RADAR
Understanding the businesses driving Australia’s economy
SPOTLIGHT ON LEADERSHIP IN UNCERTAIN TIMES
About this report
Each year, Pitcher Partners’ Business Radar looks into the trends, challenges and opportunities facing Australia’s middle market business leaders with independently commissioned research.
Our most recent survey, conducted in May 2025, captured the sentiment of nearly 150 middle market business owners and leaders across a range of growth stages, states and industries, focusing specifically on how leaders are navigating uncertainty while maintaining business momentum.
Here, you’ll read how leaders are demonstrating remarkable resilience through disruption from tariffs, geopolitical tensions, regulation changes and rising costs, while taking sophisticated approaches to balance growth with prudent risk management.
We also examine how middle market leaders are responding strategically to current challenges through operational optimisation, strategic investments, and careful planning rather than reactive decision-making.
Key findings
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Middle market confidence remains remarkably stable despite mounting challenges: Business leaders have maintained steady confidence levels across all segments since 2021. Although industry growth prospects show a definite downward trend, they remain above pre-COVID levels.
Leaders are taking a sophisticated, measured approach to uncertainty: The majority of middle market businesses report only moderate or no changes in uncertainty levels, maintaining a steady course or proactively investing in growth despite concerns about tariffs, global tensions and regulatory burdens.
Strategic cost management is being balanced with growth investments: Many businesses are actively cutting costs while simultaneously pursuing expansion into new markets and introducing new products and services, demonstrating strategic rather than reactive decision-making.
Technology and supply chain maturity are emerging as positive confidence drivers: Supply chain changes jumped to fourth position as a positive factor while technology changes ranked third, with leaders appreciating AI-powered business tools as viable alternatives to hiring.
Read on to learn how middle market leaders are successfully navigating turbulent times and the strategic actions you can take to maintain resilience while positioning for growth.
Level heads in turbulent times
Through the disruption of impending tariffs, geopolitical tensions, regulation changes and rising costs, Australia’s middle market business leaders are driving forward with level heads. We’ve seen steady confidence in both the future and current business success since 2021. Perhaps successfully running a business through the turbulence of the last five years has proven their mettle – they know they’ll get through, whatever comes their way.
Middle market business confidence over time
Slipping confidence in industry growth prospects
Despite continued confidence in their own business since COVID, this resilience may be starting to slip, at least as far as industry growth prospects are concerned. While each of our Business Radars has shown a slight drop since June 2023, they’ve been too small to be meaningful. However, when tracking results across multiple surveys, we can see a definite downward trend.
Our leader’s views on the growth prospects of Australia and the global business economy remain fairly consistent across all segments. This steadiness is particularly significant, given the current spluttering local economy and turmoil in the global economy.
Confidence drivers – positive and negative:
1st 2nd 3rd 4th 5th
Overall, confidence drivers have remained fairly static, with a slight reshuffling from the previous survey.
How closely are you tracking shifts in your customers' tastes and preferences?
Could technology investment help with this?
The positive side of supply chain changes
Notably, supply chain changes, as a positive driver of confidence, increased from 12% in the last survey to fourth position at 27%. Perhaps this is evidence of the further strength gained from restructuring of, and maturity in, local and global supply chains from the exposed weaknesses during the COVID years. These structural changes take time to develop, implement and secure, and businesses are now gaining strength from their actions.
31%
Technology changes were chosen as the third most influential factor on business confidence.
Is tech finally doing its job?
Labour costs dropping out of the top five factors overall may be a sign of a resettled labour market, although technology changes may also be having an impact.
“There’s been a shift in the conversations we’re having, as business leaders have had time to understand and appreciate AI-powered business tools as viable alternatives to adding more FTEs to the payroll,” said Chris Hanna, Principal, Pitcher Partners Adelaide.
Have you taken steps to review or strengthen your supply chain relationships?
When asked what circumstances were having the greatest
impact on their business, some respondents replied:
“The changes in the global political landscape, as well as the foreign policies of the new administration in the United States.”
“The tariff policies of the US government and the global political landscape have a significant impact on us.”
“The greatest positive impact on my business currently comes from the ongoing digital transformation globally.”
Extra regulation, but no extra support
As a negative driver of confidence, increased government regulation made a significant leap too: 22%, from just 11% in the last survey in February this year.
In our previous Business Radar, we noted that many business leaders viewed the climate change reporting requirements as an additional administrative burden. The federal election campaign that Australia recently endured solidified business expectations that minimal government action would be forthcoming to reduce or streamline government red tape.
“Importantly, it is my observation that middle market business leaders are feeling the government are ignoring the concerns and wishes of the business community,” said Gavin Debono, Partner, Pitcher Partners Melbourne.
