How Small Businesses Play A Role In The Future Of AI Investments

Investment in artificial intelligence (AI) has reached stratospheric levels in recent years with multinational companies and big-box retailers allocating millions of dollars to new technology and automation tools to help them break into the next frontier of economic prosperity. 

As large companies are all competing to adopt the latest and most innovative technological tools, by outcompeting one another, the driving force for artificial intelligence in the future could become smaller enterprises as they begin to seek new ways in which artificial technology can help scale their business and allow them to leverage more capital and market opportunities. 

However, not everything is poised to fall into place for some business owners, as a recent survey by Slack of 2,000 small business owners has found that many of those operating in the tech and retail space, believe that this year could be their “make or break” year. 

Many business owners have become increasingly concerned about current inflationary and economic conditions, with 32 percent of surveyed business owners saying they will likely need to raise prices in the coming months. 

Along with the results, 16 percent of business owners have said that updating their technology and digital systems is a key priority for their business this year. However, budgetary constraints and, and too much reliance on outdated technology have held them back in the past. 

For some owners, the future of their business is looking increasingly uncertain. Nearly a third of owners believe that their business might not survive until the end of the year, an alarming number considering small businesses employ about half of the American workforce. 

However, despite the tumultuous outlook, perhaps there is light at the end of the tunnel, should business owners be willing to adapt to the changing consumer and economic market conditions by leveraging the possibilities of artificial intelligence. 

A shoe for every foot 

Unlike in the past where digital systems were designed to fit and work for each business independently, technology has allowed us to remove those barriers and instead create a multi-dimensional system that allows each person to customize networks based on their business needs. 

We’ve already seen how companies are all using social media to advertise their products and services, but use it to engage with the audience and their customers more effectively. 

There are plenty of other examples where this is taking place, and for small businesses, it’s becoming ever-so-clear why artificial intelligence could help keep their business afloat as they try to navigate the unruly waters. 

The reality is that small business investment in AI applications has been rising at astronomical rates, despite only accounting for a small percentage of usage. 

Overall, there’s been a steady increase in the number of firms using AI tools in the production of goods and services. Percentage-wise, the number of firms using AI technology rose from 3.7 percent in the late fall of 2023 to nearly 5.4 percent by February 2024 this year. 

And this is only the beginning. Experts estimate that the number of U.S. firms now divesting their operations to AI tools will climb to 6.6 percent by the end of summer this year. 

These estimates are in line with what researchers from Deloitte and Stanford University have uncovered, which concluded that around 25 percent of small businesses are currently using AI in some form, either as part of their production, customer relationship management, or finance. 

While there’s plenty of research that can help support the fact that more small businesses have been adapting to a changing landscape in recent years, looking beyond this it’s important to consider how these tools are saving them time and money, and whether this technology is worth their investment. 

The cost of becoming digital 

A NewVantage Partners survey found that around 92 percent of large companies had registered a successful return on AI data investments back in 2022. Similarly, those who had reported a return had indicated that they are planning on boosting their investments in AI and data-centered tools. 

Across most business functions, artificial intelligence has the potential to reduce costs and the need to invest in additional resources, something that could help struggling businesses worried about not making it through the year. 

McKinsey analysts noted a steady decline in several business-related categories following the investment and adoption of Generative AI tools. Across all business functions, companies reported a 39 percent decrease in cost and an overall 44 percent improvement in revenue since adopting AI tools.

Business functions that witnessed the strongest decline in costs were human resources, supply chain and inventory management, service operations, and IT, among others. Areas such as risk, legal, and compliance witnessed a 60 percent increase in revenue since adopting AI tools. 

Across the board, it’s possible to see the value artificial intelligence is bringing to the table, and for small businesses, this could be their winning ticket. 

However, the proof is in the pudding. Business owners want to see the actual numbers before they can make a decision that would place their business and financial future on the line. 

Fortunately, some research has shown that quite a number of businesses have saved some money over the past few months, and expect to save even more in the coming years as they adopt and bring new automation tools onboard. 

In fact, one Constant Contract report found that there is a strong correlation between the implementation of AI or automation tools and a business’ frequency of success. Those surveyed by Constant Contracts not only had higher levels of success but over a quarter of respondents said that they expect artificial intelligence and automation tools to help save them roughly $5,000 over the next 12 months. 

For small business owners, cutting down on manual mistakes and automating certain tasks to help free up their time could help them grow faster and become more efficient. 

However, obtaining these results often comes at the expense of the business owner, seeing as they are likely responsible for taking up the responsibility to source and implement appropriate AI tools while developing an AI strategy that suits their business needs. 

Implementing effective use of artificial intelligence comes at the expense of business owners, both in terms of financial investment and investing their time in perfecting these systems to meet their demands. 

For some, it’s worth their time and money to add another job responsibility onto their plate or take on longer working hours. However, not many have been entirely convinced that being more proactive with their approach to developing a working AI strategy will yield the desired returns. 

This seemingly demanding cycle of events could mean that some owners would rather ignore the importance of long-term scalability due to their inability to recognize the near-term value of AI. 

Instead, some business owners might rely on legacy systems, or decide to invest their capital either in human resources or additional products and services to help remain competitive in the current market. 

The potential benefits of artificial intelligence are near endless, but these opportunities have created increasing challenges for small business owners who are not yet quite ready to adopt or bring AI technology into their business. 

Looking forward

The business landscape is changing rapidly, and for small businesses, this presents challenges and opportunities to redefine how they can remain competitive in the current economic climate and with a surge in new competitors entering at a staggering pace. 

Being at the forefront of AI development is a crucial element that can become the driving force for small and medium enterprises, however without proper consideration of near-term actions could lead to a greater risk of experiencing major losses, both financially and in the availability of resources. 

Business owners are constantly confronted with making important decisions that will determine the future of their business and the long-term success of their services. Being able to combine these efforts with digital capabilities could help them drive their business toward better success, improved revenue, and competitiveness. 

However, without proper planning, their investment will return dismal outcomes, and only increase their near-term risks, creating more challenges within their daily activities, and leading to an overall decline in support for digital tools that can completely transform their business from a startup to a multi-million dollar organization. 

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(Featured image by ThisIsEngineering via Pexels)

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