What’s happening: The ASBFEO Small Business Pulse rose 0.1% in the three months to February 2026, its fourth consecutive quarterly increase, and is 1.2% higher than a year ago.
Why this is important: If they are ready to grow but unable to take action, the costs are not just personal. It slows productivity, hiring and innovation in the broader economy.
The figures have been moving in the right direction for a year. The ASBFEO Small Business Pulse, a composite measure of small business health based on search behavior, official data and research patterns, rose 0.1% in the three months to February 2026.
It marks the fourth consecutive quarterly increase and puts the index 1.2% above last year’s level at the same time. Australian Small Business and Family Business Ombudsman Bruce Billson says the outcome reflects the character of the people behind it.
“It’s not a huge increase, but it’s a sign that small business owners are making progress through their own decisions and efforts,” Billson said. “Small business owners continue to demonstrate a strong intent to build and transform, exploring new products, new customer segments and additional revenue streams. There is strong interest in improving reach through marketing and advertising, particularly online and social media, alongside continued interest in leveraging technology and artificial intelligence to increase productivity and unlock new waves of growth.”
That intention is real and measurable. Research on AI and technology among small business owners remains high in the survey data. This also applies to the interest in new markets, diversification and growth through digital channels. But the same data tells a more complicated story.
Ambition without a roadmap
In many cases, the owners who want to grow the most are the ones most uncertain about how to proceed. “While the appetite for opportunity remains high, many small business owners are struggling with how to turn ambition into action,” said Billson. “There is enthusiasm to invest and innovate, but also bewilderment about how to operationalize these ideas. Requests reflect a clear need for practical implementation guidance and best-in-class digital tools, especially in industries such as construction, where margins are tight and the cost of making mistakes is high.”
This isn’t just a trust issue. It’s an implementation problem and that’s evident in what business owners are asking for. Questions shift from general information to tailor-made, practical support, including business coaching and mentoring. Nearly half of small business owners report that an in-person meeting is the most effective way to receive business management information, according to the ASBFEO report.
The pattern echoes what research published in Dynamic Business has previously highlighted. According to data from CPA Australia, only 55% of Australian small businesses expect to grow by 2025, compared to a regional Asia-Pacific average of 71%, with the technology divide identified as a major contributing factor.
“Research into innovation and growth goes hand in hand with caution about cost pressures and continued margin squeeze,” said Billson. “Concerns about the sustainability of the business coexist with strong growth ambitions and a desire to improve profitability.”
The trading environment contributes to this caution. As Mr Billson put it, inefficiency and missteps are now punished more severely than before. For owners considering investing in AI tools, new product lines or expanded operations, reality changes the calculus.
“That reality can limit productivity and growth, because innovation often requires both investment and risk. Small business owners are well aware of this and are looking for ways to minimize risk through avenues such as intellectual property protection, joint financing for innovation and careful scaling, especially in manufacturing,” he said.
When the rules get in the way
The complexity of the regulations exacerbates the problem. Owners who want to take action find that navigating obligations costs time and energy that they could otherwise put toward growth.
“Regulatory complexity remains an ongoing issue. Small business owners are actively seeking clarity on what is expected of them in a time of changing and increasing demands,” said Mr Billson. This includes new and upcoming requirements around seafood labeling and country of origin in the hospitality industry, brand messaging rules and import requirements.
State-based disagreements prove particularly difficult. Payroll tax obligations, cross-border employment contracts and differing licensing regimes are all mentioned in the survey data as areas where owners struggle to find clear, applicable guidance.
Contracts and billing arrangements, especially for contractors and subcontractors, remain one of the most frequently raised issues. Employers with limited hiring experience are looking for clarity on their obligations before making a hiring decision. That uncertainty, Billson says, directly slows growth.
“Uncertainty about obligations and costs can slow decision making and limit growth. Small business owners consistently want to ‘do the right thing,'” he said.
Questions have also arisen about the closure, closure or transfer of businesses, especially operators in the catering, retail, arts and recreation sectors. In addition, there has been a small but notable increase in the number of owners seeking early guidance on financial stress, and a growing cohort is showing signs of more advanced problems, with inquiries about insolvency processes and formal closure increasing.
Still worth starting
None of this has extinguished the underlying optimism. About seven in 10 Australian self-employed people believe this is a good place to start a business, citing opportunity, community support and trust in the Australian justice system, according to Australian Survey of Social Attitudes data referenced in the Pulse report. However, many recognize that it is becoming increasingly difficult.
Kaseya research shows that only 12% of companies currently trust AI to act autonomously, even as adoption intentions remain high. That trust gap is part of what makes hands-on, hands-on guidance so important for owners who are willing but unsure.
Mr. Billson’s assessment of this moment is measured but sharp. “The message from small business owners is consistent. Enterprising women and men are ambitious and willing to adapt, but practical support is needed: clear information, actionable tools and guidance that can be applied to an individual business, not a textbook example,” he said.
“The Pulse shows that progress is made the way small businesses build most things, one step at a time, through effort, judgment and perseverance. When we reduce unnecessary friction and it becomes easier to do the right thing, enterprising Australians can’t cope alone: they create, provide jobs, serve their communities and find a way forward. Small business owners are showing practical determination, not performative optimism. Those efforts continue to keep the economy moving.”
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