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AI trends – how AI can help small businesses

The earliest successful artificial intelligence (AI) program was written in 1951 so, whilst AI is not new, recent technological advances mean that AI is now a powerful tool for businesses of all sizes.

When businesses first adopted AI, it was often complex systems that could only be used by large organisations investing significant amounts of money.

Today, many AI-powered tools are easily accessible software for smaller companies.

There are thousands of AI solutions available to small and medium businesses, which can generate many benefits, including helping entrepreneurs better process data, make improved decisions, automate tasks, and create content to reach their target customers.

What is AI for smaller businesses?

Oxford Languages define artificial intelligence as “the theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”

For small and medium businesses, AI could bring benefits such as improved productivity, reduced costs, and boosted customer satisfaction.

Common AI technology that smaller businesses will likely encounter includes chatbots for responding to customer issues, tools to analyse data, and services to create content.

Adopting AI isn’t without its challenges for smaller businesses, so entrepreneurs should carefully research the tools available.

You should also consider how the business will use the technology, how it will be implemented, and what impact it will have.

Potential problems to consider include the following:

  • data can sometimes be of poor quality, inaccurate, or out of date
  • AI systems can be expensive, complicated, or time-consuming to implement
  • costs can be high if businesses lack in-house skills and need to outsource
  • ethical concerns over racial, gender, and other biases in AI data
  • legal concerns over the collection of sensitive data by AI algorithms.

Read our guide on protecting customer data.

AI tools and technologies for smaller businesses

There are many business activities and processes that AI can be used for.

Here is a selection with examples of the tools that are available.

Entrepreneurs running smaller companies can spend significant time dealing with time-consuming day-to-day tasks.

AI tools can handle many routine activities, so business owners can concentrate on more strategic thinking.

Examples include:

  • transcribing calls: Tools like Otter and Wingman transcribe conversations.
  • diary management: Tools like Motion and Akiflow use AI to build optimum daily schedules.
  • email inbox management: Tools like Levity help to keep your inbox organised by automatically sorting, labelling, and categorising messages.
  • accounting and finance: Many software solutions use AI to create invoices, analyse financial data, and collate employee expenses.
  • data entry: Tools like Docuf.AI and automate inputting data in documents.

Read our guide on small business finance management.

Business owners may be required to create significant content for marketing and other communications.

This includes writing blog posts, search engine optimisation copy, building emails, and creating images.

These tasks can be tackled using AI.

Tools like ChatGPT can generate content or suggest topics by analysing your audiences’ interests.

There are also solutions for:

  • researching and writing SEO copy
  • highlighting grammar and spelling errors
  • adjusting writing style and tone
  • generating images from text.

Content tools include:

A business doesn’t exist without its customers; in a competitive market, anything that can improve customer communication and service is no bad thing.

Research in 2020 by Aberdeen (PDF, 2MB) found that companies using AI capabilities achieve a 3.5 times greater annual increase in customer satisfaction rates.

One of the most common uses of AI by businesses is customer service chatbots, such as Freshchat, Happy Fox, and Kustomer, to handle routine questions.

This helps relieve the pressure on human customer service agents and more quickly deal with everyday issues.

The AI solution can act as a triage service, so questions that the chatbot can’t answer are automatically sent to an agent, or a support ticket is created.

Other customer communication benefits of AI include predicting behaviour so that the business can offer a more personalised service.

Managing a workforce and recruiting new employees takes more time and resources as a business grows.

AI could help to make HR processes more efficient.

Features include:

  • writing job advertisements and descriptions
  • targeting relevant job candidates via social media platforms such as LinkedIn
  • analysing CVs to identify the best candidates
  • chatbots to answer common questions by job candidates and existing staff
  • automating onboarding processes for new employees
  • automating training and personal development.

AI tools include:

A considerable amount of data often confronts business owners and it can be hard to use it to your business’s advantage.

AI tools quickly analyse data so businesses can use it to create, adjust, or adapt marketing campaigns and other strategic business activities.

Examples of data analysis AI tools can complete include:

  • segmenting customers into groups based on behaviour and other demographics to improve marketing and other messages
  • predicting future sales and trends, and demands to help businesses manage their inventory
  • personalising a customer’s journey based on their behaviour and making recommendations for future purchases.

Read our guide on outsourcing for smaller businesses.

Case study: Jessica Potter, Co-Founder of Used and Loved

“AI is completely changing the way shopping technology works. At the moment, for example, with second-hand listings, when somebody lists a grey jumper, they might not have even put the word grey, they might have just written jumper or the title might even just say “free”.

"But with AI tagging different items, and visual search being able to identify different dimensions and things from an outfit, it means that we are now able to uncover all of the items that are listed on second-hand sites, whereas it would have never come up in someone's search results before. We can identify whether it's got a roll neck, or other features the seller wouldn’t have thought of adding before.

"These technology advancements are massively going to help our business. It means that we can use visual search for people to find things they found, new, online and then do a search of that image on Used and Loved and find the second-hand items to buy instead. So yeah, it's perfect timing for us. Because when we started coming up with the idea for the business four or five years ago, there was no tech like this, and the process of searching was too clunky for most people to want to commit the time to buy used. So now we can use AI to really deliver the best shopping experience to help people enjoy shopping second-hand.”


Case study: Farah Benis, Founder and Managing Director of FFA Security Group

“With the emergence of new tools that bring about data privacy and intellectual property concerns, I strongly recommend that individuals educate themselves.

"If you're a team leader, it's crucial to develop policies regarding the use of tools like Chat GPT and Mid Journey. Reading and understanding the licensing terms and conditions is critical to avoid legal complications, as you may not be able to copyright your images for example when using some AI tools. Using AI tools wisely is key in safeguarding your intellectual property."

Jessica and Farah were speaking at the Building Business Resilience webinar to celebrate the launch of the British Business Bank's Guide to Business Resilience.

Download our Guide to Business Resilience

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Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or its subsidiaries the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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Investing in technology

Improving efficiency, adapting to changing market conditions, and scaling your business are all great reasons for your business to invest in new technology.

But funding growth in your business can be hard when you’re unsure what the future holds.

With tips on everything from cloud-based services to Smart meters, our Guide to Building Business Resilience could help your business prepare for the future.