Microbusinesses stabilise following 5% decline

Jirsch Sutherland insolvency practitioner Andrew Spring (pictured) told Accountants Daily that small and medium-sized business clients that he has spoken to are raising concerns about the difficulty in raising capital and addressing debts without needing to put personal assets at risk.

“Given that small and medium enterprises make up a significant portion of new businesses, ABS data suggests to me that the environment for employing entities is slowing down,” Spring said.

Spring added that his clients told him that the compliance and regulatory burden has become so complex that this is taking a lot of their time, rather than focusing on their businesses.

“The one thing that everybody’s worried about is the rise in the cost of doing business. So whether it be the labour cost, energy, fuel, or just general supply into the business, everything’s going up in the inflation environment that we’ve encountered over the last sort of three years or so,” Spring said.

Negotiating an SBR

Small business restructure (SBR) eligibility requires that a business’s financial distress be proven extraordinary as opposed to fundamental to its business viability. 

“The rigid system of the small business restructure means that once a draft proposal is locked in, there’s no ability to amend,” Spring said.

“It’s really about allowing the company and its main creditor… to have a meaningful discussion around circumstances prior to formally submitting their proposal for consideration.”

Thus, Spring stressed that small businesses must take proactive action and engage early with advisers.

“Early engagement… is really about trying to identify whether the stress that causes the insolvency or the potential insolvency is systemic, or whether it’s a one-off type issue,” Spring said.

“What we’re trying to ascertain very early on is whether the business is sound – is it something that’s worth saving, or is it something that ultimately is at the end of its useful life and perhaps just needs to be wound up in an orderly manner.

“It’s about working with the creditor and the company to make sure that all the cards are on the table, there’s full transparency, and each party has the opportunity to disclose or ask questions as required in order to make sure you reach the right outcome.”

Insolvency numbers and tax debt

Spring noted that one of the statistics that is quite frequently misquoted is the level of insolvencies being above historical norms. 

According to 2025–26 ASIC data, there was a decline in overall insolvency numbers compared to the previous financial year, which totalled 0.5 per cent of all operating businesses as at 30 June 2026. Further, ASIC data revealed that 1,243 companies entered insolvency for the first time during this period.

“That number’s not necessarily higher than historical norms. If you go back and look at those ratios, it’s not too far out of whack,” Spring said.

With ATO small business collectable debt targets being worked on by the Tax Office, Spring said if the ATO “presses a button” and enforces against all of that debt at one point in time, it will place a significant burden on small-business owners.

“That’s going to send a pretty big shockwave through the market as well. It stacks up to a fair bit of pain that’s sitting out there in SMEs land,” Spring said.

Keeping an eye on the numbers

Spring told the brand that, in light of significant tax, regulatory, and financial burdens, small businesses must ensure that they know their numbers.

“In an environment where there is an element of uncertainty and fluctuating risks that businesses are exposed to… understanding exactly where they make their money and where their cost base is and where they spend their money is really important,” Spring said.

“Seeking advice at the right time from their trusted advisers, and obviously, if they have a need to speak to someone like myself, then being proactive is important.

“The environment’s not particularly easy to navigate at the moment, so they probably need to spend a bit more time just being very conscious of their numbers. It’s really important to make sure that you take the time to know exactly where the business is making money, where it’s how it makes its money, and ensure that those numbers are making sense.”