New research by Start Up Loans, conducted by YouGov, reveals less than half (46%) of small businesses use AI at work. Furthermore, a third (34%) of small business leaders only have a ‘basic understanding’ of AI tools.
On average, only 12% would refer to themselves as an ‘expert’ in the technology, when thinking about their proficiency in five core pillars of AI: Generative AI, chatbots and virtual assistants, speech to text and vice versa, text analysis and summary, and AI-powered text editing.
The biggest barriers to further AI adoption were found to be IT security issues (25%) and a lack of appropriate financing possibilities (25%). Slow internet connection (22%) was the third largest barrier.
There is also a knowledge barrier preventing many small businesses from reaping the full benefits of tech and AI in the workplace. Over a fifth (21%) of business leaders cite insufficient digital skills of employees as being problematic, while a similar percentage (19%) cite an internal resistance to change as a hinderance. These barriers and lack of understanding are leading to a delay in uptake of the technology.
Within smaller businesses there was a clear divide between those at the larger end of the spectrum and those at the micro end when it comes to using AI. The survey found AI is used in 36% of micro businesses (0-9 employees) and 44% of small businesses (10-49 employees) but rises to 60% of medium-sized enterprises (50-249 employees).
How one Newport-based business owner is using AI to stay productive and reduce isolation
One entrepreneur bucking the trend is Louis Watkins, founder of Clear for Men – a skincare business based in Newport. As a solo business owner, Louis has embraced AI tools like ChatGPT, BoardyAI, and the Shopify AI plugin to streamline his operations and stay focused on growth.
“Running a business can be extremely lonely, and not having anyone to bounce ideas off makes it even tougher,” Louis explains. “AI has made things a lot easier. It supports me with marketing ideas, email copy, analysing data and even customer segmentation. It’s like having an extra team member.”
Although initially sceptical, Louis says the tools have helped him become more productive and given him the clarity needed to scale: “I still fact-check everything but using AI has saved me hours of manual work and allows me to focus on brand awareness and creating content. It helps me work on the business instead of getting stuck in it.”
His advice for other small business owners? “Do your research. There are AI tools that can help with everything from finance to content creation. But the key is learning how to write a good prompt – the more specific you are, the better your results.”
Louise McCoy, Managing Director, Start Up Loans Products, British Business Bank said: “AI has the potential to transform the way smaller businesses operate, but people running those businesses face a plethora of barriers which need to be overcome if they are to benefit from the technology. We hope our information, as well as start-up financing, one of the biggest hurdles identified, can help drive more use of AI. By adopting AI responsibly, smaller businesses could unlock new opportunities for growth and innovation, ensuring they remain the driving force of the UK economy”.
Start Up Loans offers pre and post-loan support packages, including access to Learn With Start Up Loans, a partnership with the Open University, with courses covering key aspects of running a business.
The Start Up Loans programme was established in 2012 to help people – wherever they are in the UK and whatever their background – to achieve their ambitions of starting their own business. It provides fixed-interest loans of between £500 and £25,000 to aspiring business owners, many of whom might otherwise struggle to secure finance.
