Small businesses turn to AI during labor shortage

Small businesses turn to AI during labor shortage

Almost two years after the term Great Resignation was coined, many companies are still struggling to hire enough workers amid a historically tight labor market. That’s especially true for small business owners, who are increasingly taking a page from Silicon Valley by enlisting artificial intelligence to get the job done.  

Main Street businesses are considering A.I. as an alternative to the rising labor costs that have been threatening many of them with closures for months. Their adoption of the technology would be a huge shift from how A.I. is currently used—mostly by large companies that have greater resources and are more on the cutting edge.

While only 11% of small business owners have tried A.I. to support their operations, 57% said they are eager to learn how generative A.I. products like ChatGPT could improve their business, according to a survey released Thursday by GoDaddy, an internet services company. GoDaddy interviewed 1,003 small business owners in April for the survey.

Owners interested in implementing A.I. will likely be encouraged by the results at other small businesses that have already tried the technology. Three quarters of the businesses that have used A.I. tools say they have performed at least very well, with only 4% saying their business has suffered as a result. 

“Small business entrepreneurs are quickly finding that generative A.I. is already really well-equipped to assist them with the tasks they find most difficult to tackle, either because they don’t have the time or require skills outside their wheelhouse,” Gourav Pani, president of U.S. Independents covering U.S. entrepreneurship at GoDaddy, said in a statement.

Most owners said A.I. helped them delegate specific tasks like marketing, content writing, and customer service responses, freeing them up for other important responsibilities like growing customers and revenue. It speaks to a larger trend in which businesses are exploring how A.I. tools like ChatGPT and equivalents developed by tech giants Microsoft and Google can automate more repetitive and generic tasks. 

A February report by job advice platform ResumeBuilder found that around half of business leaders were implementing ChatGPT, and half of those had already used it to replace some employees, whose tasks included coding, content creation, and customer support. Nearly all the companies surveyed said the strategy was saving them money, with 48% saying they’ve saved more than $50,000 and 11% saying they’ve saved more than $100,000.

A.I. could be a game-changer for small businesses too. Almost half of small businesses had at least one unfilled job opening in April, according to a report earlier this month by the National Federation of Independent Businesses, a small business association. But consumer spending is still strong, the report found, meaning small businesses are still in dire need of workers to keep up with demand.

Among the top labor problems facing small business owners are the lack of quality labor and the high cost of hiring. Inflation for raw materials and wages has been one of small business owners’ primary concerns since last year, according to the Chamber of Commerce, and the recent banking crisis has also led to fears that lending by small and regional banks, which represent a lifeblood for small business, could dry up in a credit crunch.

“The labor market continues to be a big challenge for small business owners,” Bill Dunkelberg, the NFIB’s chief economist, said in a statement accompanying this month’s report. “More owners are raising compensation to compete, but labor quality remains a serious problem for owners.”

A.I. could help alleviate some of those pressures, although educational tools to help small businesses integrate A.I. into their operations would likely be helpful, as the majority of owners remain unfamiliar with the technology. Only 33% of respondents to the GoDaddy survey said they could explain generative A.I. to a friend, while owners over the age of 55, who in 2021 owned half of small businesses in the U.S., were by far the group least likely to have experimented with A.I.

A.I. companies and experts have tried to bridge the gap locking small business owners out of the technology’s benefits. Even back in 2021, the Chamber of Commerce worked with small and medium-sized businesses to communicate how A.I. could help entrepreneurs improve customer service, hiring, and marketing strategies. Earlier this month, Microsoft released a guide for how small businesses in particular could use A.I. and educational tools to implement it.

Small businesses are notoriously slow to adopt new technologies, but their smaller size also makes them more flexible, so that when they do decide to adopt a new technology, it does not take long to make an impact. If familiarity with A.I. improves, GoDaddy’s survey suggested, it might be the bridge that helps small businesses finally find their footing in today’s labor market.


Rachel Meadows

Rachel Meadows

Trending topics news writer who enjoys cooking, walking her dog and travel.