Here’s why shifting focus to real-time financial tracking is a critical measure for survival in 2026.
What is happening: Rising supplier costs, weakening consumer spending and supply chain disruptions are creating a more fragile Christmas for the economic engine than in recent years.
Why this matters: Small businesses drive employment and economic activity in Australia, but shrinking margins and tight cash flow indicate vulnerability during the critical December trading period. When traditional holiday rushes fail to generate the expected confidence, companies face real questions of survival heading into 2025.
The Christmas countdown looks very different this year for Australia’s small business owners. While previous Decembers brought optimism and sales increases, 2025 brings tight margins, strained cash flow and genuine uncertainty over whether the festive trading period will provide the lifeline many businesses desperately need.
Research from Australian fintech leader Zeller paints a sobering picture. The Pre Christmas Business Pulse, which surveyed more than 1,000 Australian small business owners, reveals that 73 per cent of businesses are reporting tight or strained cash flow heading into December. This financial pressure comes precisely at a time when companies traditionally have strong business operations to get them through the quieter months ahead.
Zeller Chief Growth Officer Josh McNicol says the findings reveal structural pressure on Australia’s small businesses as they approach 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 is not expected to generate the same confidence as in previous years. Australian traders are incredibly resourceful, but this year’s tension is real and widespread.”
The numbers tell a stark story. Fifty-eight percent of businesses expect sales to remain stable or decline 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 did mid-year. This change compounds the challenge of maintaining revenue when each sale generates less value. Meanwhile, 36 percent report lower foot traffic heading into the holiday shopping season, suggesting that even businesses located in traditionally busy retail locations are feeling the impact of cautious consumer behavior.
Behind these pressures from the incumbents lies a cost explosion that is crushing margins. Eighty-one percent cite an increase in supplier and inventory costs year over year. These increases are reflected in all parts of operations, from raw materials to finished products. Companies face the difficult choice between absorbing costs and risking profitability, or passing increases on to price-sensitive customers and risking lost sales.
Staffing represents another major pressure point. Sixty-three percent report higher personnel costs due to wage pressures and seasonal labor shortages. The tight labor market that characterized much of 2024 continues to create challenges, particularly for businesses that require additional staff to manage December business peaks. One in two companies say profit margins are substantially smaller 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 usually one of my busiest business periods, but this year I definitely feel more pressure coming into season – ingredients, packaging, rent, insurance, everything has gone up,” says Tan. “I’m absorbing a lot more just to keep prices reasonable, and there’s a lot that can be raised before people look for cheaper alternatives elsewhere. Margins are tighter than ever and I’m relying on the holiday season to get me through to Easter. The challenge is juggling those rising costs, tight cash flow and the demand that comes with the holiday rush.”
Supply chain disruptions add another layer of complexity. Forty-four percent report stock delays or supply chain disruptions ahead of peak season. These delays create inventory management challenges, forcing companies to choose between placing pre-orders and tying up cash, or risking stock shortages during critical business periods. For businesses already managing tight cash flow, these time pressures intensify existing tension.
Twenty-nine percent are dealing with higher transaction fees in payments and banking services. These costs, although individually small, add up significantly over hundreds or thousands of transactions. For companies operating on slim margins, every percentage point matters. One in three noticed an increase in late cancellations or no-shows, particularly in hospitality and services. This unpredictability makes planning and staffing extremely difficult, further complicating cash flow management.
McNicol emphasizes that business approaches are changing in response to these pressures. “We are seeing a move away from ‘growth at all costs’ towards more controlled visibility into cash flow and a reliance on smarter, 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 thrive best during this period.”
This shift toward financial surveillance reflects broader market realities. Consumer confidence has shown volatility throughout 2024 and 2025, and recent data indicates that while confidence has improved from multi-year lows, households remain cautious about discretionary spending. This caution is directly reflected in the performance of small businesses, particularly in sectors that rely on non-essential purchases.
The combination of cost pressures, weakening consumer spending and supply chain challenges creates a perfect storm for companies entering their busiest period. While previous holiday seasons offered opportunities to build financial reserves, this year presents survival challenges for many operators. Cash flow management techniques that worked in more forgiving economic conditions may fall short when margins are compressed and revenues are uncertain.
Small businesses represent a critical component of Australia’s economic engine, providing employment and driving local economic activity. When these companies face systemic pressure, the ripple effects extend far beyond individual operators. Suppliers, owners, employees and local communities feel the impact when small businesses struggle.
The holiday season traditionally offers small businesses the best opportunity to generate the cash flow needed to navigate the quieter months. When that opportunity is compromised by structural pressures, companies face difficult decisions about investment, staffing, and future viability. For operators like Tan, the December trading period represents not only an opportunity but also a necessity, the lifeline that carries businesses until the next peak season.
As businesses navigate this challenging environment, focusing on real-time financial visibility and disciplined cash flow management becomes not only advantageous but essential. The ingenuity McNicol references will be put to the test throughout December and into 2025, as small business owners work to balance rising costs, cautious consumers and the operational demands of their busiest business period.
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