New Xero research shows 35% of small business owners don’t know if they profited last month. Angad Soin explains why that’s a wake up call.
More than one in three Australian small business owners don’t often know whether they turned a profit in the last month. That’s according to new research from accounting platform Xero, which points to a wide gap between how confident owners feel about their finances and what the professionals around them are actually seeing.
The numbers are stark. While 85% of small business owners told researchers they felt confident handling financial issues, 90% of accountants and bookkeepers who work with them said the opposite, that owners generally lack the skills to manage the financial side of their business effectively.
It’s not just profit tracking. Xero’s research found that 32% of small business owners aren’t regularly paying themselves a wage. When tested on ten basic business finance questions, only 37% got every answer right. And more than a third have turned to public AI tools for business advice, even as 95% of accountants and bookkeepers say small businesses are picking up financial misinformation, often from social media.
Three in four small business owners agreed that Australia’s education system doesn’t equip future entrepreneurs with the financial skills they need. Accountants and bookkeepers largely agreed too, with 84% backing that view.
Beyond the skills gap, the research points to a quieter toll. 41% of owners said they’re too afraid to ask questions about financial management because they feel they should already know the answers. 22% said they feel overwhelmed when dealing with business finances at all.
“Starting a small business is a leap of faith, but too many owners haven’t had the opportunity to set themselves up for success. More than one in three often don’t even know if they made a profit last month. That’s why we’re calling for financial education earlier, and bringing government and industry together to act on it,” said Angad Soin, Managing Director Australia and New Zealand and Global Chief Strategy Officer at Xero.
“Financial literacy shouldn’t be a privilege, it should be a right. Xero For Good: Financial fitness gives owners the chance to understand their numbers on their own terms, in five minutes on their phone, not buried in long financial theory at midnight or joining a webinar while they are trying to run their business,” Soin said.
The research also shows the burden isn’t shared equally. Small business owners facing social or demographic disadvantage reported significantly less financial confidence than their peers. Three quarters said financial uncertainty keeps them up at night, compared with 48% of those not facing disadvantage. They were also far more likely to be too afraid to ask questions, at 69% versus 26%, and more likely to ignore messages from the ATO they didn’t understand, at 35% versus 9%.
Dr Leanne Faulkner, a small business mental health expert, said the findings point to a deeper connection between financial literacy and wellbeing. “The more financially literate a small business owner is, the better equipped they are to have control and make choices about work on their own terms. Those without these tools are more likely to feel it’s feast or famine. Financial literacy means exercising more choice, and that’s where a program like this can make a real difference,” she said.
To address the gap, Xero has launched Xero For Good: Financial fitness, a free program built around three parts. The first is a resource hub with short videos, most under five minutes and designed to be watched on a phone, alongside practical guides covering cash flow, financial statements, budgeting and general business finances.
The second is an ambassador program that connects small business owners with volunteer accountants and bookkeepers for free mentoring, helping them put what they’ve learned into practice.
The third is a taskforce, which met for the first time today at Parliament House in Canberra. Drawing on Xero’s research along with policy expertise and grassroots input, the taskforce will explore practical recommendations for government, with a report expected in early 2027.
The taskforce brings together a mix of small business owners, advocates and industry figures, including Verity Hare of Tradie Wives, disability activist and writer Carly Findlay OAM, Beyond Blue’s Greg Jennings, HEX co-founder Jeanette Cheah, pharmacist Adele Tahan, The Social Outfit’s Amy Low, restructuring expert Jarvis Archer, Distinction Homes founder Ahmed Latif, and Huy Truong of Thrive Refugee Enterprise.
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