Australia's small businesses are a driving force behind the country's economic development. In 2026, the small business sector continues to thrive, contributing significantly to overall economic health. Whether you're thinking of starting a business in Australia or already operating one, this article provides key insights and critical statistics on the state of small businesses in the country.
Australia currently has over 2.7 million actively trading businesses. The most recent official data from the Australian Bureau of Statistics (ABS) reports 2,729,648 businesses as of June 30, 2025.
| Business Size | Employees | Number of Businesses | Percentage |
|---|---|---|---|
| Small | 0–19 | 2,656,469 | 97.3% |
| Medium | 20–199 | 67,857 | 2.5% |
| Large | 200+ | 5,322 | 0.2% |
| Total | 2,729,648 | 100.0% |
Based on the Australian Bureau of Statistics data for the fiscal year 2024/25.
The majority of businesses in Australia are classified as small, with fewer than 20 employees. According to ABS figures, these small businesses account for nearly 98% of all businesses in the country.
| Annual Turnover | Number of Businesses | Percentage |
|---|---|---|
| $0 to less than $50k | 644,604 | 24.2% |
| $50k to less than $200k | 864,086 | 32.4% |
| $200k to less than $2m | 931,592 | 35.0% |
| $2m to less than $5m | 125,445 | 4.7% |
| $5m to less than $10m | 46,417 | 1.7% |
| $10m or more | 50,854 | 1.9% |
| Total | 2,662,998 | 100.0% |
Based on the Australian Bureau of Statistics data for the fiscal year 2024/25.
According to the Australian Taxation Office (ATO), a small business is generally defined as one with an annual turnover under $10 million.
Under this classification, 98% of Australian businesses qualify as small. The overwhelming majority of these, approximately 92%, actually generate less than $2 million in turnover. However, these figures likely underrepresent the total number of enterprises earning less than $75,000. This discrepancy exists because the data is drawn from GST registrations, which are only compulsory for businesses that meet or exceed that $75,000 threshold.
The following data represents the current state of the Australian SME landscape as of 2026. These figures highlight the critical intersection between business density, revenue performance, and the operational challenges that lead to business exits.
The following data represents the state of the Australian SME landscape. These figures highlight the critical intersection between business density, revenue performance, and the operational challenges that lead to business exits.
Based on Australian Banking Association data, 2025.
These four industries alone make up half of all small businesses in Australia, indicating their central role in the nation's economy.
Small business performance in Australia finished 2025 on a high note, according to the latest Xero Small Business Insights (XSBI) data. The final quarter of the year saw sales growth reach its highest peak since mid-2023, while employment growth hit a two-year high. Additionally, small businesses experienced the fastest payment times ever recorded in the history of the data series. This upward trend throughout 2025 was largely driven by a stronger second half, as reductions in official interest rates began to stimulate consumer spending and offset global economic challenges.
Based on Xero Small Business Insights (XSBI) data, 2025.
The quarter showed a clear divide between high-growth sectors and those seeing more modest gains.
Top Performing Industries
The following sectors drove the majority of the improvement in small business performance:
The job market also benefited from the improved sales performance. Small business job growth rose 3.4% y/y in the December quarter, the highest increase in two years. Construction and healthcare were once again the standout performers in job creation, with both sectors recording strong employment gains.
Small business revenue in Australia showed a promising upward trend in 2025. In the December quarter, small businesses experienced a solid 6.7% year-on-year (y/y) sales increase, building on a 6.3% rise from the previous quarter.
Profitability also improved with quicker payment times, reflecting a positive shift in cash flow. In the December quarter, small businesses saw a decrease in the time it took to be paid, with the average payment time falling to 23.9 days, marking the fastest payment rate since the data series began in 2017. This improvement in payment speed was particularly pronounced in December, with the payment time dropping to 23.6 days from the previous month's, indicating a promising shift towards faster, more efficient cash flow for small businesses.
Based on Xero Small Business Insights (XSBI) data, 2025.
However, despite these positive shifts, late payments continue to be an issue. The average delay in payments improved slightly but still stands at 6.6 days, highlighting that while progress is being made, the full elimination of payment delays remains a key goal for the sector.
Based on Xero Small Business Insights (XSBI) data, 2025.
Despite the overall growth in Australia's small business sector, closures remain a concern. In 2021-22, there were 442,555 business entries and 305,085 exits, resulting in a net increase of 137,470 businesses. However, this growth has slowed in recent years, with 2024-25 projected to see a smaller increase of 66,650 businesses.
| Year | Entries | Exits | Net Change |
|---|---|---|---|
| 2021-22 | 442,555 | -305,085 | 137,470 |
| 2022-23 | 406,365 | -356,216 | 50,149 |
| 2023-24 | 436,018 | -362,893 | 73,125 |
| 2024-25 | 437,150 | -370,500 | 66,650 |
Based on the Australian Bureau of Statistics data on Counts of Australian Businesses, Entries and Exits, 2024–25.
Many closures are driven by cash flow issues, particularly in sectors with low margins like retail and hospitality. These businesses may show profits on paper but struggle with liquidity, making it difficult to manage debts and pay bills.
While sales and job growth are improving, businesses with slow payments face serious risks. The continued challenge of sticky cash flow means that even profitable businesses can fail without efficient cash flow management.
While small businesses in Australia continue to thrive in key sectors, cash flow remains a persistent challenge. Late payments continue to hinder liquidity, impacting growth and long-term stability. As businesses look to improve their cash flow management, the need for efficient payment solutions has never been clearer.
Pinch Payments offers a solution tailored to address these issues. By automating the payment collection process through Pre-Approvals, businesses can ensure invoices are paid promptly, with no manual intervention required. Pinch integrates seamlessly with Xero, QuickBooks, and MYOB, making it easier for businesses to collect payments on time, every time.
Start optimising your cash flow today. Register an account with Pinch Payments to see how our platform can help your business get paid faster and manage payments more efficiently.