AI for Small Business: A Beginner's Guide

With AI, humans have built a new tool that could be as transformative as the wheel. We’re only beginning to imagine how good the tool could be and how best to use it. 

When it comes to so-called “experts” talking about AI, you know they’ll make sweeping promises sprinkled with vague examples. Efficiency gains! Repetitive tasks offloaded! Sweet, sweet data analytics and glorious insights!

It’s all very impressive, but lacking in practical advice. 

That situation poses a thorny problem for small business (SMB) owners: they need all the efficiencies they can find, but they’re hesitant to buy into a new idea without some real-world evidence. So we decided to write a guide to help SMB owners understand AI for small business use, together with practical use cases. 

To be blunt, AI is a huge field, so we won’t cover it all in this article. We’ll focus on the basics, including how AI can help small businesses, the benefits of AI in business growth, and suggestions to implement AI in your small business. Look out for more articles on this topic shortly—we’ve got a lot of ground to cover.   

First Things First: What Is AI?

One of the trickiest and most important things to understand is what “artificial intelligence” really means. 

People use the term AI to cover a broad range of processes that can digest huge databases and isolate meaningful patterns that humans would struggle to find. We call this process “learning” and its output “intelligence.” 

Strictly speaking, the field of AI is about 70 years old, and companies have been using AI and the subfield of machine learning to explore complex games such as chess, Go, and Jeopardy for decades. These recreational proving grounds opened a doorway to apply AI in business applications. 

In the case of generative AI, the software process studies existing patterns such as human language and pictorial art. After sufficient training, generative AI can take a written prompt from a human and create a piece of content that interprets the request. 

The release of ChatGPT by OpenAI in 2022 took the theoretical capability of generative AI and proved it in the mainstream. Suddenly, anyone could interact with an AI model and see the results and possibilities for themselves. 

Today, AI systems can perform as well as many humans on tasks such as:

• Learning: AI can adapt and improve based on new data and experience.
• Reasoning: AI can analyze datasets and suggest logical next-steps.
• Problem-solving: AI can take complex scientific and engineering problems and suggest novel solutions.
• Perception: AI can perform image recognition and audio processing.
• Language: AI can comprehend and respond to natural human language (including machine translation). 
• Cybersecurity: AI can monitor networks and quickly identify malicious activity.

AI has become a toolset that companies can customize and experiment with to find new applications. Many AI functions are already hard at work in ways few realize. The rise of large language models and generative AI has given the public an example of how AI can transform activities like writing emails or legal research. 

It is worth getting excited about the ability to augment small businesses with an intelligent resource that never sleeps, takes vacations, or requires salary negotiation.  

Benefits of AI for Small Businesses

AI systems don’t get bored, tired, or distracted. They can digest mountains of data and hunt for needles in virtual haystacks at blistering speeds. 

Combine this superhuman appetite for the mundane with natural language processing tasks, such as answering customer support tickets or customizing marketing messages. No question that you have a powerful tool at your disposal.

Inventory management is another area where AI excels. Not only is it able to monitor sales and trigger reorders, but it can also predict fluctuations in demand to help avoid over-ordering. 

Call centers and customer support teams are expensive, especially when consumers expect 24/7 service. Many companies are successfully using AI chatbots to answer common requests and questions. Paired with the option to escalate to a human being at any point, these chatbots ensure that human expertise is applied to high-value tasks where it’s needed most. 

AI systems are highly scalable. If you suddenly experience a huge influx in email signups, an AI-powered customer relationship management platform won’t skip a beat in delivering timely, customized communication. 

Benefits like efficiency, cost-savings, and better analysis are real—it’s just that most people lauding these improvements don’t take the time to show you exactly how they help your business today and a year from now. 

A 2023 survey of small businesses by the Small Business and Entrepreneurship Council found that: 

• 40% use AI-powered financial management tools.
• 32% use AI-powered email marketing automation.
• 32% use AI for cybersecurity.
• 28% use AI to help with inventory management.

The same survey also found that 82% of small businesses feel that AI is effective at helping run and grow their operation.

AI for Small Business: Use Cases

Let’s dive deeper into ways that small business owners can use AI to assist with mission-critical tasks.

1. Loan Application Assistance

Small business lending applications are notoriously time-consuming and tedious. They require extensive financial documentation and attention to detail. Worse still, many small business owners discover—after they’ve put their papers together—that they can’t complete the application without a professional business plan. 

At Hansa, our free AI business plan generator shortens this hurdle, by giving you a polished business plan in minutes.  

2. Marketing

If marketing isn’t in your wheelhouse, it’s probably somewhat of a hassle. AI tools can easily help you fly through marketing tasks like personalization and content creation. 

AI can even help you optimize your campaign costs by monitoring your advertising spend and recommending ways to maximize every dollar and creative asset. In some cases, this happens automatically: Google and Meta use AI to optimize ad placements and bidding. 

Using AI for small business marketing is a great way to augment your existing efforts and eliminate some of the tedium digital marketing requires, like producing variations for A/B testing. 

3. Customer Relationship Management (CRM)

Augmenting CRM platforms with AI is a natural progression in making a great tool even more powerful. 

AI can analyze customer interactions, manage touchpoints, and suggest improvements faster than human operators.

However, AI isn’t a replacement for authentic communication—nothing is better than human interaction. But it can definitely help make each touchpoint more effective and meaningful to your customers.

4. Financial Management and Business Health

Don’t fire your bookkeeper. Instead, set them up with an AI-powered finance management tool that can help you monitor your cash flow, expenses, and monthly trends. 

It's a huge job to stay on top of your business's financial health. Use AI to analyze transactions and expenses, flag fraud, generate reports, and improve financial projections. 

