AI is Powering Small Business: New Survey and Report Finds $273.5 Billion Saved by Small Businesses Annually

By SBE Council at 31 October, 2023, 9:53 am

85% of small businesses agree that the government must balance AI regulation and innovation

FOR IMMEDIATE RELEASE

October 31, 2023

Washington, D.C. – A new survey and report released today by the Small Business & Entrepreneurship Council (SBE Council) finds widespread adoption of artificial intelligence (AI) tools by small businesses, which are saving these firms extraordinary time and money, and boosting owner/employee productivity and business competitiveness. According to the results of the SMALL BUSINESS AI ADOPTION SURVEY 2023, 75% of small businesses are utilizing AI tools for an expansive range of business functions. AI is easing key pain points for small businesses, said SBE Council president & CEO Karen Kerrigan, and owners report these tools are enabling their workforce to focus on high-value projects and tasks, including revenue-generating activity, and providing opportunities for growth and a more meaningful work experience. In terms of how they view government’s role in AI, small business owners do not want the government to hastily overreach or undermine AI’s attributes and what’s yet to come – 85% of small business owners want a balanced regulatory approach to ensure the American AI ecosystem continues to flourish and innovate.

Kerrigan observed, “Small business owners have rapidly embraced AI, and the range of tools and applications are helping to boost profitability, productivity and competitiveness at a time when they need such support. In fact, 93% of small business owners agree that AI tools offer cost-effective solutions that drive savings and improve profitability. Given the excellent return-on-investment they’ve experienced, it comes as no surprise that 83% of small business owners plan to continue their investments in AI over the next 12 months, with 31% opting for significant investments,” observed Kerrigan.

According to the survey, nearly half (48%) of small businesses started using AI tools in the past year, and 29% for one to two years.

Kerrigan noted that 76% of small business owners report that AI is freeing both the business owner and their employees of time to focus on high-value tasks. Combined with the investments these business owners are making in new technologies, equipment and innovation, both the economy and small businesses will receive a solid productivity boost, according to Kerrigan – which has been in a rut for the past decade-and-a-half. Moreover, AI is filling a critical void as many small business owners cannot find the employees they need, thus turning to AI tools as a solution. According to SBE Council’s SMALL BUSINESS CHECKUP SURVEY Q3 (September 2023), 48% of small business owners reported that labor shortages and limited access to skilled labor were hampering operating capacity.

With the time and capital small businesses are saving from their use of AI tools, and revenue-generating enhancements, business owners report important benefits, such as: redirecting their own time and employee time to higher-value work (41%), investing in innovative solutions for customer engagement and retention (39%), investing in new equipment and technology (37%), keeping prices stable for customers (36%), pursuing growth opportunities for the business (34%), increasing wages and benefits (25%), setting aside capital for emergency/other purposes (25%), and paying down debt more quickly (20%).

“Small business owners are resource constrained and they continue to face difficult headwinds. AI solutions are helping to ease major business challenges tied to inflationary pressures, maintaining employees, the lack of skilled workers or the affordability of human capital, competition with larger businesses, and capital constraints during a period of high interest rates and shrinking availability,” added Kerrigan.

Time and Money Saved   

SBE Council chief economist Raymond J. Keating noted that the savings from AI investments and use by small businesses – such as the estimated 6.33 billion hours in owner and employee time saved or better utilized – translates into estimated savings of $273.5 billion annually.

“The savings calculated in our report are significant, but at the same time, very conservative. Indeed, the history of innovation in our economy clearly indicates that even the additional more expansive and speculative savings estimates included in this report promise to turn out naively conservative. While no one can know the exact numbers in terms of future productivity gains from AI, understanding how free enterprise works means that we can count on entrepreneurs building on their gains with AI innovations in such ways that few can imagine today. The results will be transformative for various industries, and for economic opportunity and growth,” said Keating.

Small business owners report a median weekly savings of 13 employee hours due to AI tools and 13 hours of their own time saved.

(See SBE Council calculations and methodology here.)

Keating added, “Small business owners are experiencing the benefits of investing in AI tools, as innovations create real and significant potential for generating savings in terms of time and dollar costs. These results ultimately mean enhanced productivity for entrepreneurs and their employees, which, in turn, fuel enhanced earnings for those owners and workers. Indeed, advancements in AI fit in with the history of innovation, as investments open up new opportunities for entrepreneurs, businesses, employees and consumers.”

MORE AI Survey Highlights

Benefits Over Traditional and Existing Tools: Small business owners report that AI is more beneficial over traditional or existing tools for: increasing the quality of decision making (69%), competing more effectively against large businesses (68%), customer acquisition (67%), customer service (61%), data security (59%), and personalizing the customer experience (55%).

