A recent survey by The Small Business and Entrepreneurship Council (SBEC) found that 48% of small businesses incorporated AI tools in the last year. Notably, 93% of owners acknowledge the cost-effective benefits, resulting in hundreds of billions of dollars in annual savings.
The business investment experts at Oxford Capital have outlined the optimal approach for integrating AI into small businesses and the significant growth benefits it can offer in 2024.
David Mott, Founder Partner at Oxford Capital, shares 6 ways AI integration is transforming the landscape for founders and offering new value for investors:
-
Consider the engineering team.
Developers today can use AI co-pilots to write code faster. CTOs are reporting efficiency gains of 20-500%. Two years ago, our portfolio founders were screaming for engineering talent. While the hunt for top talent is ever-present, AI has undoubtedly eased the pressure in many teams.
-
Streamline operations through automation.
The most commonly used software programmes in the start-up stack have pushed out upgrades that automate repetitive tasks and remove many human-led processes. AI-driven automation allows start-ups to optimise workflows, reduce manual errors, and enhance overall operational efficiency. From data entry to customer service, teams can concentrate more resources to strategic, innovative and creative endeavours.
David Mott adds, “AI’s automation capabilities can also streamline routine tasks, freeing up valuable time and resources for small business owners and their teams. A report from the Small Business and Entrepreneurship Council found that more than two-fifths of small business owners (41%) have used AI to redirect their own time and employee time to higher-value work.1 From inventory management to customer support, mundane processes can be automated, allowing employees to focus on higher-value tasks that contribute directly to business growth.”
-
Personalised and scalable customer service.
By analysing past interactions, timing, preferences, start-ups can leverage AI tools to deliver a tailored product or service that meets the needs of customers, leading to greater brand loyalty and better experiences. Automating customer service for dealing with the 80% of simple queries, leaves client-focused teams more time to focus on the 20% higher value activities.
“Among AI tools are personalised recommendation systems, such as chatbots which offer instant support and predictive customer service models, which can contribute to an elevated customer experience. Through sophisticated algorithms, AI can analyse customer behaviour and preferences, empowering businesses to tailor their marketing campaigns to individual needs. This personalised approach significantly enhances engagement levels and boosts conversion rates, marking a pivotal shift in how small businesses interact with and retain their customer base.”
-
Better return on investment in marketing.
With AI, new marketing solutions are revolutionising how start-ups reach their target audiences. By analysing vast data sets, AI identifies consumer trends, tailors marketing strategies to specific demographics, and optimises advertising campaigns for maximum impact. This data-driven approach not only enhances the effectiveness of marketing efforts but also ensures that every pound spent delivers tangible results.
“AI offers small businesses a dual advantage, simultaneously reducing costs and boosting efficiency. According to a McKinsey survey, the integration of AI has the potential to amplify business efficiency by 40% and concurrently slash operational costs by up to 30%.2 The magic lies in AI’s ability to automate mundane, repetitive tasks, liberating employees to concentrate on more strategic and creative endeavours. Almost two-fifths of small business owners (37%) have strategically reinvested their AI-derived cost savings in other new technologies, fostering a culture of continuous innovation.1”
-
Decision making informed by vast data sets.
By incorporating AI data insights into decision making companies can make more informed decisions about product or strategy, identify market trends, predict customer behaviour, speed up software code, screen candidates for a new role or optimise supply chain management. AI can transform raw data into valuable insights and analytics.
“One key aspect where AI proves instrumental is in data analytics. Small businesses often possess vast amounts of data, and AI-driven analytics can extract valuable insights, allowing for more informed and strategic decision-making. By leveraging predictive analytics, companies can anticipate market trends, customer behaviours, and potential risks. This strategic foresight is a game-changer for small businesses, enabling them to navigate uncertainties with confidence.”
-
Humans still matter.
We’ve seen scary headlines claiming that our jobs will be replaced by AI. We humans are incredibly creative, resilient and able to adapt. With new AI tools, our lives may change. Often it will be for the better and we will be able to devote our skills, knowledge and passions to new endeavours.
-
And so does the planet…
The environmental impact of this new wave of AI offers both threats and opportunities. The servers behind this level of technology all need power and cooling, and demand being demonstrated today on Nvidia chips is a sign of the environmental threat that may lie ahead. In a world where global warming is already a huge issue, we are seeing a new wave of start-ups using AI to accelerate innovation and find new solutions to mitigate the environmental impact too.
Featured Photo by Mohamed Nohassi on Unsplash.