SMEs divided on using AI to drive growth

As the Prime Minister launches a new AI Taskforce to accelerate the adoption of AI across government and to drive economic growth, research from Novuna Business Finance reveals SMEs have mixed feelings towards AI amid concerns that the technology is at odds with enterprises that are built on the principle of developing strong human relationships.

A survey of SME owners by YouGov for Novuna Business Finance found 31% are already using AI to support their enterprises, but 27% say they have no plans to use it while a further 21% do not regard AI as relevant to their business.

SMEs already embracing AI identified a number of key benefits including making back-office or operational processes more efficient (16%); enhancing online and digital marketing capabilities (15%); and employing AI to help with market research and product development (14%).

Those that do not currently use AI held a firm view that their enterprises were built on strong human relationships (59%) – a sentiment held strongly among enterprises in the North West (76%), East Midlands (75%), Yorkshire and the Humber (71%) and the North East (68%).

In addition, SME owners also expressed sustainability concerns over the energy and natural resources used to run AI (22%), as well as legal concerns over the collection of sensitive data by AI algorithms (22%), and some had ethical concerns over the perceived risks of demographic bias in AI data (20%).

Enterprises based in London (41%) and the West Midlands (38%) emerged as those most likely to already be using AI. By industry sector, professional services enterprises in the IT/Tech, finance and legal sectors took the lead in using the technology, whereas SME owners in agriculture (46%), real estate (34%) and construction (36%) were most likely to say they had no plans to use AI.

Jo Morris, Head of Insight at Novuna Business Finance commented:

“The Government’s backing of AI has significant potential to drive economic growth across the UK – and our data shows there is a correlation between small business growth and AI adoption.

For example, AI adoption is more prevalent among small businesses that are significantly growing this quarter (59%) than it is among those enterprises experiencing contraction (23%).

“That said, small businesses are not the same as large corporates, where the efficiencies of scale and the ability to invest in sophisticated tech infrastructure are more central to business planning. For many smaller enterprises across the UK, the personal – and human – touch is seen to be more important. Small business owners often know their customers personally and many are deeply rooted in the communities they serve. This is perhaps why so many survey respondents expressed caution towards AI, precisely because their enterprises were built on enduring human relationships and personal service.”

“Our research also suggests there is an AI knowledge gap that needs to be addressed – with 29% of small business owners openly saying they were unsure how AI could be used in their business.”