The Cost of Running a Small Business in Australia Just Keeps Going Up

If you run a small business in Australia, you could be forgiven for wondering what is coming next.

Running a business has never been easy, but right now the pressure seems to be coming from every direction. Wages are increasing, superannuation payment requirements have changed, card surcharge rules have shifted, interest rates are putting pressure on borrowing, and inflation continues to push up everyday operating costs.

At the same time, your customers are feeling the cost-of-living squeeze. They are watching what they spend, questioning price increases and, in some industries, delaying purchases altogether.

That leaves small business owners caught in the middle. Your costs keep going up, but you can't necessarily pass every increase directly on to your customers. Our PM Anthony Albanese seems to think that your coffee could be cheaper after the card surcharge ban - does he have rocks in his head?

The real challenge isn't any one change. It's what happens when you add them all together.

Small business costs are adding up

For many small businesses, there wasn't a huge amount of spare margin available before these latest changes arrived. Every additional expense has to come from somewhere, whether that means increasing prices, reducing another cost or accepting a smaller profit.

The difficult part is that many increases creep into the business gradually. Your supplier sends through a new price list. Your insurance renewal is higher. Software subscriptions increase. Electricity costs more. Rent goes up and wages rise.

None of these expenses may seem disastrous on its own, but together they can quietly eat away at your profit.

You can still be busy throughout all of this. Customers can still be coming through the door, your team can be flat out and revenue can look healthy. Unfortunately, being busy and being profitable are two very different things.

Payday Super changes the cash flow equation

Payday Super commenced on 1 July 2026, changing the timing of superannuation payments for Australian employers. Employers generally need to ensure employees' super contributions reach their fund within seven business days of payday, rather than operating under the previous quarterly payment cycle. It actually increased your cash outgoings by 15-16% as super is calcuated on gross wages. Have you factored this into your cashflow forecast?

While more frequent payments have benefits for employees, they also mean small businesses need to think differently about cash flow.

Having money in your business bank account doesn't necessarily mean it is available to spend. Some of that money may already be needed for wages, super, GST, tax, rent, suppliers or loan repayments. Have you got at least 2 business bank accounts?

When financial obligations need to be met more frequently, understanding what is coming in and what needs to go out becomes even more important.

Wage increases affect more than wages

Minimum award wages increased by 4.75% from 1 July 2026, creating another increase for businesses employing staff under the award system.

The true cost of employing someone goes beyond their hourly rate or salary. Businesses may also need to account for superannuation, leave entitlements, workers compensation insurance, penalty rates, allowances and other employment expenses.

If your employment costs increase while your pricing remains unchanged, that extra cost has to come from somewhere. Often, it comes directly out of your margin.

This is particularly important for businesses that haven't reviewed their prices for several years. You may still be charging based on what it cost you to provide your product or service two years ago while paying today's wages, rent, insurance and supplier prices.

Eventually, those numbers stop working and the math stops mathing.

Card surcharge changes put the focus back on pricing

Card payment rules have also changed. From 1 October 2026, major designated card networks, including eftpos, Mastercard and Visa, introduced no-surcharge rules.

That doesn't mean accepting card payments has suddenly become free for businesses. Those costs still need to be accounted for within your business and pricing, because of course the banks still get to charge these fees.

For businesses processing a large proportion of sales by card, even a relatively small cost can become significant over a year.

It raises an important question: When did you last properly review your prices?

Your pricing shouldn't simply be based on what you've always charged or what your competitors charge. Your competitors don't have your wages, rent, suppliers, overheads or financial goals.

Your prices need to work for your business and ensure that your business has a chance to be profitable. We all want profit right?

Interest rates and inflation squeeze businesses from both sides

Interest rates can put pressure on small businesses in two ways. Businesses with loans, overdrafts or equipment finance can face higher borrowing costs, while customers with mortgages and other financial commitments may have less money available to spend. This creates a difficult squeeze. Your costs may be rising at exactly the same time your customers are becoming more price-conscious.

Inflation also adds another layer. It appears in higher insurance premiums, supplier costs, electricity bills, rent, freight and software subscriptions.

The problem isn't always one enormous increase. Often, it is a series of smaller increases gradually reducing the amount of money left at the end of the month.

If your revenue remains the same while the cost of generating that revenue rises, your profit shrinks. That is why many small business owners can feel busier than ever without feeling as though they are getting ahead.

Do you actually know what your business needs to succeed?

When costs rise, the natural reaction can be to chase more sales, but more revenue isn't always the answer.

If a product or service has a poor margin, selling more of it simply creates more work. If you hire another employee to handle additional demand without understanding how much revenue is required to cover their true cost, growth can actually put more pressure on cash flow.

This is why knowing your numbers matters.

Do you know how much revenue your business needs to generate each month to cover its costs? Do you know which products or services are genuinely profitable? Do your current prices reflect today's costs? Do you know how much cash you need available for upcoming commitments?

And importantly, does the business make enough to pay you properly?

Small business owners can become very good at making sure everyone else gets paid. Employees receive their wages, suppliers are paid, the landlord gets the rent and the ATO gets its share. The owner often takes whatever is left.

That shouldn't be the long-term business model. Your business needs to work for you too.

You can't control the economy, but you can control your numbers

You can't control interest rates, inflation, government spending, award wage increases or changes to superannuation rules. You can't stop your suppliers from increasing their prices either.

What you can control is how well you understand your own business.

You can review your pricing, understand your margins, forecast your cash flow and identify which parts of the business are actually making money. You can make decisions using today's numbers instead of relying on what worked several years ago.

Understanding your numbers won't make the challenges of running a small business disappear, but it gives you a much stronger foundation for deciding what to do next.

What does your business need to succeed?

This is exactly what we're exploring in our Small Business Finance Masterclass: Do You Know What Your Business Needs to Succeed?

The masterclass is for small business owners who want to understand what their business needs financially without needing an accounting degree to work it out.

If you've wondered where all the money goes, feel like you're working harder without getting ahead, aren't sure whether you're charging enough or simply want to understand your numbers better, this masterclass is for you.

With the cost of running a small business in Australia continuing to rise, knowing your numbers has never been more important.

Find out more about the Small Business Finance Masterclass through Grants Club or reserve your place through Humanitix.

You can't control what change is coming next, but you can make sure your business is financially prepared for it.

Save your free spot here:‍ ‍https://events.humanitix.com/do-you-know-what-your-business-needs-to-succeed

If you’ve missed the Masterclass, email liz@grantsclub.com.au to request the recording link.