How Australian small businesses can stay profitable in 2025

The economic outlook for 2025

Rising costs across the board

Operating costs for businesses continue to climb due to various factors. Wage pressures, driven by a tight labour market, are reducing profit margins. Additionally, energy prices remain high, and essential supplies are becoming more expensive. Sectors such as hospitality and construction are particularly affected, with many businesses struggling to sustain profitability.

Inflation and interest rates

Inflation is eroding purchasing power for both businesses and consumers. In response, the Reserve Bank of Australia has maintained high interest rates, increasing business borrowing costs and making it more expensive to access funds for growth or everyday operations. While some economists predict potential rate cuts later this year, the timing remains uncertain.

Insolvency trends

Data shows that insolvencies among Australian businesses have been rising. Sectors such as hospitality and retail have been hardest hit, reflecting the strain businesses are under. The challenges of high operating costs, reduced consumer spending, and limited financial flexibility are driving this trend.

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Strategies to protect against downturns

To stay resilient and maintain profitability during tough times, businesses must adopt a proactive approach. Here are some key strategies:

1. Streamline operations: Improving efficiency and cutting unnecessary expenses can significantly enhance profit margins. Automating repetitive tasks, implementing technology solutions, and renegotiating supplier contracts are effective ways to control costs.
2. Diversify revenue streams: Relying on a single product, service, or customer base can be risky. Exploring complementary offerings or entering new markets helps reduce risk and increase income.
3. Focus on customer retention: Retaining existing customers is often more cost-effective than acquiring new ones. Building loyalty through exceptional service, personalised communication, and incentives is key to maintaining long-term relationships.
4. Monitor financial metrics closely: Regularly reviewing financial performance is crucial. Understanding cash flow, profit margins, and expenditure trends allows businesses to make informed decisions and address potential issues early.
5. Invest in marketing and digital presence: Maintaining visibility during economic downturns is essential. A strong online presence, supported by digital marketing and search engine optimisation, can help businesses attract new customers and retain existing ones.

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How Thriday supports small businesses

One of the most effective ways for SMEs to remain resilient is by using innovative tools that simplify operations and enhance financial management. Thriday, an all-in-one financial management platform, is designed to help small businesses reduce costs, save time, and boost profitability.

Key features of Thriday

• Automated accounting and bookkeeping: Thriday streamlines financial tasks, such as expense categorisation, bookkeeping, and BAS returns, saving hours of administrative work.
• Real-time cash flow insights: Live reporting and cash flow tracking allow businesses to monitor financial health and make proactive decisions.
• Integrated banking and tax solutions: Thriday combines banking, accounting, and tax management in one platform, eliminating the need for multiple tools.
• Invoicing and payment tracking: Thriday enables businesses to issue invoices, track payments, and manage overdue accounts, improving cash flow management.

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How Thriday helps businesses thrive

By automating financial processes and providing real-time insights, Thriday allows businesses to focus on growth while reducing administrative overheads. Its user-friendly design ensures that even those without financial expertise can easily manage their business finances. Thriday's all-in-one platform simplifies banking, accounting, and tax management, empowering SMEs to remain agile and resilient during economic challenges.

Looking ahead

While 2025 brings significant economic challenges, Australian SMEs have consistently shown resilience and adaptability. By focusing on cost management, diversifying revenue, and leveraging tools like Thriday, businesses can weather the storm and position themselves for long-term success.

Staying informed and proactive is essential as the year progresses. Though the economic environment may be challenging, it also presents opportunities for innovation and growth. Thriday provides the tools SMEs need to simplify financial management, helping them survive and thrive in an ever-changing market.