Mental health concerns rise for business owners as cost pressures and compliance burdens weigh heavily
Profits have declined for nearly two-thirds of Australian small businesses, while mental health concerns remain widespread, according to new survey findings from the Council of Small Business Organisations Australia (COSBOA) and Commonwealth Bank.
The 2025 Small Business Perspectives Report, based on input from more than 800 small business owners, reveals that rising costs, regulatory demands, and personal financial strain are placing significant pressure on the sector, even as many owners remain committed to their businesses and communities.
The survey shows that 64% of small businesses reported lower profits compared to the previous year, a marked increase from 40% in 2024. Sixty percent of owners were unable to pay themselves at least occasionally, and one in four regularly used personal savings to keep their businesses afloat.
Operating costs were identified as the main barrier to growth by 72% of respondents, while compliance requirements continue to consume significant time and resources, with many owners spending more than six hours a week on regulatory tasks. Nearly three-quarters expect costs to rise further over the next year, according to the report.
Mental health remains a critical issue, with 76% of owners reporting stress or anxiety and 57% experiencing burnout. Despite these challenges, 63% of small business owners expressed satisfaction with their decision to start a business, citing purpose, independence, and community connection as key motivators.
Artificial intelligence is delivering operational improvements for some, with 46% of users reporting benefits. Meanwhile, confidence in customer demand is gradually returning, with 45% expecting demand to improve in the coming year.
The report also highlights continued difficulties with workforce shortages, wage pressures, and time constraints that limit growth and innovation.
“This year’s results paint a clear picture of a sector under strain, but not standing still,” said Matthew Addison (pictured top left), chair at COSBOA. “Small business owners are working harder than ever to keep up with rising costs, workforce shortages, regulatory complexity and the relentless pace of digital disruption.
“Many are dipping into their savings or delaying their own pay to stay afloat, yet they continue to adapt, innovate and serve their communities. What we’re seeing is not a lack of resilience, but a system that needs to do more to support small businesses.
“Behind every statistic is a business owner balancing risk, carrying personal financial responsibility, and navigating a system that often feels stacked against them. With the right policy settings – fairer tax, targeted skills support, digital investment and meaningful red tape reduction – we can shift the outlook for small business from survival to growth.”
Rebecca Warren (pictured top right), executive general manager of small business at Commonwealth Bank, noted a sense of cautious optimism among small business customers.
“While the operating environment is tougher and more complex than ever, small business owners remain committed to their staff, customers and communities,” Warren said.
“We’re proud to advocate alongside COSBOA on our shared goals to reduce friction, build resilience and unlock productivity for small businesses. Whether through smarter regulation, digital capability programs, or better access to finance, we’re focused on practical measures that make a real difference.
“Encouragingly, in my conversations with small businesses, many are telling us they feel more confident about the year ahead. Lower interest rates are beginning to support stronger consumer spending, and for those facing challenges, we’re ensuring they have access to the support and tools they need to keep their businesses running.”
COSBOA has stated it will continue to push for policies that support Australia’s 2.5 million small businesses, including tax reductions, simplified compliance, and investment in skills and digital capability through initiatives such as Cyber Wardens.
“Small businesses are not just economic contributors; they are employers, innovators and community leaders,” Addison said. “With the right support, they will continue to power Australia’s prosperity and shape our nation’s future.”
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