The future of work: 8 business trends for 2025
A look at what businesses did in 2024, and what they’ll do more of in 2025.
Every business owner knows they need to adapt to market forces, and changing customer preferences and business needs.
This requires flexibility, especially in the wake of two broad developments: 2024’s technological leaps, and more-sophisticated customers’ growing expectations of the businesses they buy from.
Tech adoption for small businesses is a big theme this year. We’ve analysed our report data and done external research to bring you eight small business trends that will drive business in 2025. See our thoughts on how your business can ride these currents to prosperity in 2025.
Business trends 2025
1. Generative AI goes mainstream
OpenAI’s ChatGPT reached 100 million active monthly users just 2 months after launching – the fastest-growing user base of all time.
Other generative artificial intelligence (AI) chatbots have now joined the race. McKinsey found that 72% of businesses use AI for at least one function. Almost everyone with an internet connection can now access AI tools that accelerate research and development, generate lifelike text and images, offer customer support via chatbots, and much more.
Businesses are integrating generative AI with existing software, and Xero is part of this trend. Xero users can ask their new AI business companion – Just Ask Xero (JAX) – to complete admin tasks for them, such as creating an invoice or a quote. Just send JAX a message, as you would a coworker, and JAX can take care of the task for you.
Balancing artificial and human intelligence will be critical for making the most of AI in business in 2025. For small businesses, accessing AI through software like Xero is a cost-effective way to use the technology to boost your business.
Generative AI has vast potential, but it’s still limited. Check its outputs and don’t upload private information to public AI platforms.
2. Hyper-personalisation is driving customer loyalty
Small businesses know that the better you know your customers, the better you can serve them – and happy customers will come back for more.
The business imperative to adapt your products to your customers’ needs certainly isn’t new. But the ‘hyper-personalisation’ of products and services, and the tools to achieve it, is distinctly modern. Now, tools like generative AI (our no.1 trend) bring new ways to better understand your customers’ needs and purchasing behaviours.
You’ve probably already experienced hyper-personalisation in action. Every film you watch or song you stream, you’re teaching an algorithm what to show you next time – so you’ll keep using and paying for the service.
This is known as predictive analytics, which uses past data to predict future behaviour – which you then use to develop marketing and sales campaigns to reach individual customers. Using predictive analytics can not only anticipate customer behavior, but optimize inventory, and create targeted marketing campaigns.
Hyper-personalisation isn’t just for big companies – your small businesses can use it by putting the data you already collect on your customers to work. According to BCG’s Personalization Index, companies with personalisation and AI in their consumer strategy grow 10% faster than others.
So dig into the data to see what customers want from you. Take advantage of built-in analytics reports and projects to tailor your marketing and sales campaigns to individual customers, and to make personalised data-driven decisions.
3. Cybersecurity and data privacy are key for today’s businesses
According to the World Economic Forum, cyberattacks could cost businesses worldwide more than US$10 trillion a year by 2025.
Small and medium-sized businesses are particularly vulnerable. Neglect your cybersecurity and you’re risking data breaches, financial loss, and your business’s reputation.
So getting a robust cybersecurity plan in place, along with policies and technical and organisational controls, will help protect your business and your customers. There are simple things you can do straight away:
- Update your software regularly
- Use encryption for private data and put two-factor authentication in place for your logins
- Set access levels for your business software so only the right people have access to information
Don’t forget to check your local data privacy regulations for guidance.
In Australia, you’ll need to comply with the Privacy Act 1988 and the Spam Act 2003.
You’ll also need to regularly review your systems and processes for their compliance with cybersecurity best practices.
4. Businesses are adapting to inflation changes
The runaway inflation of the past few years has hit business hard – not only their costs, but in their own price-setting behaviour, approach to hiring, and ability to retain customers.
But businesses like yours have adapted by restructuring their operations. The OECD notes that inflation has continued to fall in 2024 around the world, which means costs aren’t rising as quickly as before.
But that doesn’t mean you can sit still – you still need a plan for dealing with increased costs in 2025, and the chance that inflation rates will rise once more. What operational changes can you make, and what needs to be passed on to customers?
