With higher interest rates, elevated inflation and cautious consumer spending, many businesses are looking carefully at where they can reduce expenses. The 2026–27 Federal Budget introduced targeted measures for businesses, including a permanent $20,000 instant asset write-off for eligible small businesses from 1 July 2026, the reintroduction of loss carry-back for eligible companies, and changes aimed at reducing compliance costs and improving productivity. 

These measures may help some businesses with cashflow and investment decisions, but they do not remove the need for disciplined cost management. A practical approach starts with understanding your cashflow, your key risks and the resources your business relies on most.

Retain the right people

When cashflow is under pressure, reducing staff numbers can seem like a quick way to lower costs. But losing experienced people can also affect service, productivity, customer relationships and your ability to respond when conditions improve.

Instead, businesses may benefit from identifying the roles and skills that are essential to day-to-day operations, then looking at where more flexibility can be built in. This could include casual or contract support, outsourcing non-core tasks, cross-training team members, or reviewing rostering and workload planning.

The aim is not simply to cut headcount, but to protect the capability your business needs to keep operating well.

Make use of relevant Budget measures

The Budget’s permanent instant asset write-off may help eligible small businesses invest in equipment, vehicles, technology or other assets that support productivity and growth. However, businesses should avoid spending simply to access a tax deduction. Any investment should make commercial sense and support the business beyond the current financial year.

Eligible companies may also benefit from the reintroduced loss carry-back measure, which allows certain losses to be offset against tax paid in the previous two income years. This could provide cashflow support for businesses that have moved from profit to loss due to changing conditions. 

Businesses should speak with their accountant or financial adviser to understand how these measures apply to them.

Review how you manage physical assets

Equipment, vehicles, stock, premises and other physical assets can tie up cash. If your business has accumulated assets over time, it may be worth reviewing whether they are still being used efficiently.

Ask whether each asset is essential, underutilised, too costly to maintain, or able to be sold, leased, shared or repurposed. Reducing unnecessary outgoings can free up cashflow and help your business stay more agile.

Look for efficiency, not just cuts

The Budget also includes broader productivity measures, including reducing some regulatory burdens, simplifying engagement with government and making certain standards easier to access for small businesses and tradies. 

For business owners, the broader principle is useful: look for ways to operate more efficiently, not just more cheaply. That could include reviewing supplier contracts, subscriptions, payment terms, debtor management, stock levels, systems, automation and energy use.

Review your insurance cover and premiums

Insurance is another area businesses often look at when trying to reduce costs. While it may be possible to adjust your cover, excesses or payment options, reducing insurance without proper advice can leave your business exposed.

It is also important to remember that inflation can affect the cost of repairing, replacing or rebuilding assets. If your sums insured are no longer accurate, you may not have enough cover at claim time.

Speak with your insurance adviser to review your current policies, confirm whether your cover still reflects your business operations, and look at practical ways to manage premiums without leaving key risks unprotected.
 

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