Running your own AFSL is a milestone that brings independence, flexibility, and the chance to shape your business on your own terms. At the same time, small licensees face unique challenges: balancing compliance obligations, managing business operations, and maintaining focus on clients can be demanding.
Across the industry, clear trends are emerging. Some small AFSLs operate smoothly and sustainably, while others find it harder to keep pace with regulatory requirements and day-to-day pressures. Observing these differences provides important lessons for anyone navigating this space — insights that go beyond compliance checklists or business strategy alone.
1. Mindset: Survival Mode vs Growth Thinking
Licensees in survival mode often operate reactively, consumed by the next ASIC requirement or audit deadline. This approach can create ongoing stress and leave the business vulnerable to mistakes.
By contrast, thriving licensees deliberately carve out time to review both compliance obligations and business priorities. They plan ahead, ensuring that regulatory requirements are met without dominating the practice. Systems — whether through technology, frameworks, or external support — allow more capacity for reflection, client engagement, and measured growth.
It’s not about avoiding challenges; it’s about not letting them dictate the pace of the business.
2. Resources: Lone Operators vs Leveraged Support
Running a small AFSL often comes with a strong sense of personal accountability, particularly for Responsible Managers. For sole practitioners, this responsibility can feel isolating.
Thriving licensees recognise that seeking support is not a weakness. Trusted consultants, peer networks, or selective outsourcing allow the RM to focus on oversight and decision-making rather than getting buried in operational tasks. Using external expertise doesn’t diminish responsibility — it preserves capacity and helps maintain resilience.
3. Compliance: Tick-the-Box vs Embedded Frameworks
Compliance can feel like a series of administrative tasks: updating policies, completing training, and maintaining registers. But small licensees who only do this when prompted often discover cracks when processes aren’t actively reviewed.
Thriving licensees embed compliance into everyday operations. Breach registers, training logs, and governance processes aren’t just maintained; they’re reviewed and tested regularly. This approach provides confidence and ensures that when ASIC requirements shift, or audits occur, the business can respond smoothly and with clarity.
4. Financial Sustainability: Minimum Viability vs Deliberate Planning
Small licensees face ongoing cost pressures — PI insurance, audits, IT, and compliance frameworks all add up. Practices that focus only on short-term survival may manage, but they often have little buffer for unexpected events.
Thriving licensees approach financial sustainability deliberately. They regularly assess client profitability, margins, and operational costs. This allows them to build buffer capacity and make strategic decisions that support the business’s long-term viability. Thoughtful financial planning ensures the licensee isn’t just meeting obligations today but can continue to operate effectively for years to come.
5. Connection: Isolation vs Industry Engagement
Isolation is a common challenge in small licensee operations. Without a broader team or peer group, Responsible Managers can feel disconnected from industry developments, professional networks, or shared learning opportunities.
Licensees who thrive actively engage with peers, professional associations, and forums. These connections provide access to insights, collaborative problem-solving, and a sense of perspective. Engagement is a subtle but significant factor in resilience, helping licensees adapt to regulatory and market pressures more effectively.
Why These Approaches Matter
Observing small AFSLs in 2025 shows that thriving isn’t about size, resources, or working harder — it’s about approach, mindset, and context. Thriving licensees demonstrate that success is less about ticking boxes and more about how they operate day to day.
These approaches matter because they illustrate what makes a small licensee sustainable: the ability to balance regulatory obligations with operational realities, the agility to adapt to change, and the resilience to manage limited resources effectively. Recognising these approaches helps licensees reflect on their own practice — not to follow a formula, but to understand the levers that influence both stress and sustainability.
Small AFSLs have inherent advantages: agility, flexibility, and the capacity to make decisions quickly. Those who leverage these advantages while maintaining strong frameworks and support structures are more likely to thrive in the long term, rather than simply surviving regulatory and operational pressures.
Final Thought
The line between thriving and surviving is subtle but real. Observing how small AFSLs operate today provides insight into the choices and approaches that support resilience, confidence, and sustainability. Thoughtful planning, embedded compliance, strategic support, and engagement with peers aren’t just nice-to-haves — they shape how licensees experience running their business and influence whether it feels sustainable, manageable, and rewarding.
Being a small licensee doesn’t have to mean constant pressure. With deliberate approaches and a focus on resilience, small AFSLs can navigate regulatory demands confidently, run effective businesses, and continue to serve clients in meaningful ways.