Small Businesses Increasing AI Investments

While the world’s most advanced tech companies are going all-in on Artificial Intelligence (AI), SMBs (small and medium-sized businesses) remain wary of the new technology.

Small business owners feel caught between missing the wave and watching rivals surf away to a bright future; and making an investment in a technology with lingering question marks over it.

It’s easy to forget it has barely been 2 years since OpenAI introduced ChatGPT to the world. Its release sparked enormous interest in the technology and spurred the likes of Meta and Google, not to mention a whole array of smaller companies, to roll out their own Large Language Models (LLMs).

But, despite concerns around tech failure, employee resistance and cost, among others, an impressive 70% of SMBs in the US and UK are already investing in AI technology.

Compare that to, say, cloud computing — a similarly game-changing technology. Cloud computing has been widely available for a decade longer, but only 53% of UK businesses are purchasing cloud services.

In this blog, we’ll explore why 2025 might be a tipping point for small business AI adoption, what’s driving uptake of AI among SMBs, where SMBs are investing in AI and how AI-enabled composable software is empowering companies to build software.

Why SMBs are increasing their AI investments

The competitive advantage of AI for SMBs

Large corporations have had a head start with AI, demonstrating its value across varied use cases, such as optimising supply chains, personalising marketing and enhancing sales and marketing. SMBs are waking up to the opportunity to get a jump on the competition and integrate AI solutions into their operations and products or services.

Modern customers expect more. They demand faster responses, tailored interactions‌ and more power at their fingertips. AI enables SMBs to meet these expectations by providing intelligent chatbots, data-driven insights, writing and art-creation tools. Companies that can offer their customers greater usability will pull away from those that can’t.

Cost efficiency and productivity gains

One of the key benefit areas of AI is cost efficiency and productivity. Goldman Sachs reports that productivity gains from AI adoption could be as high as 25%, and it expects these gains to filter through to GDP growth by 2027.

Companies that have high needs in terms of marketing, automation, chatbot, speech text and data analysis are best positioned to realise productivity gains in the short term [Goldman].

Automating repetitive tasks such as scheduling, data entry‌ and inventory management frees up time for SMB teams to focus on growth and strategy. AI-powered analytics also help businesses fine-tune their marketing strategies, optimise operations and make better decisions — turning data into a real competitive edge.

Another critical advantage is scalability. AI solutions can grow with the business, adapting to increasing complexity without requiring proportional increases in resources. This makes them ideal for SMBs aiming for sustainable growth.

The evolution of AI tools for SMBs

A significant driver of AI adoption among SMBs has been the accessibility of SMB AI software. No longer do businesses need a team of developers to get started. Composable platforms have lowered technical barriers, enabling even small teams to implement powerful AI solutions.

Composable platforms enable anyone with an idea to develop an app (web or mobile) more quickly and affordably. By decomposing software into reusable LEGO-like features and combining them with cutting-edge AI and a patented software assembly line, composable platforms enable customers of all sizes to adopt a software-first approach.

Meanwhile, off-the-shelf tools offer customisation options and rapid deployment, helping businesses see results faster.

As the sector matures, AI solutions are becoming more readily available across a variety of payment models, making AI accessible for businesses of all sizes.

SMBs can use pre-built solutions to evaluate the value that a custom solution could bring, while targeting high-ROI business processes. From affordable subscription models to pay-as-you-go services, AI providers are democratising access to cutting-edge technology.

Key areas where SMBs are investing in AI

How are SMEs using AI? Let’s find out…

Customer experience and personalisation

AI is reshaping how businesses interact with customers. Chatbots and virtual assistants are common examples of how can AI be used in small businesses, featuring frequently on SMB websites and offering 24/7 support and quick resolutions to common queries. Conversational AI allows AI-chatbots to go beyond simple script-driven or multiple-choice conversation frameworks. An AI that can read documentation, understand natural language queries‌ or even interpret uploaded photos can provide a human-level customer service experience.

Beyond support, AI is driving personalised marketing strategies that segment customer data to deliver hyper-targeted campaigns, improving conversion rates and building stronger relationships. AI can facilitate a shift from broad segmentation-based targeting to focusing on individual behaviours and deliver personalised campaigns across multiple channels.

Operations and efficiency

Arguably AI’s strongest application, there are numerous ways AI can help SMBs optimise their operations through automation and predictive analytics.

Robotic Process Automation (RPA) is a technology that allows a bot to handle repetitive tasks that humans normally do. RPA can handle invoice processing, data entry and appointment scheduling, to name but a few applications, helping staff reduce errors and work more quickly. SMBs will benefit from reduced operational costs and improved accuracy.

Data-rich companies can use AI for predictive analytics, helping businesses optimise inventory and streamline supply chain operations. These tools not only reduce costs but also minimise errors, improving overall reliability.

Sales and lead generation

Small business AI can enable sales and outreach efforts, too. AI can help build pipeline by handling outreach, answering product queries and booking meetings. An AI-enhanced CRM solution can auto-generate personalised emails and cadences, send instant follow-ups and work across a variety of sales software. And revenue intelligence tools can record and analyse calls to generate takeaways and action items to uncover trends in messaging techniques.

AI-enabled lead generation can also build contact lists based on natural language instructions (such as “find me CMOs working at SaaS companies in India”) to cut down on admin time. AI-driven CRM solutions analyse customer interactions and identify high-value leads, enabling sales teams to focus their efforts where it matters most. Lead scoring systems use AI to predict conversion probabilities, ensuring no opportunity is wasted.

Overcoming barriers to AI adoption for SMBs

For a small business, AI implementation isn’t without its challenges. From budget concerns to technical gaps, SMBs face obstacles that can seem daunting. However, solutions abound.

