increases in 2025, according to new research from NAB.
The bank’s recent SME Business Insights report revealed the key expectations of small to medium-sized enterprises (SMEs) over the next 12 months, incorporating feedback from 600 SMEs on what they believe lies ahead.
Those in New South Wales reported the greatest expected increase in doing business, while businesses in Victoria are expecting profitability to decrease more than any other state.
Expectations also vary widely across industries, with health and hospitality highlighting cost of doing business as their key issue for 2025.
Of all businesses, just one in 50 (two percent) believe the cost of doing business will decrease, with NAB expecting SMEs to focus more on streamlining operations, negotiating with suppliers, reducing energy consumption and managing inventories more effectively.
A significant number also pointed to profitability (22 percent), revenue (19 percent), availability of suitable labour (18 percent) and customer demand (16 percent) decreasing over the next year, with Victorian SMEs feeling particularly pessimistic about the latter.
Also front of mind is red tape, with four in 10 pointing to an increase experienced by their business (41 percent), while one in three has felt the impact of cybersecurity and scam risks (35 percent).
In an attempt to protect themselves from increasing costs and an uncertain market, more than four in 10 plan to increase their adoption of technology (41 percent) and around one in three expect to improve their efficiency and productivity (32 percent).
AI also takes centre stage, with a planned increase in adoption across the business (32 percent), while cybersecurity investment rounds out the list of proactive approaches (30 percent).
On a positive note, around a third of SMEs predict higher revenue (33 percent) in 2025, alongside an increase in employee count (29 percent) and a rise in customer demand (24 percent).
“The findings suggest that while SMEs see ongoing challenges ahead, they also see opportunities and many plan to be proactive about cost reduction and revenue generation to continue to thrive, grow and adapt,” said NAB.
“And there are reasons for optimism. In particular, the likelihood of a first rate cut sometime around mid-year is expected to have an important impact on the psyche of consumers, as well as business people alike.”
