Here is why shifting focus to real-time financial tracking is the critical move for 2026 survival.
What’s happening: Rising supplier costs, weakening consumer spending and supply chain disruptions are creating a more fragile Christmas than recent years for the economic engine room.
Why this matters: Small businesses drive Australian employment and economic activity, but shrinking margins and cash flow strain signal vulnerability during the critical December trading period. When the traditional festive rush fails to deliver expected confidence, businesses face genuine survival questions heading into 2025.
The Christmas countdown looks very different this year for Australia’s small business owners. Where previous Decembers brought optimism and sales surges, 2025 brings tight margins, strained cash flow and genuine uncertainty about whether the festive trading period will deliver the lifeline many businesses desperately need.
Research from leading Australian fintech Zeller paints a sobering picture. The Pre Christmas Business Pulse, which surveyed over 1,000 Australian small business owners, reveals that 73 percent of businesses report tight or strained cash flow entering December. This financial pressure comes at precisely the moment when businesses traditionally bank on strong trading to carry them through quieter months ahead.
Josh McNicol, Director of Growth at Zeller, says the findings reveal structural pressure on Australia’s small businesses heading into their most important trading period. “Small businesses are struggling with higher operating costs, price-sensitive consumers, and the cumulative impact of extended discount cycles,” McNicol says. “The traditional December rush isn’t expected to deliver the same confidence it has in previous years. Australian merchants are incredibly resourceful, but the strain this year is real and widespread.”
The numbers tell a stark story. Fifty eight percent of businesses expect flat or declining sales compared to Christmas 2024. This expectation reflects both weakening consumer confidence, which has fluctuated significantly throughout 2024 and 2025, and changes in spending patterns as households manage their own financial pressures.
Forty one percent of business owners say customers are spending less per transaction than they were mid year. This shift compounds the challenge of maintaining revenue when each sale delivers less value. Meanwhile, 36 percent report lower foot traffic heading into the holiday shopping season, suggesting that even businesses positioned in traditionally busy retail locations are feeling the impact of cautious consumer behaviour.
Behind these headline pressures sits a cost blowout that is smashing margins. Eighty one percent cite increased supplier and inventory costs year on year. These rises flow through to every part of operations, from raw materials to finished goods. Businesses face the difficult choice between absorbing costs and risking profitability, or passing increases to price-sensitive customers and risking lost sales.
Staffing represents another significant pressure point. Sixty three percent report higher staffing costs due to wage pressures and seasonal labour shortages. The tight labour market that characterised much of 2024 continues to create challenges, particularly for businesses requiring additional staff to manage December trading peaks. One in two businesses say profit margins are materially thinner than last Christmas, a situation that leaves little room for error.
Perth chocolatier Lee Ann Tan, owner of Cheeky Cacao, describes the pressure as visible in every part of her business. “Christmas is normally one of my biggest trading periods, but this year I’m definitely feeling more pressure heading into the season; ingredients, packaging, rent, insurance, everything has gone up,” Tan says. “I’m absorbing far more just to keep prices reasonable, and there’s only so much you can raise prices before people shop elsewhere for cheaper alternatives. Margins are tighter than ever and I’m relying on the holiday season to carry me through to Easter. The challenge is juggling those rising costs, tight cash flow, and the demand that comes with the Christmas rush.”
Supply chain disruptions add another layer of complexity. Forty four percent report stock delays or supply chain disruptions leading into peak season. These delays create inventory management challenges, forcing businesses to choose between ordering early and tying up cash, or risking stock shortages during critical trading periods. For businesses already managing tight cash flow, these timing pressures intensify existing strain.
Twenty nine percent are dealing with higher transaction fees across payments and banking services. These costs, whilst individually small, accumulate significantly across hundreds or thousands of transactions. For businesses operating on thin margins, every percentage point matters. One in three note increased late cancellations or no shows, particularly in hospitality and services. This unpredictability makes planning and staffing extremely difficult, further complicating cash flow management.
McNicol emphasises that business approaches are shifting in response to these pressures. “We’re seeing a shift away from ‘growth at all costs’ towards more controlled cash-flow visibility, and dependency upon smarter and more reliable payment and financial services solutions,” he says. “Business owners who can track, manage, and take action on their cash flow and finances in real-time will be the ones who thrive during this period best.”
This shift towards financial vigilance reflects broader market realities. Consumer confidence has shown volatility throughout 2024 and 2025, with recent data indicating that whilst sentiment has improved from multi year lows, households remain cautious about discretionary spending. This caution flows directly through to small business performance, particularly in sectors dependent on non essential purchases.
The combination of cost pressures, weakening consumer spending and supply chain challenges creates a perfect storm for businesses entering their busiest period. Where previous Christmas seasons offered opportunities to build financial buffers, this year presents survival challenges for many operators. Cash flow management techniques that worked in more forgiving economic conditions may prove insufficient when margins are compressed and revenue uncertain.
Small businesses represent a critical component of Australia’s economic engine, providing employment and driving local economic activity. When these enterprises face systemic pressure, the ripple effects extend well beyond individual operators. Suppliers, landlords, employees and local communities all feel the impact when small businesses struggle.
The festive season traditionally offers small businesses their best opportunity to generate the cash flow needed to navigate quieter months. When that opportunity is compromised by structural pressures, businesses face difficult choices about investment, staffing and future viability. For operators like Tan, the December trading period represents not just opportunity but necessity, the lifeline that carries businesses through to the next peak season.
As businesses navigate this challenging environment, the focus on real time financial visibility and disciplined cash flow management becomes not just advantageous but essential. The resourcefulness McNicol references will be tested throughout December and into 2025, as small business owners work to balance rising costs, cautious consumers and the operational demands of their busiest trading period.
