Interest Rates Rise Again – But Australia’s Business Market Is Changing, Not Disappearing

Interest Rates Rise Again – But Australia’s Business Market Is Changing, Not Disappearing

Australian business owners received another reminder this week that the economic environment remains challenging.

On 29 September, the Reserve Bank of Australia increased the cash rate by 0.25 percentage points to 4.60% – the fourth increase in 2026 and the highest cash rate Australia has seen in around 15 years. The RBA pointed to persistent inflation, higher energy costs and continuing domestic cost pressures as reasons for the decision.

For small and medium business owners, interest rates are only one part of the equation.

Higher borrowing costs affect business finance, mortgages and buyer funding, while households facing increased repayments generally have less disposable income. Add rising wages, rent, utilities, insurance and supplier costs, and it is easy to understand why many Australian businesses are feeling squeezed.

The numbers tell a difficult story

ASIC reported that 14,722 companies entered external administration for the first time during the 2024–25 financial year, an increase of 33.2% from 11,053 the previous year. While the rate of increase has since begun to moderate, ASIC says external administrations have been running at approximately 1,200–1,300 companies per month.

Those figures should not create panic – but they should encourage business owners to think ahead.

One of the biggest mistakes we see is owners waiting until they are exhausted, cash flow is severely compromised or the business is approaching closure before considering a sale.

A business does not need to be performing at its absolute peak to be saleable. But buyers need to be able to see what they are purchasing: customers, systems, staff, equipment, intellectual property, market position, premises, licences, contracts and, importantly, future opportunity.

The buyer hasn't disappeared – they are changing

Interestingly, difficult economic conditions can create entirely new categories of business buyers.

We are increasingly speaking with professionals who are reconsidering the security of traditional employment and exploring business ownership as a way to take greater control of their income and future.

We also see buyers approaching retirement who are not ready to stop working completely. Rather than retire immediately, they are looking for a manageable business that can become their next project and provide income, purpose and flexibility.

At the other end of the market, established operators and larger investors continue to look for acquisitions. For them, a softer market can provide an opportunity to acquire competitors, expand geographically, add customers, increase market share or simply take a bigger piece of their industry.

Challenging markets still create opportunities

There is no point pretending this is an easy market. It isn't.

But difficult markets don't necessarily mean businesses cannot sell. They mean strategy, realistic expectations, preparation and positioning matter more than ever.

If you have been considering selling in the next 6–18 months, now may be the time to understand what your business could realistically achieve in the current market and what you can do to make it more attractive to the buyers who are actively looking.

Because sometimes the best time to prepare for an exit isn't when everything is perfect.

It's while you still have the time and control to create one.