With tech innovation powering business growth across sectors and sizes, SMBs are poised for a revolution
The democratization of AI and other technologies, an influx of new entrepreneurs, and an unprecedented shift in small and medium business (SMB) ownership are setting the stage for what I call “The Great SMB Transformation.”
Today, there are nearly 35 million SMBs in the United States, and over 50% of their owners are 55 or older. But “The Great SMB Transformation” is about more than a simple generational handoff.
We’re also witnessing a growing influx of new SMB owners from a variety of sources, including family succession handovers to a younger generation, individuals who have never worked in a corporation and want to keep working in a smaller organization, and “corporate refugees” who are seeking a new opportunity. This third group often encompasses professionals with extensive experience in large corporations who now want a different path—and bring with them a different mindset.
Corporate refugees are drawn to the autonomy of SMB ownership, to the ability to create a workplace that aligns with their values, and to the chance to leverage what they’ve learned in larger organizations to create a thriving entrepreneurial environment. On the whole, these new owners are often tech-savvier and more innovation-driven, comfortable with and eager to implement new tools to drive growth and streamline operations. In particular, they are more open to incorporating technology—especially AI—into their businesses, which can help increase business value dramatically.
The SMB Transformation Inflection Point
In the past, SMBs faced limitations in integrating new technology. From limited buying power and lack of technical infrastructure to a commitment to routine ways of doing things, many SMBs believed that cutting-edge solutions on the market weren’t built for them.
Today, tech advancements have made innovative solutions more accessible than ever. Affordable cloud computing gives SMBs access to powerful resources without in-house hardware. SaaS models enable scalable business models in which SMBs can expand or dial back their infrastructure, paying only for what they need. Now, generative AI is pushing the envelope for what’s possible even further.
Tech accessibility, coupled with an ownership evolution as the next generation of entrepreneurs take the helm, creates an inflection point. There has never been a more profitable or prescient time for SMBs to integrate new technology into their operations.
The Opportunities Within Reach
Last year, 43% of SMB owners explored new technologies to increase productivity and efficiency. But it wasn’t just exploration; SMBs found impact, with 73% saying tech investments help them keep up with or outpace the competition.
While hurdles to integrating new technology remain, the growth possibilities are immense for leaders who wisely integrate new tools. SMB owners who can strike a balance between tried-and-true and emerging strategies can access more value.
AI, in particular, is starting to increase value at every stage of the SMB lifecycle, from launch and growth through sale or transfer of ownership. Below are four key areas SMBs are leveraging AI to enhance the value of their businesses.
Smoother SMB Sales and Acquisitions
Traditionally, small business owners looking to sell have faced significant information asymmetry in the marketplace. Without specialized knowledge or expensive advisors, owners often struggled to value their businesses accurately or to connect with suitable buyers. Conversely, potential buyers had limited visibility into the true health and potential of businesses on the market.
AI technologies are now transforming the landscape by democratizing access to sophisticated business intelligence. Tools are emerging that can analyze vast datasets across geography, industry trends, and historical transactions to provide a more objective framework for valuing businesses. Both sellers and buyers benefit from increased transparency. Owners gain clearer insights into their business’s market position, and potential acquirers can better assess opportunities and risks.
Reduced Labor Costs
Within an SMB’s day-to-day management, automating tasks like data entry, inventory management, and customer support can increase efficiency. Reducing manual labor frees up staff for more strategic work while simultaneously trimming expenses and creating opportunities for capital to be reinvested into the business, fueling future growth.
Marketing Optimization
Free AI tools like ChatGPT open up a world of possibilities for SMBs. Owners and operators can boost their marketing prowess, brainstorm and create content for blogs, newsletters, and social posts, or optimize website copy and digital sales funnels to increase revenue.
Smoother Operations
AI can easily take on the grunt work of sending calendar reminders, categorizing customer emails, updating inventory, or even recording and summarizing meetings, reducing employee tedium and churn. Putting AI on the hook for remembering to send alerts also reduces human error.
Why AI, Why Now
The AI revolution isn’t coming; it’s here. And it isn’t just for big players—it’s already delivering ROI for SMBs across the U.S. In 2024, businesses of all sizes achieved 15% cost savings on average and a 16% boost in revenue after AI implementation. Tellingly, the U.S. Chamber of Commerce found that 91% of SMBs believe AI will help them grow.
AI technologies are already widely available. Better and more intuitive user experiences make these technologies accessible for entrepreneurs and employees of any age or background. AI will be a critical part of a data-driven future for every SMB. For SMBs that plan to position themselves for a sale soon, incorporating AI today will help add value and secure a higher price tag. For new owners targeting growth, AI can accelerate expansion through automation and reduce overhead. For forward-thinking business owners, now is the moment to integrate the tech solutions that will help enhance their businesses’ futures.
Small business stock image by PeopleImages.com – Yuri A/Shutterstock
