Still, small business owners remain optimistic about future growth
A vast majority of small and medium-sized enterprises (SMEs) have seen a rise in operating expenses over the past year, according to new research commissioned by Commonwealth Bank of Australia (CBA).
The report found that 89% of SMEs experienced cost increases in the last 12 months. The most common contributor was utility expenses – covering electricity, internet, and phone services – which were cited by 66% of businesses. Supplier costs were also a key factor, with 47% of respondents noting significant hikes. Other areas affected included marketing (29%), staffing (26%), and accounting software (25%).
On average, business expenses have risen by 10%, although 40% of SMEs reported increases beyond that level.
CommBank’s executive general manager for small business banking, Rebecca Warren (pictured), said small businesses play a vital role in the economy, making up 97% of all Australian businesses and contributing about a third of the country’s GDP.
Despite continued cost pressures, Warren noted that many small businesses are showing resilience and cautious optimism.
“The recent reduction in interest rates has been welcomed with both arms by our small business customers, but running a business today continues to be tough as consumer spending recovery is taking longer than anticipated, and the macro-economic landscape continues to bring uncertainty,” she said.
“While there has been a slight decrease in sentiment from November 2024, our research shows the majority (63%) of SME owners and senior managers feel optimistic about business performance over the next 12 months – down from 71% last year.”
She added that nearly two-thirds of SMEs still have growth plans in place, though that figure is down from 72% in late 2024.
The findings also show that SMEs are actively trying to manage costs. About 58% of business owners and managers review their utility costs at least once a year, with 20% doing so every six months or more often.
Warren pointed out that switching suppliers or renegotiating rates can help ease financial pressure. “It can not only help cancel out the increase in costs a business has experienced that year, but also result in significant savings, especially given our research shows most SMEs are willing to look for a better deal,” she said.
Other suggested cost-cutting measures include automating processes, outsourcing non-core tasks, cutting energy use, and downsizing unused office space.
CommBank expands SME support
The research coincides with CBA’s move to expand its CommBank Yello for Business program, which now reaches over 340,000 SMEs via the bank’s app.
The program provides eligible businesses with promotional discounts on accounting software for the first six months, up to three months’ free access to LegalVision membership, and discounted mobile, phone and internet plans with provider More – 30% off for Everyday Business customers and 50% off for Business Growth customers in the first year.
Additional savings are available on equipment hire, office furniture, technology, workwear, and supplies tailored to industries like construction, hospitality, and healthcare.
“Taking advantage of some of those extra savings could make a real difference to a small business, freeing up some of that cash to spend on marketing, extra inventory or purely to increase cashflow,” Warren said.
CommBank has also partnered with the University of NSW to offer a free cash flow management course to any small business in Australia. Mental wellbeing programs are also available through the bank’s partnership with Smiling Mind, aimed specifically at small business owners and staff.
The bank continues to back digital safety efforts through the Cyber Wardens program, delivered in partnership with Telstra and the Council of Small Business Organisations Australia. In a separate initiative earlier this year, CommBank helped promote 50 local SMEs by featuring them on billboards alongside players from the CommBank Matildas.
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