Australian small business owners are working longer hours without necessarily earning more, according to new research highlighting the growing pressures facing the sector.
The fifth State of Small Business Report, released by the Council of Small Business Organisations Australia (COSBOA) and Square, found that while business revenues have largely kept pace with inflation, many owners are sacrificing additional time to maintain operations.
Drawing on data from hundreds of thousands of Australian Square sellers and a survey of 608 small business owners, the report found typical revenue increased 3.9 per cent, compared with inflation of 3.8 per cent.
However, only around one in four owners reported paying themselves more than a year earlier, while a similar proportion were earning less.
Around two in five were working longer hours, with one in four putting in additional time for unchanged or reduced remuneration.
COSBOA CEO Skye Cappuccio said the findings demonstrated that stronger business performance did not necessarily translate into improved financial outcomes for owners.
“Many are working longer hours without seeing an improvement in what they pay themselves. That is an important part of the small business picture that topline revenue figures alone don’t show,” Cappuccio said.
The research also revealed limited capacity among small businesses to respond to increased demand.
Only 25.8 per cent could accommodate a 20 per cent increase in demand using existing staff and systems, while 27.8 per cent would need to work longer themselves.
Cappuccio warned that relying on owners to provide additional capacity placed natural limits on business growth.
Meanwhile, technology adoption is helping businesses improve efficiency, although the benefits are not necessarily translating into shorter working weeks.
Around 45 per cent of surveyed owners now use artificial intelligence tools, up from 39 per cent in 2025.
AI users estimated the technology saved between one and two hours weekly, although that time was generally reinvested into business operations.
Square Australia executive director Marco Lamantia said businesses adopting new digital tools were performing better than comparable businesses that had not.
“The owners getting the most from technology are the ones whose tools work together,” Lamantia said.
Looking ahead, approximately 45 per cent of owners expected to maintain their current business size, with operating costs and insufficient customer demand remaining major growth constraints.
Utilities, insurance premiums and supplier costs were identified as significant pressures.
Cappuccio urged policymakers to recognise that small business growth increasingly depended on the capacity of owners already working at their limits.