Should your small business be using AI?

It may seem as if AI is everywhere – but that's not necessarily the case when it comes to small businesses, which are comparatively reluctant to embrace the technology.

Recent research from the British Chambers of Commerce Insights Unit found that while a quarter are using AI right now, 43 per cent have no plans at all to do so – a figure that rises to half in the case of customer-facing firms. AI’s most popular amongst business-to-business companies, where it's used by a third, and least popular amongst small manufacturers, where only one in five is using it.

"The digital revolution of the workplace is speeding up, not slowing down. It’s clear that AI has the potential to really transform productivity and efficiency for businesses," says BCC Director General, Shevaun Haviland. "This report shows that while many firms recognise the opportunity, they are struggling to adopt the new technology right now."

One main problem holding small businesses back from embracing AI is a perceived lack of skills, with only 11 per cent feeling their current training arrangements are enough to allow them to meet their future skills needs. 

And meanwhile, there are concerns over governance, strategy, and implementation, with only around a quarter of SME leaders feeling confident about overseeing AI tools effectively, according to the Institute of Coding.

However, embracing generative AI – including tools such as Microsoft 365 Copilot or OpenAI's ChatGPT – can have a highly positive effect on a small business's bottom line, streamlining tasks from document drafting to book-keeping. 

According to research from the University of St Andrews, adopting AI may result in productivity gains of between 27 per cent and 133 percent for SMEs. Participants from service sector firms such as catering and hospitality  seemed to be strong  beneficiaries of AI, as were, unsurprisingly, firms with the lowest existing productivity levels.

"Given the UK government’s mantra about raising productivity levels, increasing AI adoption could potentially play a pivotal role at addressing the endemic problem of weak productivity in poorly performing SMEs," says Professor Ross Brown from the University of St Andrews Business School. 

"AI potentially offers SMEs short cuts that are easy to yield quick productivity wins – such as planning staff rotas and reducing food wastage in a small restaurant – but are relatively inexpensive and easy to enact.”

Research from Microsoft has highlighted a lack of access to digital connectivity and finance for growth as barriers to SME's use of AI, particularly in the UK's regions. But, its researchers found, if the UK's SMEs were to fully embrace the technology, it could add £78 billion in economic value over the next decade.

So how can this become a reality for SMEs?

As one of the biggest factors holding small businesses back is a lack of skills, Microsoft has addressed this issue by partnering with Founderz to offer AI training specifically tailored to SMEs. 

There's also free AI training for small businesses from Innovate UK via its BridgeAI programme – though only for companies in agriculture and food processing, construction, transport, and the creative industries.

Small Business Britain, meanwhile, has teamed up with BT to offer courses aimed at giving small business owners the tools and skills they need to make the most of AI; and there's a suite of AI and digital skills training courses designed to help small and medium-sized businesses from Google Digital Garage and AND Digital.

“Small businesses are the backbone of the UK economy, but without targeted support, the country’s ambition for growth will falter,” says Hugh Milward, Microsoft Vice-President of External Affairs, UK. 

“The £78 billion opportunity isn’t just a number – it’s growth that should be felt in communities from Kent to Cumbria. To unlock it, we need co-ordinated action from government, regional mayors, and industry to put the transformative benefits of AI into the hands of the people and businesses driving regional growth.” 

And the UK Government is doing its bit. This summer, the Prime Minister launched a new skills programme aimed at giving 7.5million UK workers – around 20 per cent of the workforce –  essential AI skills by 2030.

The programme is being offered through industry partnerships with major tech players including Nvidia, Google, and Microsoft.

Training will focus on enabling workers to use and interact with AI systems such as chatbots and large language models, boosting productivity across a wide range of roles. There will also be sector-specific training for industries and sectors that include healthcare, finance and manufacturing.

“We are getting Brits ready for jobs of the future by helping millions across the country gain vital digital skills in AI and beyond," says Science, Innovation and Technology Secretary, Peter Kyle.

"These partnerships with industry will translate skills into real jobs and economic growth, putting more money in people’s pockets and breaking down barriers to opportunity."

At Howden, we understand that as a business owner you’ll always be looking for ways to streamline and improve your business to ensure it remains on the road to success – and remains there. Speak to our team of specialists via the buttons below to make sure you’re properly protected in the most cost-effective way.