Inflation (38%) and increased operating costs (36%) continue to be the major drags on business confidence levels.
Jumped from just 11% in the last survey. The policy debate during the federal election has cemented the concern from business leaders there will be minimal or no action on reducing or streamlining business red tape.
Are there key policy changes or government measures that could assist your business or industry?
Can your industry body promote these to government?
How leaders are navigating extra turbulence
While the media reports would have us believe that business leaders are (very) afraid of an incoming catastrophe, our middle market business leaders aren’t panicking.
The vast majority – 83% – are seeing no or only moderate changes in uncertainty levels, with just 17% saying they’re facing high or extreme change, even in the face of tariffs, increasing global uncertainty, legislative change and disruptive technology.
These stats are reflected in on-the-ground observations from Pitcher Partners’ experts.
“In the media, these are ‘uncertain times’, but clients are more ‘steady as she goes’. Exporters have some concerns, but they haven’t completely put the brakes on. We hear a lot about catastrophe – but it hasn’t played out yet for many,” said Chris Hanna, Principal, Pitcher Partners Adelaide.
Business’s change in uncertainty levels in light of recent events
No change in uncertainty levels
Moderate change in uncertainty levels
High change in uncertainty levels
Extreme change in uncertainty levels
Tariffs driving media headlines, but not middle market concern
While tariffs are driving the media headlines, they might not be relevant to most middle market businesses, with only 29% of respondents export to the US.
Moderate to no change in uncertainty levels.
For those affected by tariffs, a considered response is necessary. Should you explore alternative markets where your goods may be more competitive?
Can consumers absorb the increased cost of your goods?
Do your margins allow you to endure and assess the longevity of the tariffs, if imposed?
It remains a watching brief as our politicians navigate this challenging negotiation
Our survey respondents were fairly aligned on what is causing uncertainty, even if they were not too concerned about it. Tariffs and trade policies (24%) and inflation or interest rates (21%) were well ahead of other events, with the third highest, the labour market, only chosen by 12% of respondents.
Most significant events causing uncertainty
24% 21% 12% 10% 9%
Tariffs / trade policy
Inflation or interest rates
There’s a financial link between both of these top factors:
Labour market Regulation / compliance AI and new technologies
“Higher costs of trade, loss of customers to cheaper brands.”
“Inflation has caused a rise in the costs of goods and services, and my business is feeling the strain of these increases across various areas.”
“We’re cautious about raising prices too much, since customers are also feeling the pinch.”
Survey respondents
Steady momentum through the ups and downs
When asked to describe general business posture, 87% said they were staying the course or proactively investing in growth. This generally reflects an appetite for risk, with 78% reporting an appetite for high or moderate risk.
Current business posture
Proactive and investing in growth
Staying the course
Cautious and risk-averse
Defensive and cutting back
87%
Staying the course or proactive and investing in growth.
These uncertain economic times will require action.
“We’re seeing some clients move more quickly towards succession transition, while others are winding back plans,” said Kylie Lamprecht, Partner, Pitcher Partners Brisbane.
Both are legitimate responses – in one, the leader is staying to steady the ship; in the other, they’re recognising the need for a fresh perspective. The key is that these actions are deliberate, not avoidant.
78%
High to moderate risk appetite.
Take action
Keep your perspective
As a leader and decision-maker, you are looked to as a steady hand and support for moving the business forward. It’s important to maintain your own emotional levels and state of mind and take the personal corrective action required to ensure your head is in the game – be it through your network, advisors or business mentors.
Middle market leaders are doubling down on the fundamentals and are ready to act when needed.
Do you have a clear strategic plan that will help guide decisions through uncertainty?
Ready to act
This calmness and optimism shouldn’t be mistaken for head-in-sand naivety. Middle market leaders are watching carefully, ready to act when needed and doubling down on the fundamentals like strong customer relationships, resilient supply chains, trusted advisors and capable teams.
When asked what businesses should be doing to navigate times of uncertainty, 31% said organisations should be maintaining strong financial discipline, 38% said adapting to changing customer needs and 36% said retaining talent. These were strongly aligned with responses about factors influencing business resilience. Strong cash flows and robust balance sheets could be seen as the result of financial discipline, retaining excellent talent helps protect the business’ ‘special sauce’ and key relationships, and accessing reliable information improves overall decisionmaking. These factors all appeared in the top three for at least half of the respondents.
31% are maintaining strong financial discipline, 38% are adapting to changing customer needs and 36% are retaining talent.
Communicate clearly
The uncertainty will be felt by your people, suppliers and customers. Focus on developing and executing a clear and comprehensive communication strategy. Transparent and honest communication will build trust and can become a competitive advantage.
