15th January 2024

How AI is Impacting Small Businesses.

EST is multi-service professional practice offering HR Consultancy, Accountancy and Tax Advice, Wealth Management, Commercial Finance and Organisational Development.

Izzy Matthews, Marketing Coordinator at EST, looks at the successes and limitations of Artificial Intelligence (AI) and how it is impacting small businesses.

Despite ongoing debate about AI’s impact on jobs and concerns about potential risks, it is undeniable that AI is experiencing rapid evolution and technological advancement.  Rather than overlooking or dismissing AI’s influence in today business environment, professionals are increasingly recognising the significance of harnessing AI to streamline their processes and reduce costs.

What does AI mean for small businesses?

In an ever-evolving landscape of business, success is not merely about survival; it is about thriving and outpacing the competition.  For small businesses, this journey can be especially challenging where limited resources and manpower often stand as roadblocks on the path to growth. AI can help with these very issues that can limit the success of small businesses by:

Analysing large amounts of data

AI can process substantial amounts of data in a very small space of time with minimal errors. This will allow for more time-consuming tasks to be taken off workers hands so that their expertise can be used elsewhere.

AI algorithms

The importance of algorithms and targeting the right customers is crucial and by using AI you can personalise customer experiences and target specific audiences allowing you to reach a greater market of business.

Access to more tools –

One large strength of AI which should not be overlooked is the wide range of tools and materials that small businesses can utilise which their budget may not have otherwise allowed if they had to pay large advertising firms. Now more than ever the playing field has been levelled allowing for smaller businesses to produce better, more mainstream content with lower costs.

What to be aware of with AI

Although AI can be seen to hold some value to organisations, it must be considered whether the costs outweigh the benefits. As AI develops, so do the ways to exploit it, which can be massively damaging for businesses.

AI-powered chatbots are able to access a huge amount of information and are so realistic that it can be difficult to know whether it is a chatbot or you are talking to a human being. This present various risks and challenges in the workplace and a policy providing clear rules on what is acceptable and what is prohibited will help organisations to limit these risks.

Recruitment is very complex, and it is so important that the right candidate is selected. However, in HR we are alert to the risk of job applications being written by AI. Not only is this deceiving, but it can lead to people being employed for a job that they do not have the skill set for. This can mean that money and time is wasted, which can be detrimental to an organisation. Although this risk is small, with the world of AI expanding faster than ever, small businesses should not overlook this.

AI headshots are becoming increasingly more popular. Although they may seem like a convenient alternative to having your photo taken and might reduce the stress on some employees who are not keen on being in front of the lense, there is an argument that the image loses authenticity and becomes a filtered version.  There are differing opinions on whether AI is going too far in allowing whole personas to be created through AI which could cause issues surrounding whether the image presented on the screen is the person they are communicating with.

Legislation regarding AI

There are no current explicit UK laws governing the use of AI and other algorithmic management tools at work, but several current areas of law potentially restrict the use of these tools in practice: common law; equalities law; privacy law; and data protection law.

It is yet to be seen how the regulations will aim to foster innovation while addressing ethical considerations and potential risks. The UK Government’s white paper ‘A pro-innovation approach to AI regulation’ (updated on 2 August 2023) laid out the framework for current plans to regulate AI.  This would take a non-statutory approach, relying on existing regulators to oversee the use of AI in their areas while following five broad principles:

  • Safety;
  • Transparency;
  • Fairness;
  • Accountability; and
  • Contestability.

At a time when management teams face huge challenges in such unchartered and complex territory, developing a partnership and leveraging external HR expertise to help navigate them through the strengths and limitations of AI from a people perspective.  It will help optimise resources and instil confidence in business leaders that your organisation is fully equipped to outpace the competition.

As there is lack of clarity on where the law stands on various issues, such as who owns the copyright on the output, organisations should monitor the use of such tools in the workplace.

How can our HR team help?

Our highly qualified and expert HR professionals can offer support to businesses in navigating the implementation of difficult and challenging strategies.  We can draft AI and Use of AI chatbots at work policies for your business.

Please contact our HR team if you would like more information about this or any other support in respect of HR or organisational and management development 02921 303888 or