Contributed by Rakesh Prabhakar, Head of Zoho Australia and New Zealand
Australia is a nation of entrepreneurs, go-getters, and big-thinkers. For 2.5 million Australians running a small business, the pursuit of independence, passion, and potential has always come with its share of challenges. The last few years have been particularly difficult for SMBs in the country, with closures hitting a four-year high, and insolvency rates currently 25% higher than they were pre-pandemic.
Last year was no different. The vast majority (89%) of Australian SMBs saw their operating costs increase in the last 18 months, according to Zoho’s Financial Health of Australian Small Businesses research. In response, three in four (78%) have been forced to increase their costs, passing the burden onto customers. However, that too has had unforeseen problems, with a further three quarters (73.9%) saying their revenue slowed; and ‘significantly’, for four in ten.
But as we step into 2025, the stakes feel higher than ever. But so too does the optimism, according to our research. Almost half (46.6%) of our SMB community anticipate stronger cash flow in the months ahead, and many see growth opportunities beyond 2024. Nearly one in three (29.3%) “see a lot of growth opportunity” in the next 12-18 months, while 33.7% believe they’re “recovering nicely”.
But as small businesses begin to think big in 2025, how can they turn their optimism into growth?
Build relationships, enhance experiences
Australians are renowned for their strong support of local business, which has only increased in recent years. Consumers are still feeling the pressures of high interest rates and inflation, so they are being cautious and considered in the businesses they engage with. They will, however, gravitate to those who build relationships and enhance the customer experience. For many Aussies, customer experience is one of the most influential factors when choosing who to engage with. Consumers would be willing to spend more for enhanced customer service, further cementing its influence on acquisition, retention and ROI.
In 2025, SMBs should think about how they can turn customer experience into a competitive advantage. Start with seeking feedback, whether through surveys, casual conversations, or social media polls. Not only does it show their experience and opinion matters, but the insights can be turned into personalised strategies. An investment in a customer relationship management (CRM) system is an investment in customers, as it allows an SMB to track preferences and purchase history, enabling personalised offers, targeted email campaigns or loyalty rewards.
Beyond that, simple gestures like promptly replying to messages, responding to reviews or recognising a customer when they enter an SMB’s store or office can go a long way.
Embracing and optimising tech, data, and automation
Of course, it’s far easier today to provide stellar customer service when it’s built on a foundation of technology. Not only embracing technology – but optimising it – should be another big focus for SMBs in 2025. Thankfully, that’s the case for many SMBs. Our research found that the biggest priority for SMBs in 2025 is staying afloat, followed closely by automating or digitising their business.
SMBs should start by analysing their technology stack. Are platforms integrated, or are silos – for example between particular platforms, processes, or departments – increasing manual handling and reducing transparency and efficiency? Can metrics like cash flow, customer retention and acquisition rates and employee productivity be tracked in real time? Is technology providing an ROI or an added burden?
Integrated technology stacks that consolidate crucial tools – from sales and marketing to collaboration, finance and more – can provide real-time insights that are essential for making smarter, growth-focused decisions. When SMBs rely on fewer vendors, it keeps their costs down, and improves the business-wide operations. Just as critical as integrating technology is automating it.
Time is a priceless commodity for SMBs, so automating repetitive, time-consuming tasks like invoicing, data entry or sending follow-up emails frees up time for more strategic work. With all technology adoption, it should be careful and planned, rather than rushed. SMBs should start by automating specific tasks – like setting up payment reminders or data entry – then build from there.
On that foundation, SMBs can then benefit from more sophisticated forms of automation, for example related to Business Intelligence (BI). BI helps SMBs analyse their data to both understand performance and identify opportunities for growth. For example, BI platforms like Zoho Analytics can visualise, in real-time, which products or services generate the most revenue, which marketing channels 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, prioritising certain demographics or providing more training for an underperforming team member. BI is ‘predictive’ too, which means SMBs can use historic data to forecast and predict performance. For example, what do sales from 2024 mean for 2025, and how can SMBs use that insight to proactively mitigate risks or maximise growth opportunities?
In 2025, SMBs should focus on being tech-powered and customer-focused. By prioritising customer relationships and experience, and investing in integrated, automated and insight-driven technology, small businesses could be justified in their big thinking in the months ahead.