Demystifying Artificial Intelligence for Small Businesses

We examine the potential benefits of AI for small businesses and offer businesses tips on how they can start exploring the use of AI for their organisation.
· 23 January 2024 · 4 minute read

Defining artificial intelligence

Artificial intelligence (AI) is a term to describe an ecosystem of technologies that come together to do something autonomously.

AI encompasses various subfields, including machine learning, natural language processing, and generative AI. Machine learning algorithms play a significant role in AI. They enable machines to learn from data. This means they can improve their performance over time without explicit programming.

Generative AI – used by tools such as ChatGPT, Google Bard and Microsoft Copilot – is a type of artificial intelligence system. It generates new text, images, or other media in response to prompts.

Deep learning algorithms such as large language models (LLMs) underpin generative AI tools and are trained to use massive datasets to recognise, summarise and generate content. To make these tools easy to use, conversational AI, essentially chat bots, can act as an interface for someone to engage with.


The potential benefits of AI for small businesses

AI works best to support people performing tasks. This is the sweet spot, because it offers the power of AI as an enabler to complement or enhance the input, control and expertise of the person.

Potential benefits of AI for small businesses include:


Extend your skills

Some AI tools help make it easier to do time intensive tasks or complex tasks such as editing an image or analysing large data sets.


Make new capabilities more accessible for your business

AI tools with natural language processing capabilities can provide 24/7 customer support for low complexity enquiries. You can set them up to answer frequently asked questions you might receive via digital channels.

This means you can help customers when they need it more efficiently. And it can let you better focus your time people on more complicated or higher value customer conversations.

Many AI tools can automate routine or manual tasks, such as data entry, to help free you up to do more important work.


Enable richer experiences with your customers and employees

AI may help you to analyse historical data to predict future customer choices or employee needs.


Help enhance security

AI tools may be able to help filter out spam emails to reduce the risk of successful phishing attacks.


Applications of AI for small businesses

There are many ways businesses can use AI. For a hypothetical example, let’s look at how a hair salon could use AI tools across various functions.


Reservations and customer enquiries

Customers who want to book an appointment can interact with an AI-powered chatbot on the salon’s website. The chatbot provides availability and takes bookings. It notifies salon staff about the appointment and surfaces details about the customer’s previous visit. This way, the staff can then have a more tailored and meaningful conversation with the customer about the services they want.


The salon uses AI to streamline various sales tasks, such as lead nurturing, email outreach, and follow-ups. The system integrates with the salon’s customer database. It drafts personalised emails and messages to prompt customers to make a booking. The salon team reviews and edits these messages before sending them.


Digital marketing

The salon has an AI platform they use to automate scheduling, curation, and analysis of its social media content. The service highlights the best posting times and drafts content. It also provides insights on engagement and audience behaviour. This helps the business to streamline its social media management activities.


Bookkeeping and accountancy

The salon owner uses AI-powered accountancy tools to assist with bookkeeping. The tools help the owner with bank reconciliation, forecasting cash flow, and tracking expenses.

This hypothetical example shows how a small business could use AI-powered tools available today.

The common thread in these use cases is the way the business uses AI to assist staff doing the work, rather than removing humans from the process.


Tips on using AI in your small business

AI is still a new area of technology for most businesses, and it’s changing fast. AI platform providers frequently release new capabilities and best practices continue to evolve. As with any new technology, there are things to consider before adopting it in everyday business operations.


Identify your own starting point

Each business is unique, so a one-size-fits-all approach is rarely suitable. As a starting point, you may want to consider how AI aligns with your values and goals. Aligning your approach to AI with your values helps to set a clear direction for using the technology.

The Australian Government has a set of principles for AI use that may be helpful in formulating your own position. The eight AI Ethics Principles cover areas such as human rights, fairness, privacy and security.


Communicate with your people

Clear communication about your plans for using AI is essential. Discuss your objectives and listen to any concerns. Offering training and support to your team can help them upskill and feel valued. And it can also help make your adoption of AI tools more successful which can increase the potential benefits for your business.


Have a strategy with clear guardrails

Creating a well-defined strategy for AI adoption is critical to ensuring its success. This strategy should identify where you intend to adopt AI but also where you consciously choose not to. Then you can set clear guardrails for AI use.

The concept of "symbiosis" is key here. Aim for a sweet spot where AI and human employees work together seamlessly for mutual benefit.


Experiment safely

As you develop your AI strategy, it's essential to allow room for experimentation. However, it should be done safely. This usually means not experimenting with business-critical applications or sensitive customer data. Such an approach enables you to discover how AI can best work for your business while reducing potential risks associated with AI experimentation.


Ask lots of questions

It's crucial to understand how your chosen AI tools work. How do they produce results? And what do they do with your data?

All AI tools rely on data to produce results. The default view should be to assume the AI tool will consume any data it can access. So, understanding what the tool does with the data it accesses, where it is stored and how it is secured is crucial. Some tools may process data outside of Australia which may be an issue for your business or for certain types of data which are governed under Australian regulations.

Establishing guidelines for how you want to use AI in your business is important. You may wish to limit use to only specific tools and/or limit the type of data that you input or allow the AI tools to access.


Your business is unique, your use of AI will be too

AI-powered solutions offer the potential of a range of benefits for businesses of all sizes.  They can help businesses extend their skills, be more efficient and better meet customer expectations.

AI is most effective when people can use it as a tool to help them do their jobs. Sustainable and ethical adoption is more successful when you have the symbiosis of human and machine.

This is a fast-changing area of technology. Best practices are evolving and there are important considerations for any business looking to implement AI. So, think carefully about what AI can mean for your business.

Human oversight is key to helping maximise results so you can augment the capabilities of your workforce. Thoughtful, transparent, and safe adoption of new AI tools can help you get the most from opportunities in the short term and as this space continues to evolve. 

Your one-stop shop for software solutions

Help boost your productivity with software that connects you with the solutions you need to stay competitive in the ever-changing world of business.

Explore more on this topic

Empower yourself to get the most from technology

Learn how to choose the right technology solutions. Get help to boost efficiency, build skills, and integrate tech.

Other articles you might like