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Small businesses face hurdles in embracing AI

Insights from Savanta Business Tracker

In a world increasingly driven by digital innovation, we've examined how UK businesses are embracing artificial intelligence (AI). Our recent Savanta Business Tracker survey paints a stark picture of AI adoption, highlighting a significant gap between small and large businesses.

Jian Chen Tiong Senior Executive 24/10/2023

In today’s digital age, it’s expected that every business owner would readily embrace technology, especially with the rise of artificial intelligence (AI). After all, AI can increase efficiency, provide easy access to information, and offer instant responses to queries. However, recent data from the Savanta Business Tracker reveals otherwise.

In September, we surveyed 1,000 UK businesses about their AI usage. The data reveals a significant disparity: 34% of medium to large businesses (250+ employees) are already leveraging AI, compared to only 14% of small businesses (<250 employees). This aligns with Savanta’s Business Tracker’s previous findings on ChatGPT, highlighting that smaller businesses typically have a slower technology adoption rate.

But why are businesses potentially not adopting AI?

Small businesses express significant concerns about managing cash flow and working capital (29%) and experiencing a drop in customer demand (26%). These challenges weigh more heavily on small businesses compared to their medium and large counterparts, as we have previously reported in July.

Given these key challenges to their future, it’s understandable why small businesses are less motivated to adopt AI. When basic survival is a concern, it’s difficult to prioritise long-term investments. To put things into perspective, nearly half of small businesses (48%) with fewer than 250 employees have no plans to use AI in the next year (and this is even higher among sole traders, at 65%) – which emphasises how small businesses struggle with day-to-day razor-thin profit margins.

Furthermore, only two in five (40%) of small businesses agree that companies failing to embrace AI will be overtaken and replaced by those that do, compared to more than two thirds (69%) of medium and large businesses. Additionally, a higher proportion of medium and large businesses (66%) are actively seeking guidance on how to best utilise and leverage the benefits of AI, as opposed to only 38% of small businesses.

Clear differences in perceptions between small and medium/large businesses

Our Business Tracker indicates a correlation between business size and attitudes toward AI. For instance, two in five medium/ large businesses (42%) view AI as more of an opportunity than a threat, compared to only a quarter (27%) of small businesses. Furthermore, only two in five of small businesses (42%) agree that AI is a game-changing technology capable of transforming business operations (and this sentiment is even weaker among sole traders, at 35%), while a significant majority (72%) of medium and large businesses share this belief.

The impact of business size on AI adoption is a crucial factor to consider. Smaller businesses often face challenges in terms of survival and have limited knowledge and resources to adopt and benefit from new technologies. In contrast, larger businesses tend to have a more positive perception of AI, as they are already using and benefiting from this transformative technology. This suggests that the size of a business plays a significant role in its ability to embrace and leverage AI solutions effectively.

As we anticipate ongoing acceleration in AI developments and business adoption to further increase in the market, Savanta will continue to monitor these trends through our ongoing Business Tracker. Our aim is to provide businesses with valuable insights into the evolving perspectives of AI and its potential impact on different industries. By staying up-to-date with these trends, businesses can make informed decisions regarding AI implementation and capitalise on its transformative potential.

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