How small businesses can harness the productivity power of AI

There is a productivity problem in Aotearoa, New Zealand, and small businesses aren't immune. 

Although a long-standing issue, poor productivity has recently been compounded by tough economic headwinds across the country, seeing company liquidations rise 19% year-on-year. 

Xero's report Small business productivity: Trends, implications and strategies reflects these macroeconomic changes, showing Kiwi small business productivity declined by 6.1% in 2023 compared to 2022 levels and is now well below the country's pre-pandemic range.

Without improvement in labour productivity, we risk a domino effect whereby small businesses struggle to generate profit, which they can use to re-invest in capital to drive growth. 
Business owners can't just sit and wait for the economic conditions to become more favourable and so are understandably looking for ways to boost the productivity of their operations.

For many, that means turning their attention to technologies like artificial intelligence (AI) to try and solve the productivity problem. 

Time is often the most precious commodity for small businesses, and AI is starting to show how it can give some time back to owners so they can refocus on more important tasks. 
From automating processes to relieving business owners of process-heavy and time-consuming tasks that hamper productivity. 

Of course, AI tech will not completely solve the productivity problem, nor is it a case of 'one-size-fits-all' for small businesses – particularly when AI itself is a variety of different technologies and capabilities. 

But there are some key considerations for small business owners looking to effectively harness and leverage this technology – namely understanding where it can benefit them, what the limitations are, and finding ways to safely experiment with emergent but relevant tools.

Optimising tasks, processes and workflows with AI  
A good starting point is to look at key business processes and identify the critical activities which are causing productivity blockages through the requirement for manual, repetitive intervention. 

From there, small businesses can frame experiments to explore how AI might help automate or augment these tasks, thereby reducing the effort required to complete them at scale.
Some businesses stand to benefit from streamlining tasks like drafting emails and producing documents for stakeholders, which can otherwise soak up time. 

Various types of AI can help with starting and, in some cases, completing this work faster and more accurately, freeing up staff to spend more time on functions that are either more pressing or require more creativity.

Beyond that, small business owners can also gain critical insights that can enable smarter decisions. 

For example, our research tells us most small businesses struggle to maintain a healthy cash flow. 

The AI capabilities available today are able to assist with addressing this pressure point by helping answer deeper questions regarding an organisation's finances, producing forecasts, and providing analysis of where to start to dig further when seeking professional advice. 

This can lead to busy business owners having greater control over their cash flow and knowing where to focus their efforts, enabling them to prepare for potentially leaner months.
Alongside optimising tasks and processes, small business owners can also look for opportunities to optimise their workflows by utilising new conversational capabilities unlocked by generative AI. 

One example of this is using AI-powered tools that meet you where you are already doing the work, saving you time and the need to switch between applications. 

Risk awareness when using AI 
Everyday we're gaining a better understanding of the limitations of AI technology and also some of the risks inherent in its use, like misinformation, discrimination and bias. 

For functions like finance and accounting, the problem of hallucination – where data points are 'made up' by the model – can be compounded if datasets that are used are not the right ones for the task, or are not kept up to date. 

And when up-to-date but sensitive or proprietary data is used, whether the AI tool is directly managed by a small business or built into products and services used by them, it's key to take measures to prevent LLMs from disclosing this data to other unauthorised parties. 

This is particularly important when using 'free' or public AI tools: taking time to examine how they are using and protecting the data provided to them is key to managing the risk associated with their use. 

It's a marathon, not a sprint
Like any advanced technology, speculation around the 'correct' amount and style of AI implementation in small businesses is to be expected and should, in fact, be welcomed. 

Small business owners have an increasing stake in how technology is best used to improve productivity in their world and need to have opportunities to evaluate where it can be of most use to them.

When it comes to harnessing AI and unlocking its potential to accelerate and improve productivity, small business owners need to be well-informed. 

Understanding AI's capabilities, limitations, risks, and rewards will enable them to make better decisions around experimenting with and implementing these technologies in their businesses. 

In this way, productivity can be unlocked gradually, one improved AI-powered process at a time.