New research from Xero has revealed that 89% of small business owners in Singapore are concerned about AI development and adoption is outpacing regulation, as generative AI tools permeate various industries and the workforce.
Xero’s Future Focus AI research surveyed over 3,000 small business owners from Singapore, Australia, Canada, New Zealand, the United Kingdom and the United States on what they are thinking, feeling and doing about AI.
In Singapore, 500 small business leaders participated in the survey. Findings revealed that small businesses believe sensitive information disclosure (42%) and data privacy violations (41%) are the biggest ethical challenges relating to AI use in their business. This is closely followed by intellectual property infringement, with 35% citing this as the biggest ethical challenge.
Mark Rees, Chief Technology Officer at Xero, said, “While AI brings lots of benefits, the survey results highlight the need to provide more knowledge, tools, and policies to ensure small businesses are not left behind and can continue to thrive.”
Data privacy concerns don’t reflect actions
The survey showed that, as AI tools become more widely accessible, many small businesses are proactively looking for ways to stay ahead of the curve. The most common steps are experimenting (37%) or dedicating more resources to AI use (32%), investing (31%) in new AI tools, and working with third party AI vendors or experts (31%). However, 16 % of small businesses aren’t taking any proactive steps.
When exploring the benefits that AI can bring, small businesses are also paying attention to the risks. The top actions taken by small businesses to manage the risks of generative AI tools include providing training to employees on identifying biases or inaccuracies (37%), seeking written consent from clients /customers before using AI tools (36%), followed by creating policies and guidelines for employees (34%).
However, the survey shows many small businesses are trusting AI tools with sensitive data, highlighting a need to support them in assessing security and privacy risks. For example, more than half (65%) of small businesses said they trust AI with identifiable customer information, while 62% trust AI with their sensitive commercial information.
By being too comfortable with sharing personal identifiable information with AI tools, many small businesses are putting their data at risk.
23% of small businesses have seen increased security or privacy issues since using generative AI tools. In fact, 89% of small businesses said they have seen drawbacks when using generative AI in their business. Other drawbacks small businesses have seen are increased biases or inaccuracies in content (32%), reduced headcount due to generative AI utilisation (27%), decreased employee morale (25%), and decreased efficiency due to time overseeing the quality control of AI content (19%).
Both excited and anxious about the impact of AI
Small businesses are decidedly ambivalent but lean, ever slightly, towards optimism when it comes to the impact of AI on their business. More than a third (36%) of small businesses are excited about AI , while 23% are anxious and 22% are intrigued towards the technology.
More than half (63%) of small businesses believe AI will be more helpful and have a positive impact on their people, processes and workflows, compared to 23% who said more harmful.
Four out of five (83%) small businesses believe AI will have an impact on their business in the next five years, with 38% saying it will have a “significant impact”. Among other respondents, 33% believe AI will help them create more efficient business models and workflow, and 25% believe it will lead to new products and services.
However, 10% of small businesses say they are not sure what impact AI will have on their business.
Most small businesses want AI to play a larger role in their business, with 54% of small businesses planning to hire fewer people than they would have otherwise due to AI.
Another 44% of respondents say they want more than half of their business systems supported by AI in the next three years. However, a third (33%) said AI will have no impact on their hiring plans in the next three years.
Amid all the hype and buzz, AI is not a priority in the near term for the majority of small businesses. When asked about their concerns over the next 12 months, attracting new customers (54%), growing business revenue (52%), and managing rising costs (45%) were the top three concerns.
Only 13% of respondents ranked adopting or investing in AI as their number one priority over the next 12 months.
New guide for advisors to help small businesses navigate the world of AI
There is a clear desire for greater education and support, with 47% feeling that training and resources on different types of AI and its impact on their business or industry is necessary for their business.
Using AI to increase productivity (48%) and responsible AI practices and the ethical considerations (46%) were also the top knowledge areas that small businesses owners felt were necessary.
As accountants and bookkeepers become trusted advisors to small businesses on new technology and how it can be used, Xero has published the Future Focus: AI Guide for Accountants and Bookkeepers to help them navigate the impact of AI on their practices and clients.
“We wanted to cut through the hype and fear-mongering and answer a really simple question: what does AI mean for your typical practice? The Xero guide is intended to help accountants and bookkeepers make well informed choices when it comes to using AI tools, to help manage the risks and realise the benefits for them and their small business customers,” said Rees.