How small businesses are navigating AI

The hype around artificial intelligence (AI) is making small businesses feel that its development and adoption is moving at lightning speed.

In fact, our new research shows that 80% of small business owners globally are concerned that the fast pace and nature of AI is leaving regulation in the dust. They told us they want governments to do more, given the potential big impact to industries and the workforce.

We launched our Future Focus research on AI at Xerocon Sydney this year, taking an in-depth look at how 3,000 small business owners from across Australia, Canada, New Zealand, Singapore, the United Kingdom and the United States feel about AI and the potential impact on their business.

We also announced a number of new, exciting AI-powered features and generative AI experiments at this year’s event. You can learn more about those enhancements in our product wrap from Xerocon Sydney 2023.

Mixed feelings in research findings

So, what did the research tell us? In a nutshell — small businesses have mixed feelings about AI. They’re curious and excited, but there’s also concern about ethical implications and data privacy. 

Almost a third (32%) of small businesses are intrigued about AI, while others are feeling anxious (31%) and excited (30%). Half of small businesses believe AI will be more helpful and have a positive impact on their people, processes and workflows, compared to 20% who said they believe it will be more harmful.

We also learned that sensitive information disclosure (41%) and data privacy violations (41%) were considered to be the biggest ethical challenges relating to AI use in their business. Some (38%) respondents were also concerned about the ethical challenges around worker displacement that could be caused by AI utilisation.

Curiosity outweighs concerns

Even with these ethical concerns in the frame, and with AI tools becoming more easily accessible, small business owners still want to be proactive and stay ahead of the curve. We found that globally, 32% of businesses are experimenting with AI tools, and 21% are investing in them. The results also showed:

• one in five small businesses were dedicating more resources to AI
• more than half (51%) said they trusted AI tools with identifiable customer information 
• 45% of respondents said they would trust AI tools with sensitive commercial information

The challenges of using AI

While AI has piqued the interest of small business owners, we’ve also learned that it’s not the top priority for small businesses just yet. Only 8% of respondents ranked adopting or investing in AI as their number one priority over the next 12 months. 

In terms of the small businesses that are already using AI, 69% are reporting some drawbacks, and 23% have seen increased security or privacy issues since using generative AI tools. These drawbacks included:

• increased biases or inaccuracies in content (18%) 
• decreased employee morale (18%) 
• decreased efficiency due to time overseeing the quality control of AI content (16%)
• reduced headcount (14%)

While reduced headcount can be seen as a drawback, it can also support small business owners to be more efficient and save on costs. Though 59% of small business owners said they don’t see their hiring plans changing over the next three years, a third (31%) said they plan to hire fewer people.

A reminder to use data responsibility 

The interest in generative and predictive AI is understandably driving curiosity among small businesses. But if exploration of this technology leads to sharing personal identifiable information, that could put their clients’ data at risk. 

Because we know how important protecting sensitive data is, Xero has had, for many years now, responsible data use commitments that guide us as a business, and help us support our customers as they navigate their own data use.

New AI guide for accountants and bookkeepers

As an accountant or bookkeeper, you are often a trusted advisor to your clients when it comes to new technology and how it can be used to help their business. So, we’ve published the Future Focus: AI Guide for Accountants and Bookkeepers to help you navigate the potential impact of AI on your practice and clients. 

We invite you to take some time to read through this guide, and consider the opportunities and risks that AI can open up for your practice. You can also visit our Future Focus playlist on YouTube, to learn more from experts about AI and other emerging technologies.