Take action
Lead with clarity and intent
Before making any decisions, get clear on your core strategy, goals and values, rather than letting fear guide you. This will give you space to explore ideas that may contribute to your long-term plans in more creative ways. For example, it may feel like a simple solution to increase prices in response to rising costs, but this may conflict with your core strategy or values. There may be other ways to relieve pressure on your profit margins.
Middle market leaders are taking a sophisticated, measured approach – optimising operations while investing in long-term value.
Cutting costs, not quality
But what are leaders actually doing in response to the market uncertainty? When we dig deeper into business posture, an interesting tension emerges. On one hand, 69% of respondents say they are actively looking to cut costs. On the other, almost as many are pursuing growth initiatives – 67% are expanding into new markets and 65% are introducing new products and services.
This isn’t contradiction – it’s strategy. Rather than choosing between caution and ambition, many middle market leaders are doing both. They’re taking a sophisticated and measured approach: optimising operations and cost structures to preserve margins, while simultaneously investing in areas that create long-term value. Two in five are focusing on supply chain and operational efficiency, and 40% have accelerated business model transformation – like investing in tech, digitising operations, etc.
It’s a sign that businesses are thinking broadly and taking actions on many important areas of their business: containing risk while preparing for opportunity.
Have you considered whether your current business model is serving you well in today’s market conditions, or are there aspects that need refreshing?
While 37% are keeping their business models as they were, 23% have stopped or delayed making any changes. Again, that figure aligns with those reporting a low appetite for risk (22%) and taking more defensive or cautious measures (13%).
Take action
Invest in people and relationships
Regardless of the tack you take, you’ll need people to implement it. Consider if you have the right people on your teams and at the board table. Do they have the mindset, skills and energy needed for today’s challenges? Your external relationships are crucial, too – explore how you can establish and invest in relationships with partners, customers, suppliers and other people in your network.
Confidence built on careful planning
To support this planning, businesses say they’re primarily seeking support from advisors or consultants (42%) or collaborating with industry groups and peers (44%).
“Business leaders are seeking information, feedback and guidance broadly, feeding external experiences to their own internal information to help with decision-making in a complex business environment,” said Gavin Debono, Partner, Pitcher Partners Melbourne.
Solid advice is always critical, but equally important are the strategic connections you forge. Great advisors will maintain and help you access their networks. Similarly, they should go beyond generalisations and instead listen, understand your unique context, and offer genuinely tailored solutions.
The optimism of this group is underpinned by careful contingency planning around financial discipline, customer care, sound strategy and solid advice:
“Diversified supply chain, review contracts, and negotiate terms and conditions.”
“We have slowed down new customer intake and focused on our existing customers.”
“We have increased our cash reserves to actively deal with uncertainties.”
Survey respondents
Don’t get complacent
We see established businesses being taken by surprise when a hidden dependency reveals itself, a long-standing client moves on, or a single supply source is cut off.
“Even if everything is going well, look at your business through the eyes of a potential buyer. What would worry them should worry you too,” said Kylie Lamprecht from Pitcher Partners Brisbane.
Use data to uncover these issues and then take steps to plug the gaps. This might be becoming more vertically integrated by acquiring an important supplier, diversifying your client base or supply chain, or identifying single points of failure before they become problems.
Middle market poised for success
Middle market business leaders have proven time and again that they are well-positioned to survive and even thrive through uncertainty.
We observed the same bullish entrepreneurial spirit and growth mindset throughout the COVID crisis. They are resilient, proactive, and backing themselves to get through the worst.
“Your perseverance and positive attitude will inspire your team to stay motivated and committed. Be humble and giving as a leader. Share how you navigated past difficulties to remind your people of what can be done and how it can be achieved”, said Gavin Debono from Pitcher Partners Melbourne.
The middle market also occupies a sweet spot. It is large enough to maintain financial resilience but small enough to be nimble and foster strong relationships. This means leaders could be poised to find opportunity in adversity while their competitors struggle.
Key actions to take:
1 Balance cost cutting against growth
Refine operations and supply chains to build efficiency while continuing to invest in innovation, expansion and customer value.
2 Strengthen your network
Find mentors, organisations and advisors who connect you to wider networks and opportunities.
3 Prioritise people
Focus on strong, steady leadership that supports your team’s capability, motivation and stability.
4 Make decisions based on strategy, not fear
Get clear on your goals, and then hold your nerve.
5 Build your buffers
Whether that’s building a financial cushion or diversifying supply chains, customer base or revenue streams.
6 Automation gives the edge
Ensure your tech and AI are being used to re-skill your people and lift productivity.
Insights for business
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