AI for small business: Why it’s essential and how it can help you grow

Published Tuesday 16 September 2025

Table of Contents

• Why AI makes a big difference for small business
• Benefits of AI for small business
• How AI helps businesses grow
• Practical AI applications for small businesses
• Overcoming barriers to AI adoption
• Future trends in AI for small business
• Get started with AI – the first step is simple
• FAQs on AI for small businesses

Key Takeaways

• More businesses are adopting AI tools for various purposes including marketing, customer service, and finance
• Small businesses that adopt AI can save time, boost revenue, and compete with larger companies
• Practical applications of AI for business include using customer service chatbots, creating marketing content, and automating financial admin
• Getting started with AI is easier now. It’s available through existing software, and you don’t need technical skills or qualifications to be able to use it well

Why AI makes a big difference for small businesses

In today’s fast-paced world, artificial intelligence in business is no longer a luxury – it’s an essential tool for growth. Think of AI as a strategic partner that acts as an extra pair of hands to help you streamline operations, enhance decision-making, and unlock new opportunities.

So, what exactly is artificial intelligence? Artificial intelligence refers to a set of technologies that can simulate human intelligence and perform tasks. Following the introduction of Generative AI tools like ChatGPT, Gemini, and Claude, there’s more opportunities for businesses to integrate the technology.

These tools are readily available and accessible, so applying the technology in your business has never been easier. AI is already popular among small businesses. Three quarters of businesses say they’re experimenting with AI tools, according to a Salesforce report. You don’t need to be a computer scientist or skilled coder to make them work for you – Generative AI tools are designed so that you can use natural ‘human’ language to interact with them.

AI can help you come up with marketing ideas, build a product launch schedule, and even spot errors in your bookkeeping. Plus, many AI tools get better as you use them, unlike conventional software which tends to have specific functionality.

So, to recap AI for small businesses:

• Learning capability: AI systems can analyze data and improve performance over time, so the more you use them, the better they typically get
• Automation potential: AI can handle the repetitive and time-consuming tasks that weigh your team down, freeing everyone up for more focused work
• Accessibility: AI tools are affordable, easy to use, and don’t require technical expertise to get results

Benefits of AI for small businesses

Most businesses could benefit from an extra pair of hands. Having AI tools as your collaborators can help you get more done, spend less time on the parts of work you find tedious, and simplify your business operations.

Enhanced efficiency and productivity

According to an AI and Small Business Adoption report by Thrvy, one third of small businesses save between 11-20 employee hours per month by using AI tools. And almost another third have achieved savings of 21-40 employees hours per month.

Time-consuming admin can be automated and sped up by AI in the workplace. For example, AI scheduling tools can plan your day for you, avoiding double-bookings, organizing team meetings, and ensuring deadlines are hit.

Another example is document processing. For every receipt or invoice you have, the transaction information needs to be exported and recorded in your accounting system. That can mean lots of time spent typing transaction details.

AI tools can extract this information from photos and upload it to your accounting system, no manual inputs required. For example, Hubdoc uses a specific form of AI – machine learning – to recognize supplier details on paper receipts and invoices. All you need to do is snap a picture and the information is uploaded and transcribed – no manual entry required.

Data-driven decision making

AI tools can crunch through large datasets in the blink of an eye, uncovering patterns and insights humans might miss. This applies to all kinds of data – financial performance, staff engagement, customer satisfaction, marketing campaigns. For example, Analytics powered by Syft is an AI-driven tool that can transform your financial data into clear, actionable insights.

Some of these tools allow you to interact conversationally. You can ask questions about the data – such as how sales have differed this quarter compared to last, which products customers are buying, what the engagement rate was for your latest email campaign. The AI tools can respond to these questions with analysis and insights.

Instead of staring at a report and trying to decide what it means, you can ask questions about it and drill deeper with AI. You can then use these insights to guide decision-making, allowing you to respond to real financial, customer, and staff requirements.

Cost reduction

Used strategically, AI can save your business money. According to the AI and Small Business Adoption report, two thirds of businesses save up to $24,000 annually. More than half of businesses use the money saved on additional marketing efforts to grow their business.

Automating repetitive tasks can help you save on labor costs, and redirect your team towards meaningful work. But you can also save by increasing the accuracy of your accounting and financial management, so you avoid costly mistakes, penalties, and fines.

