Regional SMEs are confronting a steep rise in operating costs, a shortage of labor and growing infrastructure challenges, according to the 2026 Small Business Perspectives Report released by Cosboa.
Survey reveals worsening profitability and rising expense pressures
The Survey Matters‑led research found that 87 percent of regional small businesses reported higher expenses in the past year. At the same time, 73 percent said profits had slipped, and only 18 percent expect an improvement within the next twelve months. A mere 7 percent anticipate that costs will fall.
Housing, infrastructure and access to services emerged as key factors limiting operations. More than half of respondents rated housing availability in their communities as poor, making it difficult to attract and keep staff. One‑quarter singled out regulation and compliance as major pressures.
Stress levels climb as owners grapple with uncertainty
About 77 percent of business owners reported experiencing stress or anxiety related to running their enterprises over the past year.
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Many firms are still seeking growth through service diversification, community engagement and domestic tourism.
Adoption of artificial intelligence is on the rise.
Owners look for ways to boost productivity and improve customer service.
Cosboa chief executive Skye Cappuccio said the findings point to structural issues that go beyond temporary setbacks. “Regional small businesses don’t just support local economies – in many communities, they are the local economy,” she said. “When they come under pressure, the impact is felt across the entire community.”
She added that policy should help businesses adapt rather than expecting them to shoulder rising costs alone. Reducing regulatory burdens, cutting the cost of doing business and investing in housing, connectivity and essential services could bolster regional development.
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Rebecca Warren, executive general manager of small business at CommBank, echoed the sentiment, noting that owners are making cautious decisions on investment, hiring and growth amid economic uncertainty. “If we want stronger regional economies, we need policies that make it easier – not harder – for small businesses to invest, employ people and grow,” she said.
Cosboa CEO Skye Cappuccio said businesses’ ability to adapt should be supported through policy rather than expecting them to continue absorbing rising costs and operating pressures alone.
Rebecca Warren said the report reflects the decisions many regional business owners are making on investment, hiring and growth amid economic uncertainty.
Cappuccio said reducing the cost of doing business, simplifying unnecessary regulation and investing in housing, connectivity and essential services would support the development of regional Australia.
