How AI Can Help Small Businesses
The COVID-19 pandemic has dramatically amplified existing disparities between small and large businesses. This year saw Amazon doubling its quarterly profit, while Chinese tech giant Tencent earned $93 billion after its online gaming revenues in the first quarter rose by 31 percent. However, for smaller companies, the story has been quite different. A study published in the Proceedings of the National Academy of Sciences (PNAS) found that 43 percent of small businesses were temporarily closed and that employment in small firms fell by 40 percent.
But the pandemic has also been kind to some small businesses, creating space for growth in sectors such as tech, entertainment, and health. For these lucky players, embracing state-of-the-art technology has been essential for weathering their unexpected increase in demand, and now they are looking to artificial intelligence (AI) to streamline and further expand their operations.
Make no mistake, implementing AI solutions for business is nothing new, but so far it has been an expensive tool often reserved for large companies with big budgets. So, how can small businesses successfully modernize their operations without breaking the bank? Fortunately, cheap and readily available AI solutions can be acquired by small firms to save time, make money, and manage risk — all of which promote a fairer playing field for businesses of different sizes.
Create More Time for Your Employees
To compete with larger companies, small businesses must optimize staff output and this can be achieved by using AI systems to manage menial tasks. For instance, chatbots are becoming an increasingly important way for smaller businesses to provide customer service around the clock, freeing up time for human staff to handle only the most strategic and complex tasks. Developments in natural language technology have equipped these chatbots with the ability to provide even more accurate and relevant responses for customers.
For example, HR operations can be streamlined by using chatbots to answer routine questions. Google’s CallJoy, a virtual customer service phone agent, uses similar technology to provide callers with basic business information, block spammers, and redirect other requests to SMS.
Small business marketing teams can use AI to handle repetitive tasks like cleaning up large data sets, data entry, and media monitoring so their staff can focus on identifying consumer patterns and testing the efficacy of sales campaigns. They can also get a head start with insights generated from other consumer search patterns, social media trends, and mobile ad campaigns rather than learning through time-consuming trial and error experiments. An example of this is Google’s Smart Campaigns, which uses machine learning to optimize ad performance by tweaking specific aspects of ad campaigns — like doubling down during times your ads perform best. Google learns not just from your own ads, but also automatically recommends optimizations from everything Google knows about all the ads they run.
Previously, a big barrier for employing this type of AI to save time was business heterogeneity — the fact that all enterprises work very differently from each other. This meant that, to make use of particular AI, companies would have to spend vast resources developing solutions specific to their business operation. Now, however, small businesses can benefit from cutting-edge robotic process automation (RPA) without spending too much time or money on development. This saved time is an essential component in leveling the playing field for small businesses.
Help Boost Profits
Offloading generic tasks to AI systems can also save money on overhead costs and help boost profits. If deployed judiciously, AI can provide a huge advantage: A 2016 study published by Harvard Business Review found that sales teams incorporating AI enjoyed a 50 percent increase in leads, an edge that has only grown with advances in AI's sophistication and ease of use. AI has also improved profitability in retail, where small businesses are focusing on personalization to provide customers with a much better experience. One study, for example, found that 61 percent of consumers prefer buying from shops that use augmented reality to enhance customer experience.
Making money is also about finding opportunities to expand, but 25 percent of businesses have missed a revenue growth opportunity, and this is often due to poor cash flow management — a process that can be made more reliable through the effective use of AI. Overall, AI has proven to be helpful for small businesses needing to save money and has helped them find opportunities to compete with bigger players when looking to grow.
For smaller businesses just starting out, reducing risk is essential for keeping afloat, especially during the current economic recession. Given its focus on pattern recognition and trend forecasting, AI can be invaluable for small businesses needing specialized and accurate predictions.
AI planners can use machine learning intelligence to advise on strategic decisions like marketing and employment. These tools can answer questions like: “Is it safe to hire another employee, given my forecasted cash flow?”
Small businesses also have low cash buffers, so a miscalculation, a late payment, or even fast growth could cause a life-threatening cash crunch. To help alleviate this challenge, cash flow planners enable small businesses to predict their daily cash flow 90 days into the future. Equipped with the ability to foresee 90 days of outgoing expenditure, small business owners can use these planners to mitigate challenges before they lead to catastrophe. Instead of having to fall back on a 401k or other personal funds, they can suggest short-term financing options or other solutions such as delaying paying a bill or requesting for an invoice to be paid faster. The efficacy of these planners stems from their ability to proactively warn business owners of upcoming problems and make relevant recommendations. Small firms can use these AI risk management solutions to remain resilient amid dramatic market turbulence and uncertain futures.
Developments in AI are closing the gap between small and large businesses, thanks to recent advancements that have made this technology more obtainable for smaller firms. Given the present challenges brought by COVID-19, small businesses should actively be looking for AI solutions that will help them weather the storm. Otherwise, they will be left behind by the competition sooner rather than later.