AI Set to Shape the Future of UK Small Businesses, Urges New Report
A wave of optimism about the transformational power of artificial intelligence is sweeping through the UK’s small business sector, according to a new study urging policymakers to ensure no firm is left behind in the AI revolution. Small Business Britain, in partnership with BT, has released research highlighting both the enthusiasm surrounding AI and the barriers many firms still face in adopting new technologies.
The report, ‘The AI Opportunity for Small Businesses’, reflects the views of 2,000 small business owners and finds that a significant 60% believe AI will be vital for their businesses to thrive and even survive in the coming five years. What’s more, 62% of those surveyed have already started integrating AI into elements of their operations—a notable jump from only a short time ago.
Most small firms are harnessing AI’s capabilities in diverse ways. The most common applications cited are in marketing (with 47% automating their promotional efforts), as well as operations (17%) and customer service (8%). By offloading repetitive tasks and streamlining complex processes, some businesses are freeing up precious hours to focus on growth, product development, and customer engagement—a development many describe as revolutionary.
However, despite these positive trends, many business owners acknowledge encountering significant obstacles. Many smaller firms report that costs are prohibitive, with 68% keen to see more affordable AI solutions on the market. Furthermore, understanding how to effectively implement and manage AI remains a major challenge, with 60% of entrepreneurs admitting to a lack of familiarity with the technology. Additionally, over half are seeking more practical and tailored support to guide their AI journey.
To confront these challenges, the report presents an action plan with 13 recommendations aimed at government, tech suppliers, the education sector, and business networks. Suggestions include the provision of cost-effective tools, incentives such as grants and tax breaks for early adopters, and clear metrics to help firms assess the return on investment from AI. Notably, the study calls for the establishment of a national AI resource hub, offering everything from guidance and training to tool reviews and frequently asked questions, all designed to demystify AI for business owners at every stage of adoption.
Peer learning and sector-specific mentoring are also highlighted as essential, alongside a call for increased regulatory clarity—especially in terms of compliance and ethical use of AI. Such moves could ensure that AI adapts to the varied needs present across the UK’s 5.45 million small firms.
Michelle Ovens CBE, the founder of Small Business Britain, underscores AI’s transformative potential but also the risk of leaving some businesses behind. “Entrepreneurs are encountering AI at very different stages: some are fully embracing its possibilities, while others are only just starting to investigate what it can offer. We must ensure equal opportunities for all, regardless of their current level of expertise,” she comments.
The research points to AI as a powerful tool for inclusivity, with the potential to help level the playing field for founders who have historically been under-represented in business. Disabled business owners, for example, are among the groups most engaged with AI tools, with two-thirds already using them, though only 14% claim to fully grasp their benefits—an area the report says needs urgent attention.
Dr Chris Sims, Chief Commercial Officer at BT Business, echoes the call for action. “Small businesses are the backbone of the UK economy. If adoption rates remain uneven, we could see a widening gap between those using AI to their advantage and those left behind. This is the moment for comprehensive, inclusive support and affordable solutions to help every business benefit,” he argues.
Entrepreneurs such as Amelia Peckham, co-founder of Cool Crutches, demonstrate first-hand the gains possible: “AI hasn’t just sped up our marketing, it’s made work more efficient for the whole team. The challenge is in knowing how to use it well, which is why expert guidance and practical education are so vital.”
The findings will be presented at a launch event in London’s Science Museum, bringing together entrepreneurs, AI experts and industry leaders to discuss the next steps. Small Business Britain and BT maintain that seizing the AI opportunity now will be essential for British small businesses seeking to remain competitive and resilient in an increasingly digital world.
For more detailed findings and the full set of recommendations, visit smallbusinessbritain.uk/ai-opportunities.