AI is no longer a “maybe later” for Australia’s small businesses. It’s a “get on board or get left behind.” A huge 80 per cent of small business owners are already using artificial intelligence or planning to within the next two years, according to the new Australian Small Business AI Report 2025 from BizCover.

The national survey of 965 small business owners reveals that AI adoption is reaching a critical turning point, transforming how small businesses operate, the skills they value, and how they plan to grow.

Whether it’s automating admin, improving customer service, sharpening marketing strategies or reducing reliance on outsourcing, AI is quietly but quickly becoming part of the small business backbone.

AI is becoming business-critical

According to the report, 62 per cent of small businesses say AI is important to their day-to-day operations, with over a third (35 per cent) saying it’s “very important” or “essential.” While marketing, consulting and ICT are leading the charge, industries like healthcare, retail and trades are increasingly getting in on the action.

“Small businesses are incredibly resourceful, and we’re seeing them use AI in smart, practical ways to save time, improve service and stay competitive,” says Sharon Kenny, Head of Marketing at BizCover.

“The momentum we’re seeing in 2025 shows that AI has become more accessible and relevant, even for businesses that previously felt it was out of reach.”

AI won’t take your job, but it might take that next hire

While the tech is gaining traction, small business owners aren’t throwing humans under the bus just yet.

Yes, 46 per cent say they’d consider using AI instead of hiring or outsourcing, but only 16 per cent say they’d actively choose AI over a person. In fact, nearly one in five (18 per cent) say they’d never consider replacing a human with artificial intelligence.

“I don’t think small business owners are looking to fully replace human skills,” Kenny explains. “They’re looking for ways to enhance them. This data shows that rather than using AI for simple automation, SMEs are applying it to amplify the human strengths they already depend on.”

Still, 65 per cent of business owners do believe AI could replace some tasks in their business. But just 13 per cent think it could replace entire roles.

Creative skills in the spotlight

As more businesses start using AI for tasks like content generation, image creation, customer emails and design, concerns are emerging about its impact on creative industries.

Nearly half of respondents (49 per cent) worry that AI could damage creative skills like writing, design, and storytelling, areas that are traditionally seen as human strengths.

Despite this, optimism outweighs fear. Only 12 per cent of small business owners feel their own skills may become irrelevant due to AI, and 60 per cent view AI as a genuine growth opportunity.

New tools, new skills

One of the most significant impacts of AI adoption is its influence on the future workforce. Nearly half (48 per cent) of small businesses expect AI will reduce demand for some current skills, while creating demand for entirely new ones.

So, what stays and what shifts? According to the report, communication, problem-solving and critical thinking remain must-have skills in the AI era. But now, they’re being supercharged with AI assistance, helping business owners ideate, analyse, and make faster decisions.

“All small businesses, regardless of industry, should be conscious of the way they use AI and customer information,” Kenny advises. “However, this doesn’t mean that businesses should be too afraid to even begin experimenting with AI and new technology.

“There are so many new and exciting opportunities out there when it comes to AI. Businesses can’t afford to be left behind.”

The barriers to adoption

So what’s holding some small businesses back? Surprisingly, it’s not just budget or tech know-how. The report shows that the biggest blockers are lack of understanding of how to use AI effectively and concerns about data privacy, particularly when it comes to customer information. The finding points to a growing need for better education, training and practical examples of how AI can be applied safely and smartly, particularly for solo operators and microbusinesses without dedicated tech teams.

Want to see where your business stands — and where the AI opportunity lies?

Check out the full Australian Small Business AI Report 2025.

Want to find out more about how Ai can help your business grow? check out our tech hub

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