Australia’s small business owners are hanging in there, with a slight lift in confidence showing cautious optimism despite rising costs and ongoing pressure on margins.

The latest Pulse report from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) found its Small Business Pulse index rose by 0.1 per cent in the three months to February 2026, marking the fourth straight quarterly increase. The result puts the index 1.2 per cent higher than this time last year.

While the increase is modest, Ombudsman Bruce Billson says it reflects the determination of small business owners to keep moving forward.

“It’s not a large uplift but it is a sign that small business owners are making progress through their own decisions and effort,” Billson said.

“Small business owners continue to show strong intent to build and transform – exploring new products, new customer segments, and additional income streams.”

Growth ambitions meet real-world pressure

According to the report, many business owners are actively looking for ways to grow. Expanding product lines, reaching new customers and improving marketing (especially online) are all high on the agenda. Interest in technology and AI also remains strong.

Billson says that turning those plans into action is another story.

“There is enthusiasm to invest and innovate, but also bewilderment about how to operationalise these ideas,” Billson said.
“Requests reflect a clear need for side-by-side, practical guidance on deployment and best-of-breed digital tools.”

Demand for hands-on support is rising, particularly in areas such as staff recruitment, contracts, compliance, and risk. Nearly half of small business owners say in-person support is the most effective way to get business advice.

Costs and compliance still biting

Despite the small lift in the index, operating conditions remain tough. Rising costs, squeezed margins and complex regulations are making decision-making harder and slowing growth for some operators.

“Research into innovation and growth sits alongside caution about cost pressures and ongoing margin squeeze,” Billson said.

Businesses in sectors that rely on discretionary spending such as retail and hospitality, are feeling the pressure most, with many exploring ways to diversify or find new customers.

Regulatory complexity remains a major headache, with business owners reporting confusion over changing rules and differing state requirements.

“Navigating government information remains difficult, with many small business owners finding the information confusing and difficult to apply to individual circumstances,” Billson said.

More businesses calling for help

The report also found more business owners are seeking advice earlier when facing financial stress, while enquiries about closing or selling businesses remain elevated.

At the same time, optimism about starting a business is still strong, with around seven in ten self-employed Australians saying Australia is a good place to launch a venture.

“Small business owners show practical resolve, not performative optimism,” Billson said. “That effort continues to keep the economy moving.”

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