Across Australia, millions of small business owners will be watching closely when the Federal Budget is handed down on 12 May. For many, the decisions made in Canberra next week will help shape the environment in which they make some of their most important investment and hiring choices over the coming year.

Our latest MYOB Bi-Annual Business Monitor, surveying more than 1,000 small and medium businesses, shows just how closely business sentiment is tied to policy direction. Half of all small businesses say this budget will directly influence their investment and expansion plans. One in four would look to expand if meaningful new measures are delivered. But equally, around 65% say they would delay hiring or investment decisions if the budget falls short on key priorities.

That is a significant signal.

It tells us that small businesses are not standing still. They are engaged, they are thinking carefully about what comes next, and many are prepared to move. But they want more certainty about the operating environment before they do.

That reflects what we are seeing more broadly across the small business community. There is resilience, but it is measured. Many businesses continue to report steady performance, supported by ongoing demand and relatively stable sales pipelines. The sector is adaptable by nature, and that quality continues to serve it well.

That said, cost pressures remain elevated. Over the past year, average business costs have risen by around 18 per cent, with fuel, utilities and interest rates among the biggest concerns. Revenue growth has softened, with 19 per cent of SMEs reporting growth over the past 12 months, and around two-thirds expect economic conditions to soften further in the year ahead.

So, while there is still ambition in the sector, there is also caution. Business owners are recalibrating. They are managing stability while staying alert to opportunities to grow.

When we asked business owners what they most wanted to see from this budget, the answers were practical and consistent.

The top priority was easing cost-of-living pressures. That matters not only to business owners themselves, but to the customers they rely on. When households pull back spending, small businesses feel it quickly, especially in sectors like retail, hospitality and services.

Lower company tax rates and less red tape were the next two priorities. And when businesses were asked to nominate the single measure that would make the biggest difference right now, tax relief was the most common response.

These are not radical asks. They are grounded in the day-to-day reality of running a business. Small businesses are not looking for complexity. They are looking for practical settings that help them stay viable, invest with confidence and keep contributing to the economy.

That challenge is becoming more acute as businesses navigate a growing range of additional costs and regulatory changes this year, from changes to the superannuation system and minimum wage increases, to new Anti-Money Laundering and Counter-Terrorism Financing obligations and reforms to merchant card surcharging. These pressures are emerging against a backdrop of broader economic uncertainty and global instability, creating significant headwinds for small businesses before wider geopolitical risks are even taken into account.

One of the more telling findings in this year’s data is where optimism is concentrated. Younger operators, exporters and medium-sized businesses, the segments that are often driving expansion and taking on new opportunities, are also the most likely to pause if the budget doesn’t deliver. But equally, they are among the most optimistic when conditions are supportive.

Start-ups, exporters and medium-sized businesses all report stronger confidence about the year ahead. The appetite to grow exists. Policy settings can help convert that appetite into action.

That is why this budget matters.

For Australia’s small business community, the Federal Budget is not just a fiscal update; it’s a signal about the operating environment for the year ahead. It says something about the conditions businesses can expect, the pressures government understands, and the confidence owners can have in making decisions about hiring, investing and expanding.

The most encouraging insight from our findings is that small businesses are still ready and prepared to invest and grow if the conditions support them. This budget presents an opportunity to give them that confidence because when small businesses are able to invest with certainty, the benefits flow well beyond individual enterprises to jobs, communities and the broader economy.

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