Small businesses make up 97 per cent of all Australian enterprises, employ more than five million people, and contribute over $589 billion to the national economy. As Australia looks for new ways to lift productivity and long-term growth, enabling these businesses to operate more efficiently is essential.
Point of Sale software company, Square, has released the ‘2025 State of Small Business Report’ in partnership with the Council of Small Business Organisations Australia (COSBOA), revealing that small businesses embracing digital tools are running more efficiently, selling more, and setting the pace for stronger economic performance across the country.
The ‘2025 State of Small Business Report’ draws on survey data from more than 500 small business owners and Square’s transaction insights. It shows that tech-enabled sellers are consistently outperforming those that have not yet digitised. Sellers using Square’s software tools process 94 per cent more in sales volume than Square sellers who don’t. Businesses with API integrations process 2.6 times more in sales and nearly twice the number of transactions.
The message is clear. Technology adoption is now one of the biggest levers available to drive small business productivity: from cutting admin to accelerating sales and streamlining customer engagement, digital tools are giving time back to business owners and helping them do more with less.
One business that’s seen efficiency gains from using technology is Jayden Ong Wines in Yarra Valley. For manager, Morgan Ong, using tools that are easy to use helps the business to focus on its premium hospitality service.
“Being able to onboard staff quickly with Square’s user-interface has meant I can focus more on details of service rather than on mastering new technology. It’s a big time-saver,” Ong said.
While 85 per cent of small businesses are already using at least one digital tool, the report shows investment is still cautious. The majority of businesses planning to upgrade technology expect to spend less than $5,000 in the next year. Many cite the need for practical training, tailored support, and affordable solutions.
When Impact Comics expanded into online sales, reconciling stock and sales became a time-consuming challenge. By using integrated systems, they streamlined operations and reduced hours of manual work.
“Having the Square system means we can sell comics in-store, online, and even at events without juggling different platforms,” owner of Impact Comics, Malcom Briggs, said.
“Everything ties back together. It used to take hours to reconcile the register with online orders. Now the system does that work for us.”
The ‘2025 State of Small Business Report’ landed as the Productivity Commission released interim findings showing that digital adoption, including better data access, AI, and small business technology enablement, could significantly boost national productivity.
“This report reinforces what we hear from sellers every day. Productivity gains come from small, consistent improvements, not big overhauls,” executive director of Square Australia, Marco Lamantia, said.
“It’s about tools that reduce friction, remove repetitive tasks, and give time back to focus on what really matters. That’s what we’re building at Square – technology that fits around how small businesses work, giving them time back to grow and focus on their craft.
According to COSBOA Chair Matthew Addison, the shift to digital is not just a recommendation, it is a necessity.
“Technology is no longer optional. If you are still relying on pen and paper to run your business, you are at serious risk of being left behind,” Addison said.
“The State of Small Business Report and Productivity Commission both make it clear that digital adoption is critical for lifting Australia’s productivity. Small businesses that embrace modern tools are more efficient, more competitive, and more resilient. This is not just a business decision. It is an economic imperative.”
The report also highlights how customer behaviour is accelerating the shift. More than three-quarters of surveyed businesses now say most of their transactions are cashless. Square data shows rapid growth in tap-to-pay via mobile, particularly among micro and service-based sellers who rely on agility and speed.
As Australia continues to face complex economic conditions, the productivity of small business will be central to national recovery and resilience. ‘The 2025 State of Small Business Report’ makes clear that with the right tools and support, small businesses are not just keeping up. They are leading the way.
To read the full report Click here