Small businesses are bracing for a mixed year ahead. Rising costs, labour shortages, and shrinking profits are putting pressure on many industries. This new NAB Business report reveals the key expectations of small to medium sized businesses over the next 12 months.
But it’s not all doom and gloom—some sectors are proving resilient, with demand holding strong and investment plans still on the table. If it feels like everything is getting more expensive, that’s because it is. A hefty 74% of SMEs expect their expenses to climb over the next year, with Health Services (83%) and Construction (80%) feeling it the most. And just when you thought red tape couldn’t get any worse, nearly half of Accounting and Construction businesses report an increasing regulatory headache.
Moreover, the costs of doing business in the next 12 months is weighing on most SMEs, with 3 in 4 (76%) expecting them to increase, and just 1 in 50 (2%) decrease. The cost-of-doing-business is a significant issue facing businesses across various states and industries. It refers to the rising rates businesses are having to contend with when simply trying to complete their daily operations. In response, 2025 is likely to see businesses focus more on areas such as streamlining operations, negotiating with suppliers, reducing energy consumption, and managing inventory more effectively
Demand is up—unless you’re in retail or manufacturing
Despite economic jitters, more businesses expect customer demand to grow rather than shrink. Property Services leads the charge with a net balance of +35. But for Retail (-3) and Manufacturing (-2), it’s a different story. With consumers tightening their wallets, these industries are preparing for leaner times. The talent drought isn’t over, and Hospitality is feeling it the hardest, with a net balance of -17 expecting labour shortages to worsen. Meanwhile, Property (+12), Business (+3), and Financial Services (+2) are slightly more optimistic about finding the right people. Some industries are going all in on sustainability, with Business Services (+13) leading the way in climate-related investments. But Property Services (-12) is pulling back, highlighting a divide in how SMEs approach green initiatives.
Making money is getting tougher. Health Services (-30) is the most pessimistic, with Retail (-10) and Transport (-10) not far behind. But it’s not all bad news—Financial (+31), Business (+24), and Property Services (+12) expect to see profits grow. Despite cost concerns, SMEs aren’t skimping on tech. AI adoption is set to rise, especially in Financial (62%) and Business Services (60%).
Cybersecurity is also getting a boost, with over half of businesses in these sectors planning upgrades to stay ahead of cyber threats. The challenges are real, but so is the fight. SMEs are tightening their belts, adapting to shifting demands, and investing where it matters. The year ahead will be about smart decisions, strategic pivots, and finding ways to thrive—even when the odds are stacked.
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A new NAB report spills the tea on what’s ahead for SMEs, from skyrocketing expenses to surprise winners. News, SMEs Dynamic Business
