One in three small businesses now using AI

Its new white paper ‘People for Business’ found strong potential for UK small businesses to benefit from advances in AI-driven technology.

However, the research also found signs that entrepreneurs will need support to upskill in this area, as only 22% of small businesses say they understand how to best deploy AI within their business.

And although the white paper points to a strong interest in AI amongst the UK’s entrepreneurs, the research gave few indications that people will be less central to Britain’s small businesses in the future.

Cheryl Laidlaw, Founder of London Web Girl, is adopting AI into her operations, and improving process as a result (Image: Small Business Britain)

Only 6% of business owners say they have cut staff due to new technology, a statistic that is more than balanced out by the 10% who have created new roles to manage digital.

The research found instead that small businesses are increasingly responding to demands for flexible and remote working post-Covid, with four fifths (84%) now offering flexible roles.

Michelle Ovens CBE, founder of Small Business Britain, said: “It is really encouraging to see this high engagement around AI amongst business owners. This type of technology can be a positive force to boost small businesses – but it relies on enhancing the knowledge, understanding and confidence of entrepreneurs to make the most of it.

“Ultimately the small business experience is so fundamentally human, driven by passion and community, I think that the opportunities from AI will be exactly that: supercharging an existing personal experience, and helping firms to become more efficient, agile and flexible.”

And Sanjay Aggarwal, co-founder of Spice Kitchen, a business that has grown considerably since it started in 2012, certainly has this attitude too.

He said: “As a small business, we see AI as an ally, not a challenge, and I’m genuinely excited about its potential. We are in the very early stages of implementing it into our operations, particularly within our marketing and communications team and recruitment.

“In time, I do want to learn about its full potential to streamline our operations and drive process improvements, make our decision-making more informed, and create an experience that's not just efficient but also innovative.”

Bill Richards, UK Managing Director at the leading hiring platform Indeed, said: “Artificial Intelligence is on the lips of almost every business we speak to as the boom in interest in AI continues and the opportunities it presents become more tangible than ever before.

“While many small businesses have already adopted the technology, our research suggests that millions of business owners lack the understanding to harness its potential and therefore risk missing out on efficiency and productivity benefits.

Sanjay and Shashi Aggarwal, mother and son duo of Spice Kitchen, are not only aiming to make processes more efficient with AI, but also innovate (Image: Small Business Britain)

“AI also has an important role to play in making the hiring process simpler and faster for small businesses, allowing owners to focus more on human experiences and interactions. At Indeed, our AI-powered matching technology quickly connects quality candidates and employers while removing administrative and repetitive tasks. For example, employers can already use our Job Description Generator, which is a tool that leverages OpenAI's GPT with our own proprietary AI, to determine the specific phrases and details that attract more qualified candidates.”

In signs that small firms are also embracing other key workforce trends that will help them attract talent, over three quarters (78%) now allow flexible hours and over a third (35%) enable staff to work from home and offer flexible holidays (36%). A fifth (22%) have brought in more flexible work locations and/or have introduced more time off (20%).

Bala Croman, Founder of The Chocolate Cellar in Birkenhead, said: “Over the past year, we have gradually been building our team at the Chocolate Cellar and taking on seasonal staff regularly. Hiring the right people for our business is essential, and we have been offering as much flexibility as possible, which has turned out extremely helpful for everyone in our team and potential new joiners. We have core hours that need to be covered but staff can be flexible around those hours, which means that staff can fit in their other commitments and still maintain a focus at work.”

Yet despite this, a quarter (25%) of small firms say they find recruitment ‘very difficult’, whilst half blame hiring challenges for hampering growth. This comes despite the report also indicating small businesses are starting to recover from economic turbulence, as over four fifths (89%) feel confident about the future.

Ovens added: “Our research shows that despite prolonged economic challenges and a range of hiring difficulties, such as skills shortages, an encouraging number of business owners are responding with positively and agility.

“The shift towards flexibility in hiring in particular can only be a good thing for opening the talent pool and creating a more diverse and inclusive workforce.”

‘People for Business’ is a new programme from Small Business Britain and Indeed to help small firms find, hire, and retain talent to fulfil growth ambitions. The new white paper can be downloaded here: https://smallbusinessbritain.uk/people-for-business.