Using AI chatbots for customer service can help you answer queries faster and keep buyers satisfied, and more inclined to make future purchases. Plus, AI tools for inventory management can help you optimize stock levels, avoid overspending, and predict demand.

Using AI chatbots alongside human employees to generate social media content, refine your email marketing campaigns, and improve website pages can help you get more done with smaller teams.

Enhanced customer experience

Improving your customer experience can help with acquisition and retention, so that curious searchers become loyal buyers. AI can be applied across the process, through the use of chatbots which handle first-line enquiries, to customer data analytics platforms that help you spot where you might be missing out on purchases.

Some AI tools for customer experience can analyze past purchase data and recommend products or services to cross-promote, increasing your overall order value.

Competitive advantage

AI tools enable you to do more with fewer resources. You can create more marketing materials, deliver 24/7 customer service, and automate admin tasks so there’s more time for strategic work.

AI-powered analytics and insights can give smaller businesses the opportunity to move with the market, respond to customer needs, and do things more quickly than bigger businesses. You don’t need a team of 1000 to get everything done – by augmenting your team with AI, you can do more as a team of 10.

How AI helps businesses grow

According to Salesforce, 91% of small and medium businesses using AI say it boosts revenue.

While many AI applications are still in their infancy, tools exist for customer service, marketing, finance, operations, and many other aspects of running a business. It’s unsurprising that 80% of small business owners believe that AI will help them in the future, according to Thryv.

When AI tools are adopted strategically, they can help businesses grow by:

• Automating administrative tasks to free up teams and enable them to focus on sales-generating tasks
• Revealing opportunities for growth through analytics and data insights
• Enhancing customer experience by providing insights and recommendations for personalisation
• Optimizing inventory management and predicting demand so that you don’t overspend
• Making automated processes scalable so you can grow your revenue without adding to your headcount

Practical AI applications for small businesses

The best way to learn how AI can help your business is to start experimenting with it. Testing AI tools in different areas of your business will show you what’s possible.

Here are some practical applications of AI for businesses that you can get started with immediately. No tech or coding skills required.

Financial management and bookkeeping

AI tools can simplify and automate accounting processes, maintaining accuracy and saving you time on admin. Tasks like categorizing transactions, making financial performance predictions, and identifying opportunities for cost-cutting can all be done by AI.

An example of this is the bank reconciliation predictions feature in Xero accounting software, which recommends matches for statement lines based on your past transaction information.

Another example of how AI tools can help you with financial management is the AI cash predictions in Xero Analytics Plus. Using your past transaction data, Xero can make cash flow predictions to help you plan your finances better and prepare for what’s next.

Customer service automation

Delivering a memorable, personal customer experience is essential if you want to keep people coming back for more. And human customer service is important for making buyers feel seen and valued. But AI can also support customer service experiences, by providing essential product or service information in a few clicks, through a chatbot.

AI chatbots are much better than early chatbot technology, and understand human language much better. Customers can ask conversational questions and get human-sounding answers from AI chatbots. This can help you deal with the first wave of questions, making room for human agents to tackle more technical questions.

These tools are readily available for businesses of all sizes to implement, and they could help you speed up response times, improve customer engagement, and keep buyers happy.

Personalized marketing and sales

AI marketing tools can take the guesswork out of trying to reach your target market. These tools exist for content creation, writing, design, and process automation. Plus, there are others that focus on marketing analytics to help you understand customers better, tailor campaigns towards them, and cross-sell products.

Generative AI platforms like ChatGPT and Gemini can help you create written and visual content. You can even prompt these tools for content calendar templates and broader marketing plans to build on.

Search for AI marketing analytics platforms if you want a deeper understanding of customers. These tools can help you optimize your website content, make recommendations on keyword phrases to target and content to publish, tell you which products are selling best, and track the customer buying cycle.

Inventory and supply chain optimization

AI tools for inventory can predict demand patterns, reduce stockouts, and optimize ordering so you only carry the items you need. This means you can keep inventory lean; only spending what you need to, with more free cash, and a reduced risk of unsatisfied customers waiting for you to restock.

These tools give you oversight of your stock levels and can notify you on the status of specific products, automate reordering, and create purchase orders too. While tools like this may once have only been accessible for large companies, monthly subscriptions are now available for tools around the $20 - $50 mark.

