AI for Small Businesses: Key Information You Need to Know

Paige Smith

Since the launch of ChatGPT in late 2022, AI has been a major topic of conversation across the business world. Now more than ever, companies of all sizes are paying attention to AI trends and experimenting with the latest AI tools. 

Whether you’re just curious about AI’s impact on business or eager to try out AI-powered platforms in your own operation, we’ve got you covered. Keep reading to learn more about AI for small businesses, including how it works, how the technology can support your operation, and the potential complications you need to look out for. 

What is artificial intelligence? 

Artificial intelligence (AI) is a branch of computer science that creates technology designed to mimic human intelligence and problem-solving abilities. Though AI is constantly evolving, it’s been part of our daily lives for a while now. 

Netflix and YouTube use AI to suggest videos and shows users will like. Apple and Google use AI to program Alexa and Google Assistant, respectively. AI is also behind personalized social media feeds, map apps, and features like FaceID and predictive text in email and message apps. 

The latest development in AI—the one responsible for the surge in hype—is generative AI, or conversational AI (more on that below). 

What is machine learning?

There are several different subsets of AI, but most of the AI applications we know and use regularly are built from machine learning models. Machine learning is a type of AI that gives computers the ability to accumulate knowledge and build skills without having specific programming. 

Machine learning models use algorithms to learn from data. The more data they consume over time, the more proficient they become at identifying patterns, detecting errors, giving suggestions, and making predictions. 

What is a large language model?

A large language model (LLM) is a type of machine learning technology that uses huge sets of data to understand and generate human language text. 

LLMs are impressive because of their ability  to respond to natural language questions and requests in a conversational manner that closely mimics human behavior. To do this, they rely on deep learning, a subset of machine learning, to identify complex patterns and make connections like humans do. For example, you can ask an LLM to format a cover letter for you or explain what black holes are. 

However, LLMs are only as effective as the information they consume. If they’re gathering false information, they can make untrue claims. LLMs can also be “hypnotized” or manipulated with misleading prompts and inputs. 

There are tons of emerging LLMs marketed toward individuals and businesses alike. ChatGPT is the most ubiquitous. Developed by Microsoft’s OpenAI, ChatGPT uses generative AI to answer questions and generate written text in response to prompts and user inputs.  

Similar models include Google’s Gemini, Claude, Meta’s Llama 2, and GitHub Copilot

AI will continue to evolve

As a discipline, AI is  evolving at high speed. In the last five years alone, AI has improved its natural language processing, speech recognition and generation, and image and video generation capabilities. 

AI has also made huge advancements in specific fields, like manufacturing (industrial robots in factories), transportation (self-driving cars), finance (fraud detection), and healthcare (using large data sets to review patient images and identify diseases). In the coming years, AI will continue to evolve, becoming more complex and efficient across a variety of sectors.  

If you want to stay up-to-date on AI changes and trends, it’s a good idea to follow a few different newsletters and media sites. Here are some great options to consider:

  • DiggerInsights offers the latest insights in emerging startup and tech
  • Ben’s Bites shares bite-size tutorials for non-technical professionals looking to get started with AI
  • Homescreen is a popular newsletter for all things tech
  • The Rundown AI gives you the latest developments in AI
  • The AI Ethics Brief makes AI ethics literacy more accessible 
  • AI Revolution breaks down complex AI topics into digestible video formats

How can small businesses use AI?

Small businesses can use AI in a variety of areas, from marketing and customer service to inventory management and hiring. AI tools can automate repetitive processes, improve efficiency, and ultimately save costs.  

According to the US Chamber of Commerce’s 2023 Impact of Technology on Small Business Report, 23% of the small businesses surveyed said they already use some form of AI. And 71% of business owners said they plan to adopt the latest technology, including AI. 

Here are some of the areas you can use AI in your business: 

  1. Operational processes: AI is great at automating tedious backend admin tasks. You can use AI to sort job applications for new hires, update customer files with new addresses, categorize expenses, or generate financial reports.  
  2. Marketing: AI tools can do a slew of tasks that support your marketing plan, including researching competitors and creating customer profiles so you can tailor content and emails more effectively. 
  3. Customer service: Using AI can help you improve your customer experience. Chatbots can answer customer questions 24/7, while other AI tools can analyze customer sentiment and satisfaction based on social media posts and surveys. 
  4. Idea generation and content creation: You can use LLMs to brainstorm blog post ideas, generate email subject lines, and track metrics like page views and social shares. 
  5. Sales: AI sales platforms can streamline tasks like inputting customer data, tracking and scoring leads, and forecasting customer demand. 
  6. Hiring: AI can help with the recruiting and hiring process; you can use it to automate candidate screening or generate content for recruitment materials. 
  7. Inventory management: AI-powered inventory management software does a number of things, including forecasting demand, suggesting minimum and maximum stock levels for specific items, and gathering data on price matches and competitors.  
  8. Team collaboration and communication: Certain AI platforms specialize in project management, helping automate tasks and pinpointing bottlenecks in workflows. 
  9. Research: You can use AI tools to gather and synthesize information on a number of complex business topics. You can ask ChatGPT or another LLM about the process of becoming an S corporation, for example, or expanding operations to another state. 
  10. Knowledge management: AI makes it easier to organize, store, and retrieve essential files and data within your company. AI tools can improve your internal filing search functions, automatically update content, categorize data, and create reference documents for frequently asked questions and common searches. 
  11. Note-taking: You can use AI note-taking tools to generate transcripts from recorded conversations, create meeting summaries from team calls, and identify key action items. 
  12. Accounting and budgeting: AI-powered accounting solutions can automate payroll, create custom financial reports, and track expenses. 

