The state of our economy presents a lot of challenges for both businesses and consumers, and many small businesses are looking for ways to drive more operational efficiencies to offset the impact of inflation and continue to grow. Artificial intelligence (AI) is one solution that both businesses and consumers are leveraging every day, yet the debate remains around adoption, understanding, and value of it.
Awareness of AI and machine learning is growing. A recent Prosper Insights & Analytics survey shows that the majority of U.S. business owners and Adults 18+ surveyed have heard of ChatGPT, and that business owners are actually most excited to use it in comparison to the consumer audience surveyed.
How can small businesses capitalize on advanced technologies to catapult growth? AI can help businesses perform a variety of functions, such as automated tasks, create predictive insights, and personalize experiences. Most importantly, these can help tackle some of the biggest small business challenges – like cash flow.
To better understand how small business owners plan to leverage AI to tackle these challenges, we spoke with Kelly Vincent, vice-president & mid-market segment leader at Intuit where she focuses on helping drive small business success through the QuickBooks platform. Today, the platform focuses on providing small businesses with the connected tools, expert services, and insights businesses need at every stage of growth.
Gary Drenik: What are the top macroeconomic headwinds that small businesses are facing?
Kelly Vincent: Inflation continues to be the top external challenge small businesses currently face. A recent Prosper Insights & Analytics survey found 57% of U.S. business owners and 62.5% of U.S. adults surveyed think inflation is negatively impacting the overall economy. Inflation has a big impact on small business cash flow, which also remains a key reason they fail.
Despite today’s challenging macroeconomic landscape, a recent QuickBooks survey revealed the majority of businesses (73%) are prioritizing AI, financial technologies, and expanding e-commerce solutions with an average investment of $45,000 to $142,000 in technology tools to help drive growth and success – up an average of $10,000 from 2022.
There is a massive opportunity for small businesses to benefit from AI, especially as they need to do more with less in today’s economy.
Drenik: How should small businesses address the challenges associated with growing and managing their businesses?
Vincent: Our customer research shows that as businesses grow or adapt to a new environment, they face several challenges. Top challenges include managing finances and accounting in a scalable, automated way that doesn’t “time sink” the team given time is their most precious resource, managing quote to cash, and finding more time to engage with customers. For the 35% of small business owners surveyed who identified a lack of time as a top challenge, AI can be a game-changer.
But growth can mean different things to different business owners. For some, growth means increasing sales and revenue, for others it means reaching new customers or expanding their team. The first step is to identify and prioritize what area to address first.
Customer acquisition is a primary concern for many business owners impacted by today’s economy and as a result, the majority are turning to e-commerce technology to expand their reach and drive sales. In 2022, more than half of businesses that experienced growth say they invested in e-commerce technology (54%) and nearly 9 in 10 business owners (89%) say they are selling or plan to sell on at least one e-commerce platform this year. Investing in e-commerce technology is not only important but will help small businesses drive growth.
Drenik: What are the top investments small and midsized businesses should consider to ensure their success and catapult their growth?
Vincent: Small and midsized business owners should focus on simplifying financial operations, automating low-level tasks, and streamlining communications. Investing in technologies that can help with these three things will help put them on the right path.
Another consideration for a small business is where, when, and how much to invest in technology. More than 7 in 10 small business owners say they invested in technology last year, spending over $35,000 on digital tools on average. And it paid off. 95% of these business owners claim those investments increased operational efficiency, increased sales, and provided better financial and employee management. Meanwhile, other business owners invested in tools this past year that they didn’t understand or use properly, and some reported overspending or even scrapping the technology entirely. Business owners should invest in tools that serve them at their current stage of growth but can also grow with them.
Drenik: How can AI help small businesses manage their growth?
Vincent: AI cannot replace the strategic and creative work that business owners and employees contribute, but it can play a central role in streamlining operations and performing low-level, time-consuming tasks to free up time for more demanding, critical work like developing customer relationships and creating more products and services. Luckily, there are many established and reliable ways businesses can use AI for both long- and short-term business benefits.
Business owners can leverage AI to manage their growth by automating business operations and gaining better visibility into financial performance. The QuickBooks survey shows 51% of business owners want to automate payroll. Similarly, a recent Prosper Insights & Analytics survey shows a 3 percentage point increase year-over-year of business owners planning to purchase payroll services. Payroll tools powered by AI can help business owners as they grow their workforce.
AI can also be used to help with marketing and content creation, analyzing customer trends and behaviors, and customer service support, which our survey shows are the most common AI-based tools business owners plan to adopt. AI can rapidly learn about the customer and create a personalized machine learning model for a business with very little work needed from the user.
On another note, at QuickBooks we often see small business owners start to explore AI-based tools and not give them enough time or input to produce quality results. Good data creates good results from AI, and if a business isn’t able to input proper data and requests, the model won’t be able to give them the results they’re looking for, which can lead to frustration and owners quickly deciding AI isn’t for them before giving it a true chance. AI depends on accurate information and proper data and small businesses that recognize this detail will benefit from the innovative capabilities AI has to offer.
Drenik: What are the most common functions that small business owners should seek to automate?
Vincent: Automation is a gift that keeps on giving to small businesses. When starting a business, many entrepreneurs manually track and monitor day-to-day operations. As specific tasks become more complex as a business grows, it’s important to start automating them.
Many small business owners use or plan to adopt AI tools for automating low-level tasks and financial workstreams like managing cash flow. Other tasks like expense management (69%), invoicing (68%), and running financial health reports (47%) are a few of the most common functions business owners wish to automate with the help of AI-powered tools.
When planning to implement AI to streamline workflows, small business owners should look closely at their processes and identify specific functions that AI can manage.
Gary Drenik: Thank you, Kelly, for your insights on how AI can play a significant role in the growth of small businesses and how technology solutions like QuickBooks can help foster this growth. I’m looking forward to seeing how AI will impact the success of small businesses, and our broader economy.
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