Trust us, your bookkeeper will thank you. 

5. Cybersecurity

Unfortunately, hackers are using AI tools to find vulnerable consumers and business owners faster than ever. 

The good news is that you can fight fire with fire. Many companies offer AI systems to monitor your IT network, applications, and financial accounts. They can even mitigate attacks and protect you from scams. 

The agony of getting hacked pales compared to the cost, especially if you’re the victim of ransomware. When you consider a loss like $5.13 million, aside from paying the ransom, the justification for using AI to protect your operation is almost a no-brainer.

AI Tools and Solutions for Small Businesses

You’ve probably noticed an uptick in the mentions of AI from vendors trying to sell you stuff. Much of it is hype. 

But some established companies partner with small business owners and use AI in transparent and powerful ways:

QuickBooks Online: an AI-powered accounting software that automates bookkeeping, invoicing, and financial reporting.

HubSpot: a CRM platform with AI capabilities for marketing, sales, and customer service automation.

Hootsuite: an AI-driven social media management tool that schedules posts, tracks performance, and provides analytics.

ChatGPT: an AI model by OpenAI that can generate content, provide customer support, and assist with various text-based tasks.

Zoho CRM: a comprehensive CRM system with AI features for sales forecasting, customer segmentation, and workflow automation.

Trend Micro: a global cybersecurity firm, Trend Micro offers comprehensive AI-native protection that compares well to many other popular firms, such as Crowdstrike, Microsoft, and Palo Alto Networks.

Hansa: an AI-powered business assistant that can help you write a business plan, discover your business credit score, and apply for funding. 

Best Practices for Implementing AI

Resist the urge to implement AI just to keep up with trends. AI can deliver real benefits, but it’s not a universal solution to your problems. You need to be mindful about how you use AI, and smart about how you implement it in your business.

Follow these steps to avoid “shiny object syndrome.”

1. Perform a Gap Analysis

There is a formal process for gap analysis, but the fundamental idea is that you assess where your business is now and where you want to be in the future, what the gaps are, and how you could bridge them. Then, implement the highest-priority changes. Look for overlaps between your gaps and the strengths of AI tools. 

2. Research Vendors and Tools

Pick three vendors or tools in one or two categories and compare features, price, and customer satisfaction. Speak with colleagues or peers and ask for testimonials and referrals. 

3. Start Small and Monitor Results

Carefully choose one or two tools to implement. Determine benchmarks to evaluate the performance of those tools, and set reasonable goals and keep expectations on staff light. They need time to learn the tools and acclimate to new processes. 

4. Stay Open-Minded and Keep Learning

Subscribe to relevant newsletters and blogs on AI tools for small businesses or industries that matter to you. Weigh your expectations against the technology's newness and be willing to think creatively about using it.  

AI for Small Business: FAQS

As this article is just our first guide on how AI can help small businesses, we know there are many open ends.

While we’ll continue to cover AI for small business topics in upcoming months, we’ve connected with thousands of small business owners and heard a lot of questions about AI. Here are some of their most burning questions.

Is AI expensive?

That depends on the tool, the application, and the scale of implementation. The costs are usually baked into your recurring service fee if you’re partnering with a vendor like Hubspot or Quickbooks. Some AI tools are offered as add-ons, but the cost is manageable when used as part of an enterprise product or service. 

Once you begin experiencing efficiency gains and cost savings in other areas of your business, the equation shifts heavily in favor of AI-powered tools.

Do I need technical expertise to implement AI?

For many applications like those listed above, the AI aspect of a tool is designed to fit easily into a normal workflow. If you’re looking for more advanced integrations or specialized use cases, you may need to hire a developer who specializes in AI systems. 

How do I ensure data privacy when using AI tools?

Review the terms and conditions of any vendor or tool before you purchase. Consult with your legal team and IT team to look for areas of conflict in how data gets used. Some vendors give you the option to choose how your data gets used. Others expect you to make your data available to train their AI models. 

Review the relevant data regulations for your industry and governmental jurisdiction. In most cases, you’re responsible for protecting the data of your customers and getting their express permission to share it with other companies.

Will AI replace human employees?

The answer to this question remains to be seen. People have already lost their jobs due to AI-related changes. Is this a sign of things to come or just a temporary shift? New positions are also opening up related to AI. 

AI has yet to reach the level of general intelligence. Until that happens, AI will be restricted to specialized use cases that are repetitive, tedious, or computationally intensive. It’s likely that we’ll always need humans to manage and direct the work and do jobs that only humans are fit to do.

Ultimately, if enough customers dislike an AI product or service, it won’t thrive. Society must decide how much AI transformation we want. 

What happens if the AI does something wrong?

AI systems make mistakes. Generative AI models hallucinate or return factually incorrect and harmful information. Humans are far more experienced at reading contextual clues and integrating new information.

The output of an AI system always needs to be checked by humans with subject matter expertise, before releasing anything to the public or implementing a suggestion. 

Legal indemnity is a work in progress with some companies, such as Google, assuming responsibility for the legal risks associated with their models. You should ask this question to any vendor you consider using. 

There Is Nothing Artificial About the Results

We’ve only dipped our collective toe in the pool of what AI is capable of doing. The underlying technology is changing at a blistering pace while people are developing new and creative applications just as fast. 

Small business owners are right to be cautious when adopting AI technology, but they would be foolish to ignore it. AI is a tool like personal computers, broadband internet, credit card terminals, and 3D printing. Each technological leap unlocks new business opportunities and makes others obsolete. 

The future of your business depends on your willingness to embrace change and turn it to your advantage. Hansa is here to help.

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