AI, often visualized as humanoid robots bringing about an apocalypse, tends to be dramatized in Hollywood as something to fear. But as AI becomes a reality, is fearmongering justified?
Over the past 15 years, AI has evolved beyond recognition: from a dystopian future only seen in the movies, into software applications that we use every day. From voice assistants, to chatbots, to search engines and more, the tool has transformed the way we share and receive information. It also has elevated the way we do business and is forecasted to increase global GDP by $15.7 trillion by 2030, according to the World Economic Forum.
Small businesses are recognizing that now is the time to embrace AI technology to enhance operations and drive better business results. According to the 2024 Hiscox People & Programs Report, nearly 46% of small business owners are already using or planning to implement AI-powered tools.
As businesses lean further into the AI way, they open themselves up to new risks and rewards. All new disciplines and technologies demand a period of adjustment and education, and AI is no different. To reap the long-term benefits of AI, companies should identify where it could add value and prioritize employee training and risk mitigation.
Slow and Steady: Small Businesses Are Warming to AI
With whole departments dedicated to change and innovation, it’s no surprise that large and mid-sized companies are already planning how AI can supplement their operations. Strikingly, small businesses have also been quick off the mark with their plans to adopt AI, and they have much less red tape to contend with. The Hiscox report finds of those who do not use AI but want to, 75% plan to implement it into their business within two years’ time.
For those small businesses that are more apprehensive about AI and don’t plan to implement it, many fail to realize that they are already using it unknowingly. From autocorrect on an email, to shopping online, to face ID technology and more, AI is engrained in our daily routines, underlining its scope and utility.
When it comes to new technology, small businesses do not need to dive in headfirst. Most take a measured approach, gradually exploring AI through two key areas: email software (72%) and online distribution channels (56%). For example, many email platforms are already equipped with AI features that can be switched on per the user’s preferences. These features can draft an email with a simple prompt, uncover a specific email through a cluttered inbox, remind users to respond to untouched emails and more.
Starting small can be a practical way to introduce AI into a business’s operations without taking on too much risk.
AI Can Help Small Businesses Save Time, Energy and Money
With a small staff, small business owners become the ultimate multitaskers, expertly balancing every facet of their operations. Yet, in this whirlwind of responsibilities, important details can slip through the cracks, and technology can help to plug the gaps.
According to the report, 91% of small businesses surveyed are already utilizing software that taps into AI into some form. These tools help streamline workflows, facilitate quick and informed decision-making, and, most importantly, save time and reduce errors. With more free time, professionals can put their brain power towards the strategic and creative development that makes a business thrive.
AI can enhance efficiency in various aspects of a business:
- Supply Chain Management
- AI leverages data to analyze consumer behaviors, providing insights that help businesses optimize inventory. For example, an online jewelry business can use AI to track consumer purchase frequency and provide data on how to adjust inventory for the beads, chains and gems needed to satisfy demand, reducing production costs and product waste.
- Customer Service
- Gone are the days of holding on the phone for an employee to answer a simple question. Many small businesses are turning to AI chatbots and virtual assistants to provide immediate, 24/7 customer service. These tools deliver consistent, timely responses, while gauging consumer sentiment and preference, increasing the likelihood of completed purchases.
- Customer Loyalty
- For small businesses, customers and relationships come first. AI helps by segmenting audiences, analyzing consumer sentiment, and providing immediate feedback to align strategies with customer needs. For instance, a local restaurant owner who uses AI can track who orders, how often, and which menu items, then send personalized deals. This boosts customer loyalty and drives revenue.
AI can help to level the playing field for small businesses with larger companies, as the software could potentially double, or even triple, one employee’s productivity.
Humans are Irreplaceable
Though many small business owners are optimistic about AI implementation, it is important for them to understand that AI serves as a supplemental tool. The ‘human touch’ brings creativity, emotional intelligence and the all-important empathy, all of which cannot currently be well replicated by AI. The ‘human’ factor is also vital for creating an uplifting internal culture and maintaining a healthy, engaged workforce (for example, imagine having a monthly catchup meeting with an AI voice). In turn, happy employees naturally create happy customers, and AI cannot replace the innate desire to smile back when a familiar human face smiles at us.
Balancing Innovation with Responsibility
Though AI is data-based, and mostly accurate, small businesses should act responsibly when utilizing its services and be educated on potential risks.
- AI should be used as a resource rather than a crutch as the results from AI may not always be right. For example, a copywriting agency can leverage AI to support content development. However, the employee, as the expert, must review AI-generated copy to ensure it is factual.
- Employees should be vigilant monitoring for suspicious, AI-related activity. From phishing emails to ransomware attacks to deepfakes and more, bad actors are utilizing AI to refine their cyberattack approach. Small businesses are especially vulnerable to these incidents as they are less likely to have iron-clad security measures than larger companies. In fact, in 2023, 41% of small businesses experienced a cyber-attack in the last year, according to the 2023 Hiscox Cyber Readiness Report.
- Small business owners should train their employees in security awareness and the latest cyber-attack techniques. Without proper education, even the savviest individuals can fall victim to a convincing phishing attempt, which could threaten a business’s survival. Training programs should cover how to identify and report ransomware, recognize suspicious emails and phone calls, and strengthen personal security through strong, unique passwords.
AI is the present, and it’s not going anywhere. For small businesses, the secret lies in embracing AI not just as a tool for growth, but as a catalyst for transforming the way we work. When harnessed with intention and care, AI drives innovation, offers businesses a competitive edge, and redefines work-life balance. Imagine a business model where efficiency meets balance, where smart solutions fuel success. That’s what AI offers.
Laila Gillies is the head of Human Resources at Hiscox USA, a leading insurer for more than 600,000 U.S. small businesses. She plays a central role in aligning HR initiatives with strategic business goals and transforming the HR function into a strategic partner that drives business success and supports organizational growth. She is a champion of diversity and inclusion and is committed to creating a workplace that values and celebrates the unique contributions of every individual.
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