Xero research has revealed a seemingly critical AI “paradox” for U.S. based small businesses: while regular or more typical AI users are more likely to see revenue growth, more than half (53%) say their business “wouldn’t be impacted if AI tools disappeared tomorrow.” Xero’s white paper found those adopted AI are seeing improved business performance; owners who use AI were “twice as likely to see a revenue increase compared to those who never use it.”
This contradiction prompts the question: how can AI, which has “a direct impact on revenue, not impact a small business if it no longer existed.”
Andrew Kanzer, Managing Director of North America at Xero, noted that the readiness gap is both “a cause and effect of many small businesses not truly realizing the benefits of AI, and incorporating its multiple facets into their business.”
Kanzer added that AI has the opportunity to “transform every aspect of a small business, from content and marketing, to daily operations, to payment processing, to hiring.”
They also mentioned that there is, however, “a difference between using it on an ad hoc basis, and fully ingratiating it into your backend.”
Though many small business owners are optimistic, there are “more who are abundantly cautious – and that is what’s creating the readiness gap.”
The research report found that the readiness gap is driven largely by concerns related to:
- Data privacy and security, with 36% of respondents noting this concern
- Accuracy and reliability of AI output, with 29% of respondents noting this concern
Kanzer added:
“To de-risk adoption and increase trust, small businesses owners should shift their focus from the tool to the vendor, and ensure they’re establishing relationships with enterprise systems that value security as it relates to both customer intel and data. This is the first step in ensuring you’re well on your way to a long-lasting, fruitful partnership that further solidifies your AI tech stack and foundation.”
The ‘AI for small business: Bridging the gap from inertia to action’ white paper outlines “a three-pillar approach for small businesses to bridge the gap, focusing on adopting a new mindset, taking strategic action and de-risking the environment through trusted partners.”
The research was conducted by One Picture via an online survey of “1,100 small business owners or financial decision makers, including 300 in the U.S.”
The survey was conducted between “16 July to 7 August 2025.”
Participants reportedly came from a range of industries and the data was “weighted by employee size to be as representative of the market as possible.”