How Small Businesses Can Leverage AI for Growth and Efficiency

Artificial intelligence (AI) is one of the most promising areas of technology investment today, with significant implications for small businesses. While many AI innovations have been tailored for large enterprises, small businesses are increasingly embracing AI to gain a competitive edge. According to a Paychex report, 72% of small-business owners and HR leaders have a positive view of AI, and 40% of small businesses are already using generative AI, nearly double the number from 2023.

To understand the opportunities and challenges of AI for small businesses, BizTech convened a roundtable of experts: Nada Sanders, professor at Northeastern University; Debi Kleiman, director of the D^3 AI Lab for Startups at Harvard Business School; Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council; and Alys Woodward, a senior director at Gartner specializing in AI and emerging technologies.

What are the Greatest AI Opportunities for Small Businesses?

Kleiman highlighted that AI can significantly reduce the time spent on mundane tasks such as handling customer inquiries, scheduling appointments, and bookkeeping. This automation allows business owners to focus on growth-oriented activities. Additionally, AI provides powerful data insights, enabling small businesses to make informed decisions about customer habits, pricing, and inventory management without the need for a dedicated data team.

Kerrigan emphasized that AI helps small businesses save time and money, increase profitability, and improve decision-making. In an era of high costs and workforce gaps, AI can help small businesses operate more efficiently and compete with larger enterprises. By automating tasks and providing data-driven insights, small businesses can level the playing field and enhance their competitiveness.

What’s Preventing Small Businesses from Doing More with AI?

Kleiman noted that small-business owners often feel overwhelmed by the AI landscape, struggling to identify the right tools and solutions. The abundance of AI options and the lack of clear guidance make it difficult to determine which technologies are most beneficial. Additionally, the day-to-day challenges of running a business leave little time for learning new systems or experimenting with unproven solutions.

Sanders pointed out that cost and accessibility are significant barriers. Many AI solutions require substantial upfront investments in software, hardware, and skilled personnel, which can be prohibitive for small businesses. Unlike large corporations with dedicated AI teams and research budgets, small businesses often operate with limited resources, making it challenging to justify the cost of AI adoption.

Is AI a Competitive Equalizer for Small Businesses or an Advantage for Enterprises?

Woodward believes AI can be a competitive equalizer. Small businesses, which often rely on manual processes, can benefit greatly from AI by automating tasks and improving efficiency. While large enterprises have the advantage of massive data sets and resources to build custom AI solutions, small businesses can leverage AI to enhance their unique strengths and focus on specific areas of improvement.

Kleiman agreed that AI has democratized access to tools that were once out of reach for small businesses. However, she noted that large companies still have certain advantages. Small businesses can excel by being nimble and focusing on specific areas where AI can amplify their strengths, rather than trying to match the features of larger competitors.

Kerrigan added that small-business owners feel empowered by AI, as it frees them and their employees from menial tasks, allowing more time for innovation and identifying opportunities. AI helps small businesses compete more effectively against larger enterprises, improve decision-making, and acquire new customers.

What Use Cases Should Small Businesses Focus On?

Kleiman recommended that small businesses start with customer-facing applications that directly impact the bottom line. Implementing AI-powered chatbots for customer service, automating marketing campaigns, and using AI for analytics and process optimization can yield immediate benefits. By focusing on these areas, small businesses can see tangible improvements in efficiency and customer satisfaction.

In summary, AI presents significant opportunities for small businesses to streamline operations, enhance customer service, and drive profitability. By starting with specific use cases and leveraging AI to automate mundane tasks, small businesses can achieve greater efficiency and competitiveness. Despite the challenges, the potential benefits of AI make it a worthwhile investment for small businesses looking to thrive in a rapidly changing technological landscape.