Small business pressures intensify across Victoria
Victorian small businesses are entering the Christmas trading season with subdued confidence and rising financial pressure. New research from Zeller’s Pre-Christmas Business Pulse highlights the strain owners are experiencing as they navigate softer consumer demand, higher operating costs, and tighter margins during a period that normally drives strong revenue.
The survey reflects the sentiment of more than 1,000 small business owners nationwide, including detailed insights into Victorian operators. Although Victoria performs slightly better than the national average in several areas, the overall picture remains challenging for businesses preparing for what should be their most profitable month.
Victorian confidence stays weak ahead of Christmas
A total of 56% of Victorian small business owners report average or low confidence in their financial position heading into December. While this is marginally better than the national average of 58%, the numbers show a sector still under strain.
In addition, 57% of Victorian operators believe they will earn the same or less revenue than they did during Christmas 2024. Again, this result sits slightly ahead of the national average of 59%, but it still points to stagnant growth expectations during a period when businesses typically rely on increased holiday spending.
A total of 60% of Victorian owners believe consumers will spend the same or less than they did last year, reflecting ongoing caution among households as they manage rising living costs.
Consumer demand is the biggest concern in Victoria
Victorian operators are more concerned about declining consumer demand than any other state. A total of 49% rank it as their biggest challenge heading into the Christmas period. This concern is significantly greater compared to the national average of 42%, showing how sensitive Victorian businesses are to shifting customer behaviour.
Cost pressures continue to play a major role in business decision-making. A total of 42% of Victorian small business owners cite the cost of goods as a key challenge. Many highlight increases from suppliers across ingredients, electricity, packaging, and raw materials.
With these pressures mounting, owners are adjusting their strategies. A total of 44% say they are managing rising costs by maintaining normal operations without over-investing during Christmas. Others are taking more decisive measures than their interstate counterparts.
A total of 24% plan to increase prices to offset operating costs, compared to the national average of 23%. Meanwhile, 18% intend to reduce stock or inventory orders to preserve cash flow. This number sits notably higher than the national average of 13%.
Cash flow remains tight for Victorian businesses
In addition to weakening demand and higher costs, businesses continue to feel the impact of tight cash flow. A total of 69% of Victorian small business owners say their cash flow is tight or under significant strain heading into Christmas. Although this is slightly better than the national figure of 73%, it still highlights widespread financial pressure during a period where many operators rely on volume to restore margins.
These challenges line up with national trends identified by Zeller. Josh McNicol, Director of Growth at Zeller, says small businesses are being stretched across multiple fronts.
“Small businesses are struggling with higher operating costs, price-sensitive consumers, and the cumulative impact of extended discount cycles. The traditional December rush isn’t expected to deliver the same confidence it has in previous years. Australian merchants are incredibly resourceful, but the strain this year is real and widespread,” said McNicol.
“We’re seeing a shift away from ‘growth at all costs’ towards more controlled cash-flow visibility, and dependency upon smarter and more reliable payment and financial services solutions. Business owners who can track, manage, and take action on their cash flow and finances in real-time will be the ones who thrive during this period best.”
Victorian operators feel the pressure up close
Many Victorian businesses are dealing with the pressure day to day. Perth chocolatier Lee Ann Tan, owner of Cheeky Cacao, captures the reality of rising costs and crowded competition.
“Christmas is normally one of my biggest trading periods, but this year I’m definitely feeling more pressure heading into the season; ingredients, packaging, rent, insurance, everything has gone up. I’m absorbing far more just to keep prices reasonable, and there’s only so much you can raise prices before people shop elsewhere for cheaper alternatives. Margins are tighter than ever, and I’m relying on the holiday season to carry me through to Easter. The challenge is juggling those rising costs, tight cash flow, and the demand that comes with the Christmas rush.”
Her experience mirrors the concerns of Victorian operators trying to balance resilience with the practical realities of a difficult trading season.
