Small businesses divided on whether to use AI for growth
Three in ten small business owners (31%) say they are already using AI to support their enterprises – although 27% say they either have no plans to use it – and a further 21% don’t regard AI as relevant to their business, according to new research from Novuna Business Finance. Whilst some small businesses see efficiencies that AI can deliver, many small business owners view AI as being at odds with enterprises that are built on the principle of strong human relationships.
At a time when the Prime Minister’s new AI Taskforce has been created to accelerate the adoption of AI across government and to drive economic growth, the new research reveals mixed feelings towards AI from UK small businesses. Enterprises based in London (41%) and the West Midlands (38%) are most likely to already be using AI – but in the other nine UK regions, a larger percentage of small businesses said they didn’t plan to use it or didn’t believe AI was relevant to their business [see tables below].
By industry sector, professional services enterprises in the IT/Tech, finance and legal sectors were most likely to already be using AI – whereas small business owners in agriculture (46%), real estate (34%) and construction (36%) were most likely to say they had no plans to use AI – and those in agriculture, transport and hospitality were also among the most likely to say AI was not relevant to their business.
During the current three-month period (July to September), the percentage of small businesses predicting growth has fallen to a record low of 24%, with significant downturns in the construction (15%), retail (21%) and hospitality (21%) sectors. In light of these challenging conditions, Novuna Business Finance polled a representative sample of 1,000 small business owners to explore whether AI could help drive future business growth.
For small businesses already embracing AI, the key benefits cited included: using AI to make back-office or operational processes more efficient (16%), using AI to enhance online and digital marketing capabilities (15%) and employing AI to help with market research and product development (14%).
For small businesses that do not currently use AI, there was a firm view from respondents that their enterprises were built on strong human relationships (59%) – a sentiment held strongly among enterprises in the North West (76%), East Midlands (75%), Yorkshire and the Humber (71%) and the North East (68%).
In addition, small business owners that did not use AI expressed sustainability concerns over the energy and natural resources used to run AI (22%). Many also voiced legal concerns over the collection of sensitive data by AI algorithms (22%), and some had ethical concerns over the perceived risks of demographic bias in AI data (20%).
Jo Morris, Head of Insight at Novuna Business Finance said “The Government’s backing of AI has significant potential to drive economic growth across the UK – and our data shows there is a correlation between small business growth and AI adoption. For example, AI adoption is more prevalent among small businesses that are significantly growing this quarter (59%) than it is among those enterprises experiencing contraction (23%).
“That said, small businesses are not the same as large corporates, where the efficiencies of scale and the ability to invest in sophisticated tech infrastructure are more central to business planning. For many smaller enterprises across the UK, the personal – and human – touch is seen to be more important. Small business owners often know their customers personally and many are deeply rooted in the communities they serve. This is perhaps why so many survey respondents expressed caution towards AI, precisely because their enterprises were built on enduring human relationships and personal service.
“In truth, humans and AI need to co-exist, and in the early days of AI roll-out, striking the right balance is key. Our research also suggests there is an AI knowledge gap that needs to be addressed – with 29% of small business owners openly saying they were unsure how AI could be used in their business. So, as a new Government task-force assesses how AI can deliver economic growth, it is important that small businesses are involved in the process, that their voices are heard, and that they have access to the knowledge and toolkits needed to make informed decisions about whether and how they can strike the right balance between embracing technological innovation and delivering the personalised service that remains central to their business.”
Small business owner views on AI by region (row percentages)
Already use AI
Don’t currently use AI but considering it
Don’t plan to use AI
AI is not relevant to our business
National average
31%
7%
27%
21%
London
41%
2%
20%
12%
West Midlands
38%
6%
22%
22%
North West
36%
5%
23%
22%
East
34%
6%
17%
30%
Yorkshire / The Humber
30%
10%
27%
23%
Wales
30%
7%
29%
23%
Scotland
29%
7%
31%
27%
North East
27%
5%
39%
15%
South East
27%
6%
17%
30%
South West
25%
13%
27%
25%
East Midlands
22%
8%
37%
17%
Small business owner views on AI by industry sector (row percentages)
Already use AI
Don’t currently use AI but considering it
Don’t plan to use AI
AI is not relevant to our business
National average
31%
7%
27%
21%
IT / telecoms
65%
4%
14%
5%
Media / marketing
55%
8%
12%
5%
Finance / accounting
40%
11%
17%
12%
Legal services
34%
9%
32%
8%
Retail
31%
4%
27%
20%
Hospitality / leisure
31%
11%
23%
26%
Education
30%
4%
32%
16%
Medical services
27%
5%
30%
25%
Manufacturing
27%
8%
27%
24%
Construction
18%
9%
36%
21%
Transport
19%
9%
27%
32%
Real estate
17%
11%
34%
29%
Agriculture
10%
2%
46%
38%
