Agile methodology: Principles and steps for your business

Published Tuesday 4 November 2025

Table of contents

• Benefits of using agile techniques in business
• Which business types can benefit from agile methodologies?
• The 12 agile principles in business
• Traditional vs agile project management methodologies
• The different types of agile frameworks
• How to implement agile methodologies in your business
• How to measure your success with agile KPIs
• Can software help manage agile teams?
• Getting started with agile in your business
• Frequently asked questions about agile methodologies

Key takeaways

• Implement agile by starting with team education through introductory workshops and hands-on training, then choose a framework like Scrum or Kanban that matches your business needs and resource capabilities.

• Organise work into short cycles called sprints (typically 2-4 weeks) that allow teams to deliver value continuously, gather customer feedback regularly, and adapt quickly to changing requirements.

• Form cross-functional teams with clearly defined roles and responsibilities, ensuring members have diverse skills to manage different project aspects independently while fostering collaboration and self-management.

• Measure success using key performance indicators such as sprint burndown rates, team satisfaction scores, and output quality metrics to ensure agile adoption delivers better results for your business and customers.

Benefits of using agile techniques in business

Agile techniques deliver measurable improvements to how your business operates and serves customers. Key benefits include:

• adapting quickly to market changes and customer feedback
• delivering value sooner and more frequently to customers
• catching issues early through iterative testing and review
• strengthening relationships with stakeholders through regular communication
• identifying problems early to reduce project risk
• Faster adaptation: Teams respond quickly to market changes and customer feedback
• Improved customer satisfaction: Regular releases deliver value sooner and more frequently
• Higher quality outputs: Iterative testing and review catches issues early
• Better team collaboration: Regular communication strengthens relationships with stakeholders
• Reduced project risk: Short sprints identify problems before they become costly

Which business types can benefit from agile methodologies?

Agile methodologies work best for businesses that need to adapt quickly and deliver value in stages. Your business can benefit from agile if you have:

• Evolving requirements: Project needs that change as you learn more
• Customer involvement: Direct feedback throughout the development process
• Complex deliverables: Products or services built in phases

Industries using agile successfully:

• software development and technology
• engineering and construction
• marketing and advertising
• finance and banking
• healthcare and pharmaceuticals

The 12 agile principles in business

The 12 agile principles, first set out in the Agile Manifesto of 2001, form the foundation of agile methodologies, guiding how teams work together and deliver value to customers.

Early and continuous delivery

This principle prioritises the customer by delivering value to them early and then continuously improving it. One way to apply this principle is to use customer feedback to modify and improve your product or service.

Responding to changing requirements

Agile teams embrace change, even in late stages of a project. Responding to changing customer needs and shifts in the market helps businesses innovate and stay competitive.

Frequent delivery

Agile businesses regularly improve their products or services to enhance quality, mitigate risk, gather feedback early, and stay competitive.

Close collaboration

Agile working emphasises collaboration across all areas of the business. Connecting regularly – such as by holding daily standup meetings – encourages transparency and discussion of important issues. This helps people make decisions and stay aligned between a project's goals and its implementation.

Motivated team members

Motivated teams find creative solutions, produce higher quality work and deliver results. You can motivate your team by creating a supportive environment where they have the trust and freedom to make decisions, move quickly and innovate.

Face-to-face communication

Direct communication unifies a team and helps to minimise misunderstandings. Cross-functional teams that regularly connect in person can find solutions and share expertise quickly.

Working product is the primary measure of progress

This agile principle puts tangible outputs and meaningful results first. Regularly review your products or services to make sure they meet customer needs and achieve your business objectives. This helps you maintain trust with your customers and stakeholders and stay competitive in the market.

Sustainable development

Agile frameworks support ongoing and indefinite improvement. It's crucial to build a workflow that allows team members and stakeholders to work at a steady pace over time. This supports a healthy work-life balance and lessens the risk of burnout.

Technical excellence and good design

Striving for technical excellence and good design encourages teams to adapt quickly to new requirements, design scalable solutions, and focus on the customer.

Embracing simplicity

This principle advocates low complexity and eliminating unnecessary work. This enhances efficiency and focuses teams and resources on critical tasks that add real value for customers and the business.

Self-organising teams

An agile business empowers its teams to make decisions, innovate, own the work and apply their expertise and creativity. Promoting self-organised teams fosters investment in projects and optimises resources to meet business and customer needs.

Regular reflection and improvement

One of the key benefits of agile working is continuous improvement to the product or service. Teams must set aside time to reflect on successes and find ways to boost efficiency and change behaviours.

Traditional vs agile project management methodologies

Traditional project management is linear – it follows a strict plan towards a clearly defined target. The phases of research, scope, design, and development happen one after the other, and teams provide management and support after launching. This method – the 'waterfall' approach – relies on the predictability of people, tools, and outcomes in each phase.

Agile project methodology is cyclical, emphasising adaptability, flexibility, and evolution of a product or service towards a target. Teams learn and adapt across the lifecycle of the product or service. Working in sprints, they continue to develop, test, and review after launching.

The different types of agile frameworks

There are several agile frameworks that apply specific approaches to project planning, management, and delivery.

Scrum

Scrum is a simple framework that helps businesses tackle complex problems and diverse tasks.

Scrum organises work into short cycles with specific deadlines, known as 'sprints', that typically last between two and four weeks.

The framework assigns clear roles – such as the product owner, scrum master, and development team – and encourages collaboration.

Teams deliver results and adjust priorities quickly in a 'structured yet flexible' environment. They can respond to changes in the market or customers' needs by reviewing work after each sprint.

