More than a third of Australian small business owners don't regularly know whether they turned a profit in the previous month, according to new research commissioned by accounting software provider Xero, highlighting a disconnect between owner self-assessment and adviser observation with direct relevance for brokers assessing SME lending applications.
The research, conducted with independent agency One Picture between March and April 2026, surveyed 750 small business decision-makers alongside 500 accountants and bookkeepers. It found a stark mismatch in perception: while 85% of small business owners say they feel confident managing financial issues, 90% of accountants and bookkeepers believe those same owners lack the skills to do so effectively.
The disconnect extends further. Just 37% of surveyed owners answered all of 10 basic business finance questions correctly, and close to a third (32%) aren't regularly paying themselves a wage. More than a third have turned to public AI tools for business advice, while 95% of accountants and bookkeepers believe small businesses are receiving financial misinformation, largely sourced from social media.
Angad Soin (pictured), managing director Australia and New Zealand and global chief strategy officer at Xero, said the findings pointed to a need for earlier intervention.
"Starting a small business is a leap of faith, but too many owners haven't had the opportunity to set themselves up for success," Soin said. "More than one in three often don't even know if they made a profit last month."
That gap is not evenly distributed. The strain is more pronounced among small business owners facing social or demographic disadvantage. Three-quarters report financial uncertainty keeps them awake at night, compared with 48% of those without such disadvantage, and they are far more likely to avoid asking questions about financial management out of fear of appearing uninformed.
Small business mental health expert Leanne Faulkner linked financial literacy directly to owner wellbeing, noting that a lack of financial skills often leaves owners feeling they are operating in "feast or famine" conditions.
In response to the findings, Xero has launched a free program, Xero For Good: Financial fitness, offering short educational videos, practical guides and a mentoring scheme pairing owners with volunteer accountants and bookkeepers. A newly formed taskforce, which met for the first time at Parliament House in Canberra, will develop policy recommendations for government, due for publication in early 2027.
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