Australian firms to prioritise staff upskilling & office upgrades in 2025

Australian businesses are set to focus their 2025-26 spending on new hires, workforce upskilling, and office refitting, with lower-cost, high-impact non-capital investments taking priority amid tightening profit margins.

Survey data from Small Business Loans Australia (SBLA) indicates 91 per cent of businesses plan to channel funds into non-capital investments over the next year. The most common areas identified include new employee hires (31 per cent of respondents) and investing in employee upskilling and training (35 per cent), followed closely by product or service development, marketing, and customer experience initiatives.

Spending priorities

The findings reflect a broader move back to office-based work, as well as caution among business owners about committing to significant capital outlays. Among capital investment intentions, business technology and IT hardware topped the list, with 38 per cent planning tech-related purchases. Office furniture and fittings followed at 28 per cent, while 22 per cent intend to spend on machinery and equipment, and 13 per cent on motor vehicles. Investments in sustainable assets, supporting energy efficiency or compliance, were cited by around one in 10 businesses.

These priorities correspond with a reported fall in capital expenditure. Australian Bureau of Statistics figures reveal private capital expenditure declined by 0.1 per cent in the March 2025 quarter, led by a 1.3 per cent drop in plant and machinery investments. As a result, capital spending is 0.5 per cent below March 2024 levels, though forecasts remain positive, with a projected national figure of AUD $155.9 billion for the financial year.

Challenges and constraints

The SBLA survey, which gathered responses from 200 business owners and decision-makers nationwide, sought to understand not just spending plans but also the barriers influencing investment decisions. Financial constraints were most commonly cited, with 43 per cent highlighting tight profit margins, 26 per cent noting limited cash flow, and 17 per cent prioritising debt repayments over new investments.

External or macro-economic factors are also affecting business confidence. The data revealed high energy costs (30 per cent), rising interest rates (24 per cent) and ongoing economic uncertainty (22 per cent) as the most significant external pressures currently impacting investment strategy.

People, efficiency, and growth

Despite these headwinds, many businesses are still planning for growth - though with greater selectivity and a focus on investments with faster returns and lower perceived risk. This shift is especially evident in the emphasis on workplace improvements, training and marketing, as opposed to larger capital purchases like vehicles and machinery.

Business owners are making hard decisions about where to allocate limited funds – and our research shows there is a clear preference for investment that drives efficiency, customer acquisition and workforce capability. While they might not be prioritising big-ticket capital purchases at last year's levels, many businesses are still planning to invest in growth.

Alon Rajic, Founder of Small Business Loans Australia, said the study captures the business community's evolving approach to investment. "Our research also revealed that the decision to invest in capital and the willingness to take risks is sensitive to internal and external pressures, the biggest being financial: limited finances, inflation and high interest rates."

Rajic added: "The good news is that businesses aren't necessarily slowing down - they're choosing those investments that have faster returns and lower risk. Businesses are making more selective and considered decisions about how they'll grow this financial year."

Amongst non-capital investments, product or service development was mentioned by 23 per cent of surveyed businesses, with 22 per cent prioritising marketing and advertising, and 16 per cent aiming to enhance customer experience. Environmental and sustainability considerations, such as energy efficiency, were also present in investment intentions, though deemed less prevalent compared to operational and people-focused priorities.

Survey breakdowns reveal variations across states and sectors, which are available in SBLA's detailed study, but the national trend signals a broader shift in resource allocation for Australian enterprises heading into the new financial year.