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. However, London businesses lead the way – where 56% of micro, small and medium sized businesses are using AI.
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. This rises to almost a quarter (23%) of London-based businesses.
In London, the biggest barriers to further AI adoption were found to be IT security issues (45%), slow internet connection (41%) and internal resistance to change (35%).
On a national level, the biggest issues cited were IT security issues (25%), lack of appropriate financing possibilities (25%), and slow internet connection (22%).
There is also a knowledge barrier preventing many small businesses from reaping the full benefits of tech and AI in the workplace.
Across the UK, over a fifth (21%) of business leaders cite insufficient digital skills of employees as being problematic, and this rises to 30% in London, which highlights the scale of opportunity in the capital. 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 more 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). Medium-sized businesses are also more than twice as likely to pay for access to AI (62%) compared to micro businesses (23%).
One business owner who is leaning into AI is Gary Morgan, from Wandsworth, who is opening Morgan’s Juice Bar & Snacks inside Chalk Farm tube station.
With a focus on health and wellbeing, the new venture is set in a Grade II listed building and has required significant investment in fit-out and renovation, funded by a £20,000 Start Up Loan.
As a former forensic collector, launching his first hospitality business alongside Rachel, a former police officer and paramedic, Gary has embraced AI to help bridge the gaps in his experience,
Gary said: “First of all, I used AI to help draft my business plan. Once I had secured a Start Up Loan and my dream became reality, I started using AI to help with everything from food safety checklists to marketing copy. When starting your own business, you need to do everything yourself, so learning how to use AI has really helped get us off the ground. It helps save time so that I can focus my attention on jobs that AI tools can’t do.”
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.
