Navigating the new normal: business opportunities and challenges for 2026

It goes without saying that the last few years have been a challenging time for Australia's small business owners. From the chaos of the COVID lockdowns to the inflation surge and cost-of-living crisis, running a business in the 2020s has often felt like you were simply trying to survive.

2025 included both progress towards a recovery, as well as its own unique challenges. While most firms from the Reserve Bank of Australia's (RBA's) business liaison program "report no significant impact from US tariff announcements", ongoing global uncertainty has likely slowed the recovery in consumer confidence. On the other hand, Australia's tight labour market and solid income growth – supported by tax cuts, rate cuts, wage growth and lower inflation – has helped to boost consumer spending after a period of malaise.

As 2026 looms, there are reasons for cautious optimism to continue. The effects of the RBA's first three rate cuts are yet to fully flow through to the broader economy. Gross domestic product (GDP) growth is expected to reach 2.4% in 2026 (up from an expected 2.1% in 2025) and combined with more balanced labour market conditions and further income growth for consumers, there's reason for business owners to hope that 2026 may be easier than the last few years.

Below we outline four key themes for business owners to look out for in 2026 as they work out how to navigate the new normal – a normal where easy wins are hard to find and continued growth requires deliberate strategy and sharp cash-flow management skills.

1. Smart AI adoption offers untapped efficiency gains

It's been three years since ChatGPT was first launched, and in that time, it's become increasingly clear that artificial intelligence (AI) tools are here to stay, and they're changing the way we do business.

Yet we're also discovering that AI isn't a magic bullet, and just like any other technological innovation, it requires strategic thinking and careful implementation to ensure you're getting positive returns from your effort and outlay.

The Australian Government's AI Adoption Tracker shows that there's a significant adoption gap between small-to-medium enterprises (SMEs) with more than 20 employees (68% report having already started using AI) and those with less (35%).

While this speaks to the time and resource constraints faced by smaller businesses, it also suggests an untapped opportunity for business owners to start finding new efficiencies through the strategic use of AI.

For companies using the technology, some of the ways they're seeing positive outcomes from AI include having access to higher-quality data (71% definitely or possibly agree), enhanced marketing activities (68%), increased productivity (66%) and better customer engagement (65%).

Helpful ANZ resources:

• Check out ANZ's guide to small business and AI.

2. Preserving profitability in a price-sensitive market

Costs for businesses remain elevated, with key costs including electricity (up 4.8% quarter on quarter from annual re-pricing reviews) and wages (3.4% year on year) growing. Oil prices are also likely to rise in the near term, while the AUD may also rise a little, helping the costs of imports.

Funding rates for both growth and cash management are also an issue. Despite the drop in the official cash rate from 4.35% to 3.6%, the average small business loan interest rate is close to 7% and has only reduced by around 0.5% since its recent peak, adding another burden to already stretched business budgets. ANZ Research forecasts a further 0.25ppt cash rate cut from the RBA, in the first half of 2026.

Despite these pressures, most business owners remain wary of raising prices for fear of losing customers to competitors. Their concerns about customer price sensitivity may be justified: a recent PwC survey of consumers found that 55% of Australians feel financially insecure and 74% identifying the rising cost of living as a major concern. The RBA's business liaison program notes that "Consumers remain cautious in their spending, which [firms] see as constraining a more pronounced lift in consumption growth, particularly for mid-tier retailers."

So, the question becomes: how can you preserve your margins while keeping your customers loyal? Here are a few strategies to consider:

• Reach out to suppliers and utilities to try and lock in favourable rates in exchange for your ongoing business.
• Create value-add categories such as express turnaround and special requests. If your business supports it, consider adding a discounted subscription tier.
• Analyse your offerings to identify low-profit items and services and consider removing them or finding new ways of sourcing the products.
• Make sure your cash flow forecast is comprehensive and up to date. AI could be useful in helping to identify possible efficiencies.

Helpful ANZ resources:

• Small business cash flow
• Why you need a small business plan
• Six reasons your business needs an accountant
• Setting the right price for your product or service

3. Targeted marketing can unlock new growth opportunities

Between COVID and the cost-of-living crisis, both businesses and customers have been on the back foot for years. Few businesses are reporting strong revenue growth, with many describing challenging or subdued market conditions.

However, there are early signs that the cuts to the cash rate are starting to have a positive impact on spending habits (household spending is up 5% since August 2024) and consumer confidence.

This suggests that there may be new opportunities for customer growth – if you're able to find your customers in a fragmented and increasingly competitive advertising landscape.

Major digital advertising platforms like Meta and Google are leveraging AI to make it easier than ever for business owners to create and target assets to their key demographics. However, this comes with increased competition between advertisers and a concurrent increase in customer acquisition costs (CAC).

Take this as a chance to revisit your marketing strategy. Are you talking to the right people? Does your product or service still resonate with your existing customers? How can you tailor your unique selling proposition (USP) to meet growing demand for local, sustainable and ethical businesses? Are there any opportunities for organic growth?

As you reach out to new customers, it's also worth considering your customer journey and whether you can tailor it to boost loyalty and create sources of recurring revenue. The costliest part of any customer journey is acquisition, so you want to ensure you're maximising the lifetime value of those customers you do have (a figure known as LTV). Most business analysts suggest aiming for a CAC:LTV ratio of at least 1:3, so that for every dollar you're spending on acquiring a customer you can expect $3 in lifetime return.

Helpful ANZ resources

• Getting started with digital and social media advertising
• Your guide to small business email marketing

4. Regulatory changes bring both support and new compliance burdens

There was some relief for small business in the 2025 Budget, with more than $2 billion in targeted supports for small business, along with $800 energy bill rebates and millions in energy efficiency grants. The Stage 3 tax cuts are also thought to be benefitting around 1.5 million sole traders.

More broadly, the government is preparing new legislation to clamp down on unfair business practices and protect small business owners when they engage and compete with larger businesses. It's expected that the laws will extend already existing protections for consumers to small businesses so that they can push back against unfair contract and payment terms. While still in consultation, the government expects to introduce the legislation in 2026.

Yet not all of the coming regulatory changes work in SME's favour. Compliance burdens are likely to increase with new rules requiring superannuation contributions to be paid on each payday from July 1 2026, potentially bringing new cash flow concerns for small business owners. Building financial buffers and 'squirrel accounts' to quarantine tax and super obligations can help prevent nasty surprises.

The ATO's Small Business Superannuation Clearing House is also closing in 2026, meaning SMEs will now need to find their own service to process super contributions.

Helpful ANZ resources:

• Organise your business finances now to save time later

ANZ is here to help

Whatever 2026 brings, ANZ is here to support you through every stage of your business journey.

Get in touch with ANZ today to discuss your business needs.