How small businesses can take advantage of AI

How can AI be used for small businesses?

Most small businesses have had AI come into their organizations through the software and systems they have in place to handle existing operations, Crenshaw said.

For example, they're using the AI embedded in applications for photo editing, accounting software or marketing, he said.

Ken Frantz, a managing director at assurance and advisory firm BPM, said he sees small businesses using AI in multiple areas. And, like Crenshaw, Frantz sees these businesses getting big boosts from it.

"Customer service, cybersecurity, marketing communications, consumer data analysis, and research and development are all areas where we see small companies gaining leverage," Frantz said.

"Large businesses are using AI in similar ways," he added, "but I think the smaller businesses are getting larger proportional benefits because they can [use AI to] manage functions that they may otherwise have to outsource or forgo."

The U.S. Chamber of Commerce has assembled a list of small business AI use cases, which include the following:

• Search engine optimization for customer acquisition. A family-owned coffee roaster uses AI tools to develop product descriptions that meet both the quality information standards of the owners and the criteria needed to perform high on internet searches.
• Customer engagement and back-office operations. A family-owned frozen cookie dough business uses AI -- including ChatGPT -- for marketing, social media and content delivery. It also implements AI for inventory management, financial operations and manufacturing, where it increases efficiency and eliminates waste.
• Investment research and client outreach. An independent investment bank uses AI to analyze research, develop marketing strategies and exchange information with partners.

Greg Taffet, managing partner of Taffet Associates and a provider of fractional CIO services, has seen firsthand the various ways small businesses are employing AI tools, such as using ChatGPT and other generative AI tools to draft documents and presentations, to search for and query information, and to automate customer service using chatbots.

The benefits of using AI for small businesses

Small and large business alike see AI producing numerous benefits, such as efficiency and productivity gains, improved customer service and better decision-making, experts said.

That list, however, doesn't tell the whole story of the benefits AI brings to small businesses.

The U.S. Chamber of Commerce report found that 86% of the small businesses using AI said the technology has helped increase the efficiency of their business operations, but it also found that even more respondents -- 89% -- said AI has helped owners enjoy running their business more.

Additionally, AI helps small business owners operate at a higher level, Crenshaw said, as they use AI to perform specialized functions -- such as crafting marketing campaigns and creating social media content -- that existing staff couldn't handle and the business couldn't easily afford to hire professionals to do.

Some are using AI to maximize their prospects and boost sales, he added. A food truck owner, for example, could use the technology to analyze traffic patterns to identify the ideal locales to target.

And leading-edge small businesses are exploring how they can use AI to create products and services that differentiate them in the market, he added.

Such implementations, Crenshaw said, help small businesses accomplish tasks that they couldn't do -- or couldn't do well -- without AI. This, in turn, helps them save time and money or redirect resources, such as talent and funds, into their core functions, products and services.

At the same time, using AI for such tasks helps them boost sales and, ultimately drive revenue -- enabling them to grow their businesses, he explained.

Challenges of implementing AI in small businesses

Despite the multiple advantages that AI brings, many small businesses have limited AI deployments, according to researchers, advisers and small-business leaders.

"We find that small businesses are still hesitant," Frantz said. "They're wondering about the risks of AI, security and defining the value AI could bring [to their operations]."

The U.S. Chamber of Commerce also studied the top barriers to AI adoption, with small businesses citing the following reasons for their reluctance to try AI:

• Unsure how it would help the business.
• Don't know enough about it.
• Concerned about legal or compliance issues.
• Concerned about quality of tools.
• Concerned about cost.
• Concerned about training or hiring people to use it.

The Chamber report also noted that small-business owners increasingly are concerned about compliance with proposed AI regulations.

"These laws may require businesses to disclose to customers when AI is being used, implement a risk assessment of their AI tools, explain to customers how AI tools could affect customer interactions, and implement human oversight over AI systems that make consequential customer decisions," the report stated, adding that 86% of small-business owners said "their business would face challenges complying with these types of regulations."

Steps to implementing AI in a small business

Like other tech-enabled projects, AI initiatives should be strategic, aligned to business objectives and well managed, according to small-business executives and advisers. They offered several key steps to ensure that happens.

1. Understand the AI-enabled opportunities for the business

"Small businesses first need to understand what AI can do for the business and whether there are specific AI capabilities that are available in the products and platforms they're using," Frantz said. "They should know what AI does, how AI can streamline a business process, how it can help analyze lots of data and how it can be set up as a service bot."

2. Establish guardrails and governance for AI use

Organizations need to not only understand the risks associated with AI use, but they also must mitigate those risks, Frantz said. They must establish practices and policies to ensure their AI deployments do not to the following:

• Violate their own and any government data privacy rules.
• Violate any ethical and legal standards.
• Drift beyond the adopted standards for accuracy and integrity.

3. Identify specific use cases within the business

Taffet said he advises business leaders to identify areas that need improvement or where a market advantage could be boosted further and then consider whether AI could help close performance gaps or create opportunities. He said small businesses additionally should explore opportunities to use AI for not only productivity and efficiency gains but also in ways that can differentiate them from their competitors and in ways that could bring novel products and services to the market.

4. Enable experimentations, proofs of concepts and pilots

Small businesses, like their larger counterparts, should enable experimentations, proofs of concepts and pilots in controlled environments where workers can test ideas for AI projects to determine whether those ideas are feasible and beneficial, Frantz said. "You want people to experiment but have governance ready to go so you can accelerate adoption," he added. Moreover, Taffet said he advises leaders in small businesses to engage workers throughout their organizations in this process, as they often have the best insights into where AI can be used to help them do their jobs more efficiently and effectively.

5. Test and iterate

Chris Hess, who as owner of Tech Ops Heroes provides tech consulting and advisory services to small businesses, said he recommends that businesses test and iterate to prove that each AI project works as expected, delivers the anticipated value and can expand to provide even more returns.

6. Build a business case

Business leaders should evaluate potential AI projects as they would other technology-enabled initiatives by determining if the projects will deliver business value, Frantz said. They then should prioritize work based on the anticipated returns each project will bring to the organization.

7. Set realistic expectations

Although AI can bring significant benefits to businesses, it requires ongoing investments and human oversight, Hess said. Business leaders need to keep in mind it is not a panacea, he said. "My advice is to look at it as a tool. It's not going to solve all your problems," he added.

Choosing the right AI technologies for your small business

The term AI encompasses many different types of intelligence, including classical AI, GenAI and machine learning. Business leaders should understand what type of AI is best suited to the problem they want to solve or the opportunity they want to pursue so they can leverage the right tools for the task, said AI experts, executive advisers and management consultants.

Executives in small businesses, where resources are typically constrained, should focus first on leveraging the AI capabilities embedded in the platforms and systems they are already using in their organizations, Frantz said.

He pointed out that common enterprise videoconferencing solutions, such as Microsoft Teams and Zoom, have built-in AI-powered transcription and meeting summarization capabilities.

Additionally, cybersecurity tools increasingly have AI for threat detection. Enterprise resource planning systems and other foundational technologies also have embedded AI functionalities.

Mary K. Pratt is an award-winning freelance journalist with a focus on covering enterprise IT and cybersecurity management.