Confidence among South Australian businesses has stepped up again this quarter, with general business conditions and sales also improving. While that’s a welcome change of tone, it’s very much an improvement off a low base, not a wave of unchecked optimism.
The big issues haven’t gone away. Cost of doing business remains the stand-out concern, especially wages, materials and energy. There’s also a growing trend of higher lease outgoings, with rising council and statutory costs from increased property values being passed through to tenants.
Many businesses are finding it difficult to fully pass increased costs on to customers, particularly when selling to households already facing cost-of-living challenges. The result is pressure on margins at the same time as confidence is tentatively improving.
The December quarter may be a window for businesses with stronger demand to consolidate by reviewing pricing, checking margins and making the most of any sales uplift, while staying alert to customer sensitivity. It’s all about making the most of favourable conditions after weathering a difficult period for many businesses.
One of the most striking findings this quarter is around AI. Over 70% of businesses say they’re using AI, yet 79% still report having no policy around AI use inside their business. In our conversations, it’s often employees who are leading the adoption, rather than owners or leaders driving it strategically. It is critical that businesses consider confidentiality and data security when utilising AI.
With huge sums being invested into AI infrastructure and data centres globally, today’s subscription prices are unlikely to be the end point. We’re encouraging businesses to think about the long-term economics to ensure that, if AI becomes central to their model, the productivity and revenue gains will offset the risk of materially higher platform costs into the future.
On the trade side, almost half of the respondents trade interstate and around 28% export globally, with most saying recent US tariff changes haven’t had a major impact. Only a minority of traders hedge their foreign exchange, typically where currency flows are large or prices are fixed. Others deliberately “ride the wave”, accepting wins and losses on exchange rates, but doing so with a clear understanding of the exposure rather than by accident.
For many South Australian businesses, the first step in expanding to new markets is to trade nationally. From there, New Zealand is often seen as a logical extension of the domestic market, with similar systems but its own nuances. Beyond that, the options multiply: selling directly to overseas customers, using distributors or third-party logistics providers, setting up branches or subsidiaries, or establishing joint ventures and partnerships.
Across those models, people and trust are the common thread. Local commercial, banking and regulatory advice, clarity about roles in the supply chain and a careful choice of in-market partners or representatives all matter. In an era of virtual meetings, there’s still no substitute for getting on a plane and spending time in a new market when the stakes are high. It is all about investing time and energy to maximise the chances of being successful when looking at new markets.
Taken together, the September 2025 Survey of Business Expectations results and what we’re hearing on the ground give reasons for cautious optimism. The challenge and the opportunity, over the coming months will be to use this period of better sentiment to protect margins, invest in productivity and people and best position businesses to deliver strong outcomes for South Australia.
