SMEs Stay Strong Despite Sales Slowdown, Says Xero

Even with sales growth slowing and economic uncertainty still in the air, Aussie small businesses are holding steady and staying optimistic.

The latest Xero Small Business Insights (XSBI) report shows that while the economy has thrown its fair share of curveballs this year, small business owners are pushing through with resilience and confidence.

Sales Growth Slows – But Not the Optimism

Between October 2024 and June 2025, small business sales grew at an average of +3.0% year-on-year in the June quarter. That’s a dip from +5.3% in March and +4.5% in December, and the smallest quarterly growth since 2020.

Even so, Aussie SMEs outperformed their peers in New Zealand and the UK, proving once again how adaptable and determined local businesses are, even in tough times.

Volatility is the New Normal

Month-to-month performance has been up and down this year, with sales spikes in March and June following interest rate cuts from the RBA. While these boosts didn’t last long, they suggest that when conditions improve, customers are quick to respond and spend.

According to Xero economist Louise Southall, “It’s clear many businesses are operating in a challenging environment, but it’s encouraging to see sales continuing to rise, even if growth is slower than usual.”

What’s Driving the Slowdown?

• All states and territories saw slower sales growth in the June quarter
• Western Australia led the pack at +4.6%, but still marked a slowdown from previous quarters
• Public administration was the standout industry at +7.9%
• Education and training struggled the most, slipping -1.2% year-on-year

With global trade tensions (including US tariffs affecting China) still unresolved, uncertainty remains in the broader economy, which makes it even more important for businesses to stay agile.

The Takeaway for SMEs: Stay on Top of Your Cash Flow

Xero’s Managing Director for ANZ, Angad Soin, has a simple message: stay proactive.

“As most small business owners know, it’s important to consistently stay on top of cash flow and be ready to adapt to changing customer behaviour.”

That might mean:

• Offering flexible payment options to make it easier for customers to pay
• Automating invoicing to get paid faster
• Reviewing pricing or expenses regularly to protect margins

Final Thoughts

There’s no denying it, things are unpredictable right now. But Aussie small businesses have shown they’re resilient, adaptable, and quietly confident.

If the past few quarters have taught us anything, it’s that staying focused on cash flow, efficiency, and customer experience will go a long way in weathering uncertainty — and thriving when conditions bounce back.