Poor productivity has been a persistent issue in the UK. It’s a problem accentuated by below-trend economic growth and market changes caused by Brexit, and unfortunately, it’s impacting the small business community. The impact of these macroeconomic shifts is confirmed by Xero’s reportSmall business productivity: Trends, implications and strategies, which found that UK small business productivity declined by 7% between August 2022 and December 2023, and is now well below the UK’s pre-pandemic range.
If solutions to the productivity problem aren’t put in place, we run the risk of a cascading effect where small businesses find it difficult to re-invest in their companies. So it makes sense that business owners are searching for methods to boost productivity, instead of waiting for the economy to improve.
As a result, technologies like artificial intelligence (AI) are catching people’s attention, offering the tantalising prospect of ‘doing more with less’. This is especially relevant for business owners, most of whom are likely to face process-heavy and time-consuming tasks. AI is being recognised for its ability to automate such processes and give back more of the most precious commodity for small businesses: time.
AI is also starting to show value for business owners, but no one technology offers a full solution to the productivity problem. Equally, not all small businesses can expect to deploy AI in the same way and get the same results. AI represents a variety of different technologies and capabilities, so there are some considerations for business owners as they look to harness it in their own unique ways. Critically, they should seek to understand where and how it can benefit them, what the limitations could be, and explore different ways to safely experiment with emerging tools.
Streamlining processes across the business
Before diving into deployment, there should be an assessment of where productivity blockers have developed – where in the business has the most requirement for manual, repetitive assistance? Once these processes have been identified, small businesses can frame experiments that explore how AI could augment these tasks, reducing the effort required to complete them at scale.
Streamlining day-to-day tasks like drafting emails and producing documents based on a defined template can be a huge source of support. Various applications of AI can help with starting and, in some cases, completing this work faster and more accurately, allowing staff to focus on functions that are more pressing or require more creativity.
Small business owners can also use AI to access critical insights to help them make smarter decisions.Our research confirms that most small businesses struggle to manage and maintain a healthy cash flow, for example. AI is now embedded in many digital platforms used by businesses, and can address pressure points by answering deeper questions about an organisation’s finances and producing forecasts. With greater control over their cash flow and knowledge of where to focus , busy business owners are better prepared for potentially leaner months.
Optimising tasks and processes is key, but small business owners can also look for opportunities to enhance workflows by using the conversational capabilities offered by Generative AI. For example, AI-powered tools can increasingly meet users where they are already working, saving time and reducing the need to switch between applications.
Using AI safely and responsibly
As well as the benefits, we’re also learning more about the limitations of AI and risks inherent in its use, such as misinformation and bias. For example, AI hallucinations – where data points are ‘made up’ by the model – can rear their heads in the finance and accounting function and can be compounded if the datasets used by firms aren’t right for the job or kept up to date.
If sensitive or proprietary data is used, it’s important to take measures to prevent LLMs from disclosing it to other, unauthorised parties. This is important whether the AI tool is directly managed by a small business or built into products and services used by them, but even more so when using ‘free’ or public AI tools. Take the time to examine how they are using and protecting the data inputted, to manage the associated risk.
Taking the time to set up
Speculation around the appropriate AI use cases for small businesses is to be expected. As the technology becomes increasingly indispensable as small businesses seek productivity gains, owners should explore opportunities to evaluate where it can be of most use to them.
But first, they should ask themselves some important questions: where will AI provide the most value? When will it realistically start producing better returns? And critically, how do I make the best use of AI given the goals and objectives of my business? Speaking with trusted advisors can help business owners get perspective and navigate this opportunity.
Understanding AI’s capabilities, but also its limitations and risks, will enable business owners to make informed decisions around experimenting with and implementing it. In an economy where productivity is hard to come by, taking responsible steps to harness AI could be a crucial step towards unlocking it by optimising one high-priority process at a time.
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