Most Commonly Used Tools: Among small businesses, financial management AI tools (40%) are the most commonly used. AI-powered email marketing automation (32%), cybersecurity (32%) and inventory management (28%) are also widely used tools. On average, small businesses utilize 4 AI tools, and the survey identified nearly 20 different areas where AI is being used to support business operations.

Branding, Marketing, Customer Engagement and Sales: AI tools are being used by small businesses to meet a range of marketing, sales and customer service needs. Deployment of AI for marketing and revenue-generating purposes represent a dominant category across 9 areas, including: email marketing automation (32%), image creation for logo and branding material (28%), social media management (28%), chatbots for customers support and service (27%), content writing and creation (26%), audio-to-text transcription (26%), tools for predictive analysis (23%), sales team support and CRS systems (21%), and language translation (17%).

Drivers of AI Adoption: Key reasons provided by small business owners for adopting AI include: peer experience and influence, their own research and comfort with technology (54%), time and cost savings (51%), competitive pressures (29%), and inflation (26%). Small business owners also noted that high labor costs (25%), augmenting skilled labor or lack of access to skilled labor (19%) also drove AI adoption.

AI Oversight by Government: 85% of small businesses agree that government must balance regulation and innovation in AI.  The top three areas identified by small business owners for government to play a role include establishing ethical guidelines (57%), promoting transparency and accountability (53%), and addressing potential risks (52%).

WTAS: What Small Business Owners are Saying About AI 

● “[Our business] uses AI for menial tasks that would take us much longer.”

● “AI has helped me attract and retain customers.  This has helped my business grow its revenues, reduced expenses, and increased job security for employees.”

● “AI is helping my business be profitable, especially as inflation and other economic factors continue to rise in our country. AI is helping me keep my employees.”

● “AI automates repetitive tasks, freeing up employees to focus on more strategic and value-added activities, this leads to significant increase in efficiency and productivity. AI tools also help develop new products and services, and help our business analyze large amount of data to identify patterns and trends.”

● “AI has destressed the workplace.”

● “Our small business uses AI to compute and predict outcomes for end-users health inquiries based on wound images. We also use AI for analytics using AWS services.”

● “I chose to implement AI technology because of the many advantages with branding, marketing and content creation.”

● “AI has been a game changer for me regarding our social media. I can tell AI what I need to communicate and in 30 seconds I have an amazing paragraph or post that I can review and use. It is literally saving us a lot of time and a lot of money.”

● “The Chat AI software has helped tremendously. I wish our company started using this service earlier.”

● “Google translate is invaluable in communicating with overseas clients.”

● “Working in the beauty industry, a lot of your customers may not speak English so AI helps to translate what they’re saying.”

● “Using AI to create promotional materials, asking about current trends and what’s popular, getting better insight into what is expected, and learning how to use the tools properly for what you want is almost a necessity in this day and age regardless of your business focus.”

● “Allowing AI to help with managing my finances is allowing me time to work on projects.”

● “Our business utilizes AI tools for various functions, including customer service through AI chatbots, data analysis for actionable insights, and predictive modeling for strategic decision-making. These tools have significantly increased our efficiency, accuracy, and ability to personalize customer experiences. As for government regulation of AI…it’s crucial that regulation doesn’t stifle innovation or U.S. competitiveness in the global AI landscape. It’s about striking a balance – ensuring ethical AI use and development without hindering technological progress and application.”

● “AI has streamlined a lot of our processes and saved us tons of time and money over the past year from content creation to business intelligence.”

● “We are a fast-paced medical supply company and AI it helps keep things up-to-speed up, also helps with security and inventory.”

● “The most important contribution AI has made is it has improved our ability to stay in contact with our customers, and that provides a better experience for them.  It has helped our business run more efficiently which has enabled our ability to pay higher wages to employees.”

The SMALL BUSINESS AI ADOPTION SURVEY 2023 was conducted by TechnoMetrica from October 2-October 4, 2023. The survey sample was 676 small business owners, and 507 self-identified for AI use within their business employing 2-99 employees. Non-users did not participate within the core of the survey. Credibility interval: +/- 4.4 percentage points for the 507 AI users sample.

CONTACT:

KAREN KERRIGAN, kkerrigan@sbecouncil.org

RAYMOND KEATING: rkeating@sbecouncil.org

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For nearly 30 years, SBE Council has worked on and advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth.

Visit www.sbecouncil.org for additional information. Twitter: @SBECouncil

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