Running a small business has never been easy work. Australia’s 2.5 million small businesses owners don’t start out for an easy pay check, they do so to pursue a passion, enjoy the autonomy it provides or to maximise their earning potential.
However, while it’s not supposed to be easy, it’s rarely been harder. In November, insolvencies hit a four-year high, with insolvency rates roughly 25% higher than they were prior to the pandemic. SMBs are disproportionately affected by insolvency.
According to Zoho’s Financial Health of Australian Small Businesses research, 89% of SMBs said their operating costs had increased in the last 18 months, while a further 78% have been forced to increase their costs to offset the impact of inflation and interest rates. Almost three quarters (73.9%) have seen their revenue slow, with four in ten saying it has slowed ‘significantly’.
In spite of these headwinds in 2024, there’s growing optimism that we’ve reached an inflection point, with almost half (46.6%) expecting their cash flow to increase in the next three to 12 months. Even more are optimistic about their growth opportunities beyond that.
In 2025, SMBs should focus on a combination of technical processes including, data, Business Intelligence and automation and interpersonal strategies like customer experience and relationship building. So as 2025 stretches out ahead of us, how can Australia’s SMBs turn optimism into growth?
Trust in technology
By now, few – if any – SMBs aren’t using technology in some form or another. Using technology is one thing, but optimising it is another thing altogether. When asked what their urgent considerations for 2025 were, Zoho research found that the SMB community’s second biggest priority – after simply keeping their business afloat – was to automate or digitise their business.
SMBs must start by assessing their current tech stack, and asking a series of questions. Is there technology integrated, or are they relying on a series of different platforms from different vendors that create silos or require too much manual intervention? Can they track key metrics such as cash flow, customer acquisition costs, and employee productivity in real time?
Platforms that centralise data, consolidate tools and provide clear, tangible and real-time insights are critical for making informed, growth-generating decisions. Time is money for small business owners and operators, so automation should also be a key focus in 2025. Repetitive, time-consuming tasks like invoicing, inventory updates and data entry and analysis should be automated to free up time for strategic priorities or more revenue-generating tasks. While it might sound intimidating, it needn’t be. SMBs should start with small, manageable changes, like setting up payment reminders or email follow-ups, which can quickly ease administrative burdens and improve cash flow management.
Intelligent businesses embrace BI
On top of a more strategic, integrated technology stack, SMBs can begin to optimise both their internal operations and their revenue generation. Data is one of the most valuable assets for contemporary businesses, but it’s so-often underutilised by SMBs. That’s why BI tools could be a big opportunity for SMBs in 2025.
BI helps SMBs not only track their performance, but also use the insights it provides to identify opportunities for growth. For example, analysing sales data can reveal which products are driving the most revenue, which customer segments are the most profitable or which employees are the most productive. By identifying patterns and trends, SMBs can make strategic, proactive adjustments – whether stocking up on a popular item, targeting a specific demographic or providing more responsibility for a high-performing team member.
Through BI, SMBs can also use historic data to predict future trends. Through this type of ‘predictive analysis’, a small retailer, for example, could use historic data to understand how sales might ebb and flow in 2025 or how to manage inventory of in-demand or slow-moving items. By tapping into BI tools with predictive capabilities, like Zoho Analytics, SMBs can plan ahead, mitigate risks before they arise or maximise opportunities with more foresight and conviction.
With this level of technology and data underpinning their operations, SMBs can dedicate more time to another critical focus in 2025: building relationships with their customers.
Relationship building builds businesses
Australia is a nation of small businesses, and the ‘support local’ sentiment amongst consumers is strong. While technology is critical, SMBs should never lose sight of the importance of relationships and customer experience. For many consumers, customer experience is one of the most influential factors on which businesses to engage with. Research also shows that consumers would be willing to spend more for enhanced customer service.
In 2025, SMBs should prioritise understanding their customers’ needs and preferences. With this information, which can be collected and stored in a customer relationship management (CRM), SMBs should personalise their customers’ experiences, whether that’s through tailored online marketing or product recommendations or to simply guide a personal conversation when they’re next face-to-face. In addition, acts like seeking feedback, asking questions and responding to reviews – both good and bad – go a long way in demonstrating that a business cares.
So many of the most successful businesses today are tech-powered and customer-focused. For SMBs, the focus in 2025 should be on finding the balance between leveraging technology and nurturing human connections. By investing in technology that streamlines operations and provides actionable insights, while simultaneously prioritising customer relationships, SMBs will be better placed to navigate whatever 2025 has in store.
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