Australian small businesses face readiness gap in adopting AI tools
Australian small businesses are experiencing a notable disconnect when it comes to artificial intelligence adoption, recent research indicates. A majority of companies that regularly use AI tools report revenue growth, but over half of these same businesses believe AI's removal would not impact their operations.
Growth divergence
Xero surveyed 1,100 small businesses across the globe, with 500 based in Australia. The data shows that 57% of local businesses that saw revenue growth in the past year use AI tools weekly. However, 54% say that if these AI tools vanished overnight, their businesses would not be affected. The findings suggest that most small enterprises remain curious but have not integrated AI into their core business practices.
The divide is creating what has been dubbed a "readiness gap," with a risk of a two-speed economy emerging. Businesses that can navigate AI adoption are forging ahead, while others are not seeing the same benefits. Among those surveyed, 55% of businesses with revenue growth use AI at least weekly, compared with an overall average of 45%.
Adoption barriers
Time shortages are a significant factor holding Australian businesses back from engaging with AI. Nearly a quarter of respondents (23%) say they lack the time to research or learn new technologies. This figure is notably higher than in the UK (11%) and the US (8%). Other leading barriers include concerns about data privacy (42%) and the reliability or accuracy of AI outputs (35%).
"The main challenge for Australian small businesses isn't just adopting technology, it's finding time. Our research shows small businesses are optimistic about the impact AI can have within their business, but a gap in trust and, most acutely, a lack of time is holding them back from moving AI from a 'nice-to-have' to a critical part of their business," said Angad Soin, Managing Director ANZ and Global Chief Strategy Officer, Xero.
Australian business owners also cited a lack of deep trust in AI technology. While 56% said they felt confident using AI, this confidence has not led to widespread, business-critical reliance.
"AI-savvy small businesses are seeing improved revenue growth but Aussie entrepreneurs are still hesitant to fully embrace the technology. There is a difference between surface-level confidence and the deep trust needed for critical adoption. While Australian owners are optimistic, they're also telling us they have concerns around security and reliability, which is creating a readiness gap," said Soin.
Operational focus
Current AI use among Australian small businesses remains highest in creative areas, with 25% using AI for marketing and content tasks each week. However, there is an increasing intention to extend AI use to operational tasks. In the next six months, 31% of respondents plan to use AI tools for bookkeeping and accounting.
"The role of accountants and bookkeepers is evolving as small businesses look to move AI from the edge of their business into their core operations. Becoming the strategic partner who can help them navigate this change and safely integrate AI into their financials will be a critical role," said Soin.
Practical strategies
Alan Tse, co-founder of Altina Drinks, advocates a step-by-step approach for those beginning to integrate AI. "Identify the most repetitive task - the kind that is so monotonous, you could do it in your sleep. Start by automating that. I see many entrepreneurs aiming for the shoot-for-the-moon solution, but there are many simpler prompts and simpler tasks that AI technology can help with, delivering incremental improvement that will compound over time."
Next steps
The new research outlines a three-stage model to address the readiness gap: adopting probability-focused thinking, conducting audits to identify time drains, and managing risks by working with trusted partners.