Addressing Budget Constraints

Cost can be a sticking point with AI, with 35% of UK SMBs and 27% of US SMBs identifying cost as a top concern. But that’s changing.

Costs associated with onboarding an AI solution can include software licences, cloud computing fees, hardware, integration, testing and custom development. Many of these have associated recurring costs, such as cloud access and software fees.

But don’t miss the wood for the trees. AI is not a cost, but an investment. Once an investment generates positive ROI, it hasn’t cost anything at all. Once implemented, AI drives significant time and cost savings through automation. By enhancing productivity, decision-making, growth opportunities and more, ROI from AI solutions can be attained in 6-18 months.

Companies like Builder.ai and others are offering scalable solutions that don’t require hefty upfront investments. Flexible payment models, such as subscription plans, pay-as-you-go models and cloud-based services, are also making AI accessible to even the smallest businesses. These approaches allow SMBs to experiment and grow without breaking the bank.

Costs can be managed further by deploying AI iteratively, starting small and scaling up if signs are promising. Tracking costs and implementing AI best practices also help the budget-challenged.

Navigating Technical and Talent Gaps

Many SMBs worry about the lack of in-house expertise to implement AI. In the UK, that figure stands at 32% and is among the highest points of concern. Some employers are put off by the inconsistency in the terminology used to describe AI skills and roles, which makes it hard to recruit for.

Thankfully, the rise of composable, no-code and low-code platforms has eased this concern. These platforms enable businesses to deploy AI without needing a team of data scientists. Additionally, many AI providers now offer training, consulting‌ and support services to help businesses maximise their investments.

Overcoming data privacy and security concerns

AI isn't without its data privacy and security concerns. SMBs need to be aware of these implications. It’d be easy for a company with sloppy data governance to fall foul of GDPR and other data privacy regulations, which for a small company can result in a crippling fine.

They should, per Conosco:

Set ethical guidelines and policies that champion ethics, transparency and accountability
Evaluate bias to avoid unfair outcomes
Implement data privacy best practices, such as data encryption, access controls and anonymisation
Have rules around managing unauthorised AI usage, like an employee creating an image using an unapproved platform

Fortunately, these challenges are well understood and have solutions that are often free to use. IBM’s AI Fairness 360 is an open source toolkit to mitigate discrimination in machine learning models.

Real-world examples: SMBs thriving with AI

reMarkable, a Norwegian paper tablet SMB uses Salesforce’s Agentforce AI to expand their customer service capabilities. The tool helped reMarkable handle sharply rising customer enquiries. The tool addressed common questions while escalating more complex questions to reMarkable’s customer service agents.

Northumbria Healthcare NHS Foundation Trust uses Azure Machine Learning and the Responsible AI Dashboard to produce valuable medical intelligence from raw data. The data helps the Trust allocate candidates for surgery to suitable facilities, and has improved patient outcomes and generated cost efficiencies.

Working Eye, a UK-based career discovery platform, integrated an AI digital coach that provides advice to students, job seekers and career changers. The solution is powered by two AI systems working together: IBM watsonx Assistant, which provides a natural language interface between user and platform; and IBM Watson Discovery, which finds the relevant material from a UK careers database and video content made by Working Eye.

Moodit is an initiative by Dr Hassan Yasin, who wanted to create a social media community for those facing mental health challenges. His idea was for users to share their mood and find ways to improve it. We used Natasha, our AI, to match their requirements to 18 features and created an intelligent algorithm to give users data and suggestions based on their mood.

BBC Click wanted to make it easy for people to sign up for events and interact with each live show. Our AI-powered software development platform worked with BBC Click by integrating several unique features like live polling and Q&As. It offered attendees to quickly register for an event for a world-class event experience that drove engagement and enjoyment across the board. The BBC Click team and presenters used the app throughout the evening to make the event more engaging and memorable for participants.

The future of SMBs and AI: what to expect in the coming years

Widespread AI adoption among SMBs

One thing that’s dragging on the AI roll-out is simply that physical infrastructure is struggling to keep up. AI has high technology and energy needs, requiring high semiconductor production, data centres and electricity. Semiconductor manufacturers saw revenues increase 50% between early 2023 and May 2024, per Goldman Sachs, implying that the required substantial investments are being put into place.

Although there is fear surrounding the cost of AI solutions, nearly three quarters are investing in AI today, with most (54%) in both the U.S. and U.K. expecting to increase investment over the next year.

We expect this trend to gather pace as SMBs look to gain a technological edge over their rivals and punch above their weight.

A Salesforce study found that growing businesses are leading in adoption, with 83% at least experimenting with AI. And the gap is widening — among growing SMBs, nearly four-fifths plan to increase investments in AI next year, compared to just over half of shrinking SMBs.

AI's role in driving SMB innovation

A Connected Commerce Council (3C) found that 55% of SMB leaders expect AI to play a major role in the success of their businesses over the next two financial years. The investment in AI will drive innovation by freeing up staff time to develop innovative ideas.

The pure number-crunching power of AI will allow SMBs to conduct data analysis across unused, unstructured data, like text and multimedia, documentation, emails and spreadsheets, to derive new insights into business performance. These can include sales calls, financial documents, customer feedback among many other use cases.

Conclusion: embracing AI for SMB growth

The rise of AI presents SMBs with unprecedented opportunities to grow, compete and innovate. While challenges remain, the tools, support and affordability now available make adoption more achievable than ever. For SMBs ready to embrace this technology, the future looks not just promising, but transformative. By stepping into the world of AI, small businesses aren’t just keeping pace — they’re setting the stage for a brighter, smarter future.

How we use AI

Builder.ai’s composable software platform features Natasha, the world’s first AI project manager, who gathers your ideas and assembles your software from 650+ LEGO-block-like features. Find out how Natasha can bring your ideas to life.