Artificial intelligence (AI) is helping redefine the world of work as we know it, creating entirely new roles that require unique skillsets and that promise the ability to supercharge productivity. But successful adoption and implementation of technologies, like AI, is not always straightforward – especially for those at the helm of the nation’s smallest businesses.
A study from Xero found 40% of the UK’s smallest firms don’t see the relevance when it comes to adopting more technology in their business. This can not only limit their potential to become more efficient themselves, but also the potential growth of the UK economy as a whole – as the research found that if all small businesses digitalised at the rate of the top 20% of tech adopters, they could generate an extra £77.3bn in collective revenue.
As the UK Government reinvigorates investment to boost technology adoption and AI continues to underpin deep shifts in how we live, work and connect, there is a golden opportunity for business owners to start thinking carefully about the areas where it also might help them to innovate or improve.
What is holding small business owners back?
Of course, many small business owners are already navigating an environment of significant change and uncertainty. They’re simultaneously tackling rising costs, such as National Insurance Contributions, energy bills and material price hikes, as well as reduced consumer purchasing power.
At the same time, they are often spread too thin, responsible for everything from sales and marketing to HR and finance. In fact, our research found that small business owners with 1-9 employees spend less than half (46%) of the working week on their core jobs, because they’re juggling non-core tasks like IT, legal, admin – necessary tasks, sure, but usually not the reason they opened their business in the first place.
This means finding the capacity, capital and confidence to work out how to best use AI within the context of their business can feel impossible. Facing a barrage of more pressing issues, AI and wider technology adoption is often pushed down the priority list and seen as more of a long-term aspiration than an immediate opportunity. This is unfortunate as adopting digital tools can help address some of the time and capacity challenges facing small businesses by driving efficiencies and productivity gains.
Taking the first steps to AI adoption
When deployed correctly, AI should make running small businesses easier – saving time and removing some of the tedium, or “toil” as it is often called in technology circles.
It can automate many admin-heavy tasks such as manually inputting, sorting and filtering data, freeing up time to focus on higher value work. It can also help unlock and surface insights buried in the huge amounts of data on which small businesses sit, and which can be used to identify trends, opportunities and challenges.
Of course, deciding how to optimally integrate AI into existing workflows will depend on the nature of those processes, the goals of the business, and what challenges need to be solved. From there, businesses can identify which tools have the right AI capabilities for the improvement that is being sought. Ask questions like – what problem do I wish I could solve? What ability would I need to have in order for that to happen? Can a type of AI assist with that? How does it work? What are its limitations?
A purpose-led approach
Small businesses are also often the hub of the communities in which they operate. Baristas know their regular customers’ orders, hairdressers act as a sounding board for their clients, and pubs bring people together for regular quizzes. People crave this personal, human connection, and for many small businesses it is a key ingredient to their success. This means any AI adoption needs to be tempered with the human touch. I like to think of AI as being ‘augmented intelligence’ – in that it is really there to augment our capabilities. So, assisting with automating stock ordering, or payroll management, is a good use case. Pouring pints and providing banter, maybe not so much!
The trick is to remain focused on where AI can deliver tangible improvements – whether that’s smarter insights, improved customer service, or reducing friction in key processes. By thinking carefully about the goal and then working backwards to find the right technology, small businesses can craft purpose-led AI-assisted customer journeys that ensure its capabilities are a tool for thoughtful innovation which support the standards a business sets for itself.
In the early stages of adoption, small businesses might also face teething issues. As this family of technologies continues to develop, owners will need to keep on top of new regulations governing data use and protection which could come in as part of the Government’s proposed AI bill, as well as ensure any use of AI is transparent and ethical.
Navigating the broader ethical questions that come with the latest iterations of AI is one of the trade-offs that need to be managed responsibly and carefully. Create an environment that allows for iteration, evolution and experimentation in a way which is safe and understood so the risks are managed. For example, favouring AI tools that show the sources being used in decision-making and clearly explain the thinking behind outputs.
Setting sights on the future
Breaking through the digital barrier for small businesses is no mean feat, given everything else they have on their plate and how fast things are developing. And, while there is a lot of promise inherent in the newer AI capabilities on offer, it’s important to remember AI is also not a silver bullet. It’s vital that the people running small businesses take the time to examine whether any new solution really is the right fit for them before they invest.
While it may seem daunting to consider all of this at first, the frenetic pace of developments in AI over the past couple of years is allowing even the smallest of businesses to unlock opportunities that once felt out of reach. By appropriately embracing AI and new digital tools, they can whip their back-end operations into shape and spend more time on the parts of the job they love. Automating low level admin tasks frees them up to focus their efforts on growing their business – such as R&D, getting closer to customers, and starting new product lines and revenue streams. The key is to think carefully about how AI can be leveraged in the right way so it makes the lives of the people in small businesses, and their customers, better.
