Small Australian firms lag larger rivals in hiring plans

Only 30% of small Australian businesses plan to hire over the next 12 months, according to CreditorWatch, while medium-sized and large businesses are far more likely to recruit.

The figures point to a widening split in growth plans between smaller firms and their larger counterparts. Businesses with one to 19 employees reported the weakest hiring intentions, compared with 59% of medium-sized businesses and 64% of large businesses.

Across the market, 40.8% of businesses plan to hire in the next year, down from 50.4% in 2025. Expansion plans also eased, with 69.3% exploring local growth, down from 76.1% a year earlier.

International growth plans fell more sharply. Just 35.3% of businesses were exploring overseas expansion, down from 54.2% last year, while 60% were not considering it, up from 43%.

The survey also showed medium-sized businesses were more active than smaller peers in pursuing new markets. Some 51% were exploring international expansion, compared with 27% of small businesses, while 79% were considering local expansion versus 63% of smaller firms.

Even so, most businesses have not stopped spending altogether. CreditorWatch found 78.3% plan some form of investment over the next 12 months, although that was down from 81.6% last year.

Investment aimed specifically at expansion into new markets or regions was weaker. Only 21.6% of businesses planned that type of spending, down from 25.1% a year earlier.

Growth split

Patrick Coghlan, Chief Executive Officer at CreditorWatch, said the results showed a clear difference in how businesses of different sizes were approaching growth.

"The survey reveals a growing divide within Australia's business community. Larger businesses continue to pursue growth opportunities, while many smaller firms are taking a much more cautious approach," Coghlan said.

"We're seeing businesses become increasingly selective about where they deploy capital. Hiring new staff and expanding into new markets are significant long-term commitments, and many smaller businesses appear reluctant to take on that additional risk in the current environment," he said.

"What's particularly interesting is that businesses haven't stopped investing. Rather, they're becoming more disciplined about where they invest, with many focusing on productivity and operational improvements ahead of workforce or geographic expansion," he said.

Cost pressures

Ivan Colhoun, Chief Economist at CreditorWatch, said the divide in sentiment reflected differences in trading conditions across business sizes and sectors.

"The results show that larger businesses are experiencing significantly better current business conditions than smaller businesses, micro businesses and sole traders. The same trends by business size are evident in optimism about the future. The business outlook is increasingly divergent by sector. This reflects broader headwinds from higher fuel prices and interest rates, building on a long period of rising costs. Just as consumers are experiencing cost-of-living pressures, businesses are experiencing cost-of-doing-business pressures," Colhoun said.

He said the greatest strain over the coming year would likely fall on interest-sensitive sectors if borrowing costs and other expenses remain elevated.

"These pressures will be particularly noticeable over the coming year for interest-sensitive sectors such as residential construction and real estate, sectors exposed to discretionary spending, and firms with large debts," he said.

At the same time, some parts of the economy were performing better than others.

"Sectors currently benefiting from the AI investment boom and other favourable longer-term trends include technology, parts of construction, parts of mining, defence, renewables and businesses providing services to these sectors," he said.