The Job Market Is Softening. Why Are Small Businesses Still Being Squeezed?
Employment has fallen, customers are cautious and operating costs remain high. For many employers, the challenge is not choosing between staff and profit — it is finding a way to protect both.
Written by: Melissa Cunliffe (CA)
What has changed?
The ABS reported that September 2026 employment fell by about 39,300 people, with the seasonally adjusted unemployment rate at 4.7%. The trend rate remained 4.6%, so a single monthly result should not be treated as proof of a lasting downturn. The figures do, however, underline the pressure facing households and businesses.
Small Businesses and Rising Employment Costs
Why should you care?
It is reasonable to ask whether policy debates give enough weight to the reality of being a small employer.
Wages are not an abstract line in a spreadsheet: they pay real people who depend on the business. Yet wage bills, insurance, energy, finance and compliance costs must all be funded from revenue.
Debating employers and workers as if their interests are always opposed misses an important truth: employees need viable businesses, and businesses need capable, fairly paid employees. A constructive response needs to recognise both.
Small businesses need to balance employee wellbeing, rising operating costs and profitability while keeping their operations financially sustainable.
What we are seeing in practice
A family-owned retailer has eight employees and keeps them on because their experience matters. Revenue falls 5%, but rent, insurance and most roster costs remain.
The owner asks, “How do we look after our people without putting the whole business at risk?” The answer starts with cash-flow visibility and open planning, not an automatic decision to cut hours.
What can you do now?
Prepare a rolling 13-week cash-flow forecast and a three-month sales outlook.
Track gross profit dollars and roster costs alongside total sales.
Review pricing, wastage, shift patterns and overdue debtors before making workforce decisions.
Where changes to conditions are needed, obtain correct industrial-relations advice and communicate early.
Something to think about
If sales remain 5% below budget for six months, what changes could protect both your employees and the business?
At 4P’s Future Accounting, we help family businesses understand the numbers, protect what they have built and plan for what comes next. The right answer depends on your circumstances, so obtain specific advice before acting.
Finding it difficult to balance employee costs and business profitability?
Contact 4P's Future Accounting to discuss cash flow planning and practical financial strategies for your business.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