Note that regular collaboration takes time and buy-in from the whole team. Teams should remember to keep long-term objectives in sight, as sprints can encourage a focus on short-term goals.

Kanban

The Japanese word 'kanban' translates roughly as 'signboard' or 'visual card', and as a method it was inspired by production systems from manufacturing that focus on reducing waste. Kanban organises tasks into visual cues on a physical or digital board, signalling when tasks are started, underway, or complete.

A kanban board provides a great overview of work underway to achieve business goals. It helps teams visualise workflow, track progress, identify bottlenecks, and centralise information on work deliverables. And by showing the work in progress, teams are encouraged to complete tasks before starting new ones.

Extreme programming (XP)

Extreme Programming (XP) is a less regimented agile framework that emphasises regular releases of work in short sprints.

Extreme Programming (XP) helps you deliver results and make changes quickly. You work in short bursts to produce quality output, satisfy customer needs and keep your product backlog low. Rapid change can also reduce costs over time by eliminating the need for major updates.

While Extreme Programming (XP) enables continuous improvement and fast project development, it can:

• require significant resources
• need effort, collaboration, creativity and rapid feedback from the customer to succeed

How to implement agile methodologies in your business

Implementing agile methodologies transforms how you manage projects and deliver value to your customers. To succeed, you need a structured approach that builds capability and establishes new working patterns:

1. Educate and train your team

Team education builds the foundation for successful agile adoption, which is critical in evolving industries where research shows many workers need upskilling to adapt to new workplace demands. Start with these steps:

• Run an introductory workshop: Explain agile principles and their benefits for your specific business
• Share real examples: Show how similar businesses use agile to solve common problems
• Provide hands-on training: Give teams practical experience with agile tools and practices
• Set clear expectations: Help everyone understand their role in the new approach

2. Choose an agile framework

Find an agile framework that best suits your business needs by assessing the strengths of each framework against your business goals and team capabilities.

Keep in mind the resource requirements for these frameworks. For example, XP methodology requires a robust team and regular collaboration.

3. Form cross-functional teams

Create small teams that include members with various skills and expertise. This allows your agile teams to manage different aspects of a project independently, and access expertise outside of their skill set quickly and regularly.

To help these teams succeed, you'll also need to support and foster a work culture of collaboration, learning, and self-management.

4: Define roles and responsibilities

Clearly define roles within your agile teams. Typical roles in Scrum, for example, include the product owner, scrum master, and development team.

Make sure everyone knows their responsibilities and how they'll contribute to the team's success.

5: Plan work in iterations

Using the principles of your chosen framework, divide the project into chunks and plan the work in sprints or iterations. Use tools that help your team operate in an agile environment, such as a digital kanban board.

Carry out regular reviews to share and showcase completed work, gather feedback, and make changes. Your reviews should generate actionable insights as part of continuous improvement.

How to measure your success with agile KPIs

Measuring agile success helps you understand whether your new approach is delivering better results for your business and customers. Track these key performance indicators:

• Sprint burndown: Shows work completed versus time remaining, revealing if your team is on track
• Sprint productivity: Measures how consistently your team delivers planned work each cycle
• Team satisfaction: Indicates whether agile is improving working conditions and morale
• Output quality: Tracks customer feedback to ensure faster delivery doesn’t compromise standards

Can software help manage agile teams?

Agile software tools streamline team coordination and reduce administrative work, letting you focus on delivering value to customers. The right tools provide:

• Practice development: Platforms that help teams learn and refine agile methods
• Reduced admin: Automated tracking that eliminates manual reporting tasks
• Better communication: Centralised spaces for team collaboration and updates
• Information storage: Single source of truth for all project and sprint data
• Visual progress tracking: Dashboards and kanban boards that show work status at a glance

Some project management tools that support agile working are Jira, Trello, Asana, and Monday.com. Choose software that suits your team and business needs.

Getting started with agile in your business

Adopting agile methodologies helps you respond to customer needs and market changes. Embrace flexibility, encourage collaboration, and focus on continuous improvement.

Start with a single project and a framework like Scrum or Kanban. As your team gets comfortable, expand agile to more projects. While you manage projects, keep your finances in order with Xero. Xero gives you a clear view of project costs and profitability, so you can run your business, not just your books. Try Xero for free.

FAQs on agile methodologies

Here are some questions small business owners might have about agile methodologies.

Is agile suitable for non-IT projects?

Yes, agile works beyond IT projects. Any industry that manages complex projects with changing requirements can benefit from agile approaches.

Industries successfully using agile:

• Marketing and advertising: Campaign development with client feedback loops
• Manufacturing: Product development with iterative prototyping
• Engineering and construction: Project phases with regular stakeholder reviews
• Finance and banking: Service development with regulatory compliance checks
• Healthcare and pharmaceuticals: Research projects with evolving protocols

Agile is particularly effective for projects involving planning, design, testing, and gradual rollout of products or services.

How can you manage agile teams remotely?

Agile working favours face-to-face connection, but you can manage remote teams using agile by:

• hold regular, open communication over video, phone and messaging to foster collaboration
• use digital collaboration tools like Zoom, Asana and Google Meet
• make sure each team member understands the goals and outcomes of each sprint
• set clear expectations for each team and team member
• acknowledge achievements and completion of tasks and goals
• encourage autonomy and flexibility in your team to achieve the tasks and outcomes of each sprint

Can sole traders use agile methodologies?

While agile typically applies to teams and larger projects, you can still work with an agile mindset and approach as a sole trader.

• choose the agile methodology that best suits your business
• organise your tasks into sprints or iterations
• focus on continuous improvement and adaptation

Use a digital tool to guide your agile work and provide visual support, such as a kanban board.

Disclaimer

Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.