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Ahead of the recent Federal Budget, we conducted a ‘pulse check’ survey to gauge the sentiment of mid-market business leaders across Australia. The business review, which included responses from directors and decision-makers, highlights the current business environment and the challenges and opportunities facing mid-market firms.
As a vital part of the economy, employing nearly a quarter of all Australians and generating almost 40% of business revenue, the mid-market sector’s outlook is essential for understanding broader economic trends.
The findings reveal a mix of cautious optimism and significant challenges, with leaders expressing varied growth expectations and identifying key support measures needed to navigate the evolving landscape.
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Mid-Market Pulse Check 2025: Key findings
Forecasting business growth
Mid-market business leaders have varied expectations for growth over the next few years. While some anticipate minimal growth, others are more optimistic about the future.
- 40% of business leaders expect minimal growth for the rest of 2025
- 25% foresee modest growth of up to 5% per annum starting this year
- 21% are optimistic, predicting growth of up to 10%
What’s standing in the way?
Businesses are facing several significant challenges that could impact their growth and operations. Key issues include cost pressures, regulatory hurdles, and talent acquisition.
- 65% see cost and margin pressures as their biggest concern
- 29% say dealing with regulation is a significant issue
- 27% are worried about recruiting/retaining skilled staff
Alleviating the pressure on SMEs
To navigate these challenges, business leaders sought measures that could provide much-needed support. Reducing regulatory burdens and adjusting tax policies stand out as top priorities.
- 49% say reduction in red tape is top priority
- 43% would like to see lower interest rates
- 29% suggest lower personal tax rates might help
A keen appetite for tax reform
Regarding the public finances, Australian business leaders had a clear view. A majority (61%) said that reducing the level of spending was the right approach, with fewer suggesting tax rises.
- 67% of leaders call for major tax reform
- 31% call for more targeted tax avoidance measures
- 26% favour higher GST
How do these findings impact your business?
What should policymakers prioritise?
Reduce public spending
Restraining public spending, rather than increasing taxes, is the preference among business leaders. This finding was confirmed by another poll we conducted among business attendees at KPMG’s live budget event, immediately after last month’s Federal Budget announcement.
Boost productivity
Business leaders are looking to boost productivity, the biggest issue facing the economy, and which barely featured in the budget. We hope whoever forms the new government will bear this in mind.
Simplify regulation
As a 75% service-based economy, many Australian businesses in our survey feel overburdened by regulation. This has to be a priority for policymakers after the election.
Ramp up investment
Businesses we have spoken to feel that SMEs – the heartbeat of the economy – are bearing the major brunt of consumer cost constraints. Measures to boost investment in the sector would be welcome going forward.
Sentiment in the mid-tier sector, as shown by our survey, is reasonably optimistic in terms of growth over the next two to three years, although the rest of 2025 will be challenging. It is notable that cost and margin pressures are clearly the major concern, and dealing with regulation also comes up repeatedly, which policymakers and regulators need to consider.
FAQs
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What is a mid-market business? A mid-market business, also known as a middle market business, refers to a company that sits between small businesses and large enterprises in terms of revenue and size. Typically, these businesses have annual revenues ranging from tens of millions to hundreds of millions of dollars and employ a significant number of staff.
Though they may not have the global reach of large corporations, they play a crucial role in the economy by driving employment and generating substantial revenue. Mid-market businesses often face unique challenges like access to capital, regulatory compliance, and talent retention, requiring strategic management and support.
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How was the mid-market survey conducted? KPMG Customer Intelligence conducted the pulse check on behalf of KPMG Mid-Market & Private. This pulse check was targeted at clients who run mid-market firms, aiming to gauge sentiment around key issues ahead of the 2025 Federal Budget.
The survey was completed by mid-market business directors and decision-makers. Most respondents were from private companies, however, there were also some from publicly listed companies, family businesses and NFPs. Respondents also came from a range of industry sectors.
The survey results are a valuable indicator of Mid-Market & Private clients’ opinions concerning the current business and budget environment.
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