AI in business: How small businesses can use it to grow smarter

Published Friday, 22 August 2025

Table of contents

• What is AI in business?
• Why AI benefits small businesses
• How to strategically use AI in business
• Navigating the future of your business with AI
• FAQS on AI in business

Key Takeaways

• AI in business involves using AI tools to streamline business processes (typically repetitive tasks).
• AI can help to improve data analysis, lower costs, and make informed decisions to benefit your business now and in the future.
• Create a more personalized customer experience with the help of AI.

What is artificial intelligence (AI) in business?

AI in business involves implementing AI tools like machine learning or automation, which helps improve business functions, encourage employee productivity, and drive business impact.

Learning about different AI technologies can help you discover which might work best for your small business. Here are some to consider:

• Machine learning for predictive analysis: Predict future outcomes and make strategic decisions that benefit your business.
• Generative AI in marketing: Quickly create diverse content and a more personalized experience with the help of customer data.
• Natural Language Processing (NLP) for chatbots: Enable AI chatbots to understand customer questions and provide relevant answers.
• Robotic Process Automation (RPA) for repetitive tasks: Automate repetitive tasks such as order processing, inventory management, and data entry, which can improve efficiency and reduce human errors.

Why AI benefits small businesses

Not only can implementing AI in business increase the efficiency of your processes, but it also means you don’t need to rely as heavily on manual work for many tasks. This allows your employees to spend more time on strategic work that better promotes business growth.

How to strategically use AI in business

There are several ways to use AI to improve your small business. From automating routine tasks to making a more personalized experience for your customers, AI can be a smart business investment.

1. Automate repetitive tasks

AI and automation go hand in hand. Automating repetitive tasks with AI can free up time and resources to focus on more complex tasks and creative work. If tasks don’t require human input, consider using AI to streamline the process.

Here are some ways to automate repetitive tasks:

• Data entry: AI can input data faster and minimize errors.
• Accounting: AI can automate bank reconciliation or expense categorization, improving accuracy and detecting fraud.
• Customer service inquiries: Chatbots can guide customers through basic troubleshooting and provide answers to general questions around the clock.

For example, an HR team might use AI to automate screening candidate resumes or onboarding new hires. The employees who previously worked on these tasks are now freed up to focus on more complex duties, like conducting interviews.

2. Enhance data analysis and business intelligence

Using AI for data analytics can help improve business intelligence, making it easier to make data-driven decisions. AI algorithms can process and analyze large data sets much faster than humans. This helps your business gain valuable insights and identify key trends from data quickly. AI can also be used for sales forecasting, market research, risk assessment, and identifying customer behavior patterns.

A retail store might use AI to review sales data and optimize inventory management, ensuring popular items are kept in stock while minimizing excess inventory.

3. Personalize the customer experience

As a business owner, understanding the customer experience is important to ensure sales, morale, and loyalty. AI can help you understand your customers better and deliver a more personalized experience. Consider analyzing customer data through AI engines – these can suggest products or create content that’s tailored to individual preferences. When customers feel their experience was considered, they may be more likely to use or visit your business again.

For example, AI chatbots ensure your business offers customer support 24/7 – even when your regular staff is off the clock. These conversational AI chatbots can improve customer satisfaction and loyalty while lowering costs and manual work.

4. Conduct predictive analytics and forecasting

Artificial intelligence in business can be a big help when it comes to analytics. Beyond data analysis, you can use AI algorithms to analyze historical data that can predict future outcomes and trends. This helps with things like demand forecasting, predictive maintenance, and risk management.

Let’s say you work in finance. You can use AI to predict market trends and assess credit risk. This information can be used to make smart decisions, helping you follow trends and more effectively avoid risks to your business.

Navigating the future of your small business with AI

Using AI in business can lower costs, minimize manual work, streamline processes, improve decision-making, and enhance customer experiences. It’s important to have people oversee and work with AI implementation to make sure it remains effective for your business needs.

Try adopting AI for your small business and consider future-proofing. This means finding or creating AI solutions that can easily adapt and scale over time as your business changes.

Automate your financial admin with Xero

Xero can help you streamline your small business operations. With automation built in, make reconciling your accounts a breeze. Plus, AI tools like Just Ask Xero (JAX) can help with automating tasks like creating invoices or answering business questions.

Try Xero for free today to get started soon.

FAQs on AI in Business

If you’re thinking of using AI in your small business, you probably have some questions. Getting the answers to these questions can help you make a smart decision for the future of your business. Keep reading to find the info you need.

How can I effectively use AI in my small business?

If you’re ready to use AI for your small business, start by identifying any repetitive or time-consuming processes. Consider areas of your business that may need more attention, like email marketing or writing social media posts. Don’t get overwhelmed by the process - AI can be implemented gradually and doesn’t require major infrastructure changes. This helps you test what works and scale up the use of AI as needed.

How can I strategically implement AI in business?

It’s important to clearly define business objectives before implementing AI. Be clear on what you want to use it for and what specific goals are. Once you’ve outlined how you plan to use it, look for the right tools that can help. Finally, assess your business’s AI readiness – do you have the right tools, people, and infrastructure in place?

What are the best AI tools to use for business?

Figuring out the best AI tools for your business comes down to your specific business needs. Are you looking for help with accounting tasks or project management tools? Maybe you’re interested in AI assistants or customer service help. Consider these AI tools:

• AI assistants (ChatGPT or Gemini)
• Accounting automation (Xero)
• Project management (Asana)
• Customer service (Hiver)

What are the potential risks of relying on AI?

While AI can offer benefits to your business, it’s important to consider some potential risks. These include issues with data security, relying too much on automation, and potential errors in algorithms.

When perfecting your AI business strategy, don’t forget to opt for reliable and secure AI tools. It’s important to keep an eye on how you’re using AI since this technology isn’t perfect – human review is still necessary in certain scenarios.