Your goal is business stability in an unpredictable environment, which (in part) means managing costs and protecting your margins without losing customers. This means you should:
- Remain flexible in your pricing strategy and keep a close eye on operational costs
- Adjust prices gradually so your customers don’t feel a significant change
- Secure fixed-term supplier contracts to help stabilise your costs
Talk to your customers – inflation affects them too, so there’s a good chance they’ll be sympathetic if you need to increase prices or change how you provide your products or services.
5. Small businesses chase efficiency to be more productive
With budgets stretched, small businesses are finding ways to be more efficient and close the productivity gap. While large companies can invest in advanced tools and automation, small businesses may lack the budget or expertise to do the same. This gap is especially noticeable in areas like customer relationship management, data analytics, or supply chain optimization, where small businesses tend to spend more time on manual processes and administrative tasks.
That means refining existing processes, taking advantage of time-saving tools, and upskilling your team. New technology to automate processes and streamline repetitive tasks (like accounting software) is part of the digital transformation of the workplace. It’s a great opportunity to speed up manual processes and make time for higher value work.
So take advantage of this transformation to close the productivity gap in 2025. Look at your existing systems and processes to see what you could improve and how software could help. For example, if you still spend hours reconciling transactions in your accounting software or emailing invoices and purchase orders, think about software that accelerates these tasks for you.
While there are upfront costs for software, you could save hours each month on admin – time you can re-invest in your business. Consider how you can upskill your team to make them more efficient and productive. You might find that outsourcing tasks can save you money and give you capacity to take on more work.
These efforts won’t just help your productivity – they’ll let you scale in the future with resilient processes that grow with you.
6. Consumers are choosing sustainability
Customers are more aware of the effects their purchasing decisions have on the world – which is leading them to buy with their values. According to PwC, consumers will pay a 9.7% premium for sustainably sourced and produced goods.
Businesses that want to stay competitive need to embrace these values. But integrating sustainability into your business takes time, so do your research and start setting targets for where you want to be in a year.
- Environmental sustainability is different for every business. Think about renewable energy and resources – find ways to minimise waste and sustainable waste-management practices, and switch to biodegradable packaging.
- Be deliberate about your goals, and above all, be sincere – consumers can spot greenwashing a mile off.
- Reach out to businesses you admire that already deliver on sustainability targets, and take inspiration from them.
7. Businesses connect with customers using extended reality technologies
Extended reality (XR) is a catch-all term for digital technologies that change the way we perceive and engage with reality – like augmented reality (AR), where users wear smart glasses to combine the digital and real worlds, and virtual reality (VR) – used in gaming headsets to immerse the user in a digital world. Worldwide revenue for these markets is expected to reach US$46.6bn in 2025.
Businesses are now using these technologies to personalise their products and services, and give customers the engaging experiences they want. For example, the US retailer Macy’s has a virtual room designer tool that lets customers ‘try out’ a piece of Macy’s furniture in their own virtual ‘rooms’.
Although it’s mainly large companies that invest in these technologies for now, smaller businesses can use them through services that let you build augmented reality experiences online. Tiktok's effects house tool, for example, lets businesses create their own branded filters for use in the app. WebAR services let you expand reality for your customers online – like product visualisations that show them what your products would look like in their homes (similar to the Macy’s virtual experience above).
8. Workers want work-from-anywhere job flexibility
According to the World Economic Forum, by 2030 there will be 92 million digital jobs that can be performed remotely. This trend was already gathering pace before the pandemic thanks to the digital transformation in working technologies. Now, workers routinely expect employers to offer remote or hybrid working models that allow them to balance their working weeks between home and office.
Since workers want flexibility, why not give it to them? Benefits of this are:
- Your business will have access to a much bigger pool of talent
- You can build a team based on skill, not location
- You’ll give talented candidates another reason to choose you over your competitors
You’ll also be tapping into the market for skilled freelancers. You can hire skilled specialists for your short-term projects so you can scale quickly and bring in expertise only when you need it.
Stay ahead in 2025 with Xero
You know your business best. So go for it! Look at the challenges you’re facing – processes, growth, or your tools, perhaps – and see how you could overcome them by embracing these trends.
You can’t do everything at once, so prioritise improvements that will make the biggest difference.
Reliable software helps you standardise processes and speeds up your admin, which goes a huge way towards making your business succeed.
At Xero, we do our own research to uncover small business trends, and help small businesses like yours meet big business challenges. So head to Xero’s small business insights for help navigating the road ahead.
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