Benefits of incorporating AI into your business

There are countless benefits of bringing AI tools into your business. Not only can you use AI to save time on administrative tasks and level up your customer experience, you can also leverage it to make more informed decisions on marketing campaigns, outreach strategies, and business development plans. 

In the US Chamber of Commerce report, a vast majority of the businesses who use AI reported positive experiences; 82% said AI improved their operational efficiency and 86% said it improved customer communications. Businesses that use AI were also 12% more likely to see an increase in profits compared to non-AI users. 

Implications and complications of using AI in your business 

Despite its successes, AI is a relatively new—and rapidly-changing technology—so there are still a lot of unknowns. Before you embrace AI fully, it’s crucial to understand the risks and complications AI comes with. Here are some to be mindful of: 

1. AI governance is constantly shifting 

Over the years, people have figured out how to use AI tools for nefarious reasons, including generating hyper-realistic “deepfake” videos and audio compilations to spread false information, manipulate public opinion, or tarnish someone’s reputation. 

That’s why many state governments are trying to create policies and set standards around responsible AI use. Recently, the California Privacy Protection Agency voted to advance a rule that would require companies making more than $25 million in annual revenue to notify customers that they’re using AI, and give them the opportunity to opt out. Many other states have enacted AI regulations to ensure data privacy. 

As a business owner using AI, it’s important to stay up to date on shifting AI governance to make sure you’re abiding by all the regulations and using your tools responsibly. 

2. AI can be an ethical gray area

There are a lot of ethical concerns with using AI, especially with regard to copyright and creative ownership. That’s because generative AI works by gathering and training itself on data—data that humans supply. 

When AI tools generate images, they’re pulling bits of material, formatting, and style from the work of thousands of real artists and graphic designers. When LLMs generate text, they’re pulling bits of syntax, specific knowledge, and unique turns of phrase from the work of thousands of real writers and content creators. If you use AI to generate content, it raises hard questions: Is it considered plagiarism? Who owns the final product? Who’s responsible for the information if it’s wrong or harmful?

AI-powered insights and results are also susceptible to human biases and inaccuracies. For example, if you ask an LLM to generate content for a blog post on entrepreneurs paving the way in tech, you might get a response that’s heavily skewed toward a certain population and overlooks key groups of people.  

3. Data privacy risks

AI tools could use your business’s and your customers’ data to train their models.   

As a business owner, it’s your duty to protect your customers’ personally identifiable information from breaches and threats. If you’re going to entrust an AI platform with business and customer data, make sure:

  1. You understand the AI vendor’s policies around saving and using customer data. 
  2. You are contractually allowed to share your customer data with third-party vendors. 
  3. You scrub all personally identifiable information before handing over data. 

4. AI has the potential to replace key jobs in your workplace

The prevalence of AI tools in business is already reducing the need for certain operational and task-based roles. According to a 2023 report from ResumeBuilder, 37% of the companies surveyed that use AI said the technology replaced some of their workers in 2023. What’s more, 44% of the companies surveyed by ResumeBuilder anticipated layoffs this year as a result of AI efficiencies.  

While trimming your workforce might sound like a positive thing on the surface, relying too much on AI to maintain operations could backfire, especially if the AI tools require a lot of technical knowledge to implement or if they have gaps in their services. Instead of replacing valuable, experienced workers with AI-powered technology, think of how you can train your current workforce to use AI so they can scale up and deliver even more value. 

5. The results could be subpar depending on how you use it

AI tech, especially LLMs, aren’t foolproof. If you use ChatGPT to write emails to your customers, for example, those emails could end up sounding stilted, clunky, or different from your typical brand voice, which might put customers off.

AI tools work best not as a replacement for your usual strategies or processes but as a complement to the resources and brainpower you already have. 

How to get started with AI in your business

If you’re excited about trying AI in your operation, follow these steps: 

  1. Decide what type of AI tool you need: Consider your business goals and current operational pain points to identify which type of AI would make the greatest positive impact. Maybe you want predictive marketing analytics to refine your email campaigns, for example, or maybe you want to build out your customer service features. 
  2. Research AI platforms and providers: Spend some time researching the best AI tools for different business uses and asking fellow business owners and entrepreneurs for their advice. 
  3. Pick one task and measure your results: Start small by choosing one task or area to leverage AI. Take note of where you’re starting from and which benchmarks you hope to hit (like a certain number of hours saved per week or a higher NPS number), then track your results so you know what to tweak going forward. 

Making the most of AI

Like any tool, AI can help improve your organization, but it’s important to use it thoughtfully and intentionally. To learn more, check out our comprehensive guide to using AI in your business

Paige Smith Paige is a content marketing writer specializing in business, finance, and tech. She regularly writes for a number of B2B industry leaders, including fintech companies and small business lenders. See more of her work here:
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