Overcoming barriers to AI adoption

In recent years, AI tools have become more accessible to smaller businesses as Generative AI platforms make it easy to engage with the technology. Still, you might be facing some barriers to AI adoption. Let’s dispel some myths, and look at the truth.

Myth: It’s for technical people

Reality: Using AI in business doesn’t require a technical qualification. Tools like ChatGPT and Gemini work through ‘prompting’, where you ask a question and the tool responds with content. These tools (and many others) are designed to be user-friendly, so more people can engage with them.

Myth: It’s too expensive

Reality: While it’s true that you can rack up costs with lots of subscriptions, there are plenty of tools that can be accessed free or for a low monthly fee. Monthly subscriptions mean you can pay for tools you’re using, and end subscriptions when you need to.

Myth: It replaces human employees

Reality: AI has blind spots – and humans do too. A partnership between AI and humans is best, so make sure you’re reviewing AI outputs for accuracy and including human employees in the mix.

Myth: It’s just a passing trend

Reality: AI adoption is increasing across industries and businesses of all shapes and sizes, with demonstrable results. And you can find ways to make it work for your business too.

Future trends in AI for small business

The benefits of artificial intelligence in business are already being demonstrated, as the research shows. No doubt, the future of AI will bring about more benefits as the technology becomes smarter and more widely available.

In the near future, we’re likely to see increased adoption and a deeper understanding of how to apply AI, as more people familiarize themselves with the technology.

Alongside this, we’ll see developments in:

• Voice-based AI assistants becoming mainstream, making it possible to converse with a specific tool and complete tasks
• Agentic AI, where the AI tool can complete tasks autonomously without you needing to prompt it
• Hyper-personalized marketing, where every individual customer and prospect receives specific, targeted marketing backed by data

Get started with AI – the first step is simple

There’s so much potential for AI in the workplace, that it’s understandable if you feel overwhelmed.

But modern AI tools are designed to be accessible and useful for small businesses. Many businesses are already seeing success by using these tools across various aspects of their operations. And with plenty of free and low-cost options to get started with, you can test out the technology without paying high fees.

The simplest way to get started with AI technology is to access it through existing software. Xero accounting software has AI features already integrated, with bank reconciliation predictions and Analytics Plus helping you complete tasks faster and get greater insights on your money.

And, Xero’s new smart business companion – Just Ask Xero (JAX) – is here to help you run your business smoothly. Make smarter decisions and supercharge your admin with JAX. Gain critical insights through advanced conversational capabilities, ask how to improve cash flow, or help with creating invoices or quotes.

Try Xero free

FAQs on AI for small businesses

Let’s clear up some common questions on AI for business.

How much does it typically cost to implement AI in a small business?

Plenty of AI for business tools have free versions that you can get started with. You may find the features are limited, but free trials are a great place to start if you’re still figuring things out. Generative AI platforms like ChatGPT and Gemini can be accessed for free, though the models aren’t as advanced as paid versions. Subscriptions for AI tools vary in price, but can start from as little as $20-$50 per month.

What specific AI tools should small businesses consider first?

Think about the challenges and opportunities in your business, then look at which AI tools can address them. Consider the areas that would add the greatest value to your business. If you’re desperate for a few extra hours in your business, automating your financial and accounting admin is a great place to start.

How long does it take to see results from AI implementation in a small business?

It depends on the tool and the task. If you’re implementing a document capture tool to save you time on manual data input, you should notice the benefits almost immediately. You won’t have to spend time typing in transactions and can use the time elsewhere. If you implement an AI customer service agent, you might need to wait a few months to see how effective it is for your team and the people who use your website.

Do small businesses need to hire AI specialists to implement these technologies?

No – in fact, this is one of the biggest benefits of modern AI tools. Generative AI, and software that integrates AI, is designed for businesses to use. You don’t need coding or technical experience, and in many cases, it’s much like using any other business software. Or, as simple as having a conversation with the AI interface and requesting blog post ideas, data on this month’s sales, or a product launch plan.

How do I ensure data safety and privacy when using AI tools?

Certain AI tools for businesses share data, or use it for training purposes. How your data is used depends on the provider, and sometimes on your settings with the provider. It’s always best to check the specific tool’s settings and policies, as well as your own, to make sure you’re not putting data privacy and security at risk. Avoid putting sensitive data into AI tools, and anonymize identifying information.