Small businesses that use artificial intelligence (AI) as part of their operations are growing faster, creating more jobs and generating more revenue than those that don't, according to a new study.
AI-enabled micro-businesses are making significant contributions to national economic growth, according to the findings from Venture Forward, a multi-year, international research project from GoDaddy that analyses data from more than half a million British micro-businesses.
The data demonstrates the transformative effect that investment in technology has had on Britain's smallest businesses. Micro-businesses using AI are generating higher revenues and are more bullish on their prospects. One in five entrepreneurs (19%) using generative AI report annual revenues over £100k, compared to 15% of those that are not.
"AI has enormous potential, and now we're starting to see results. Entrepreneurs embracing generative AI are enjoying increased revenue and enhanced business prospects. It's enabling them to be more ambitious with their plans as they look to scale and take on additional employees." Andrew Gradon, head of GoDaddy UK and Ireland.
Looking ahead, 78% of AI-supported micro-businesses expect revenue growth over the next year, versus 58% not using AI. Additionally, 60% of entrepreneurs using AI anticipate personal income growth, compared to just 40% of non-AI users.
AI drives job creation
While many commentators have speculated that AI could lead to the loss of jobs, the GoDaddy data suggests that among micro-businesses it is quite the opposite. Micro-businesses using AI are twice as likely to employ at least one other person than those that do not, while nearly half (47%) of employees at AI-supported businesses work full-time, compared to 34% of employees at non-AI businesses.
Profile of the micro-businesses
- 93% have fewer than ten employees
- 55% are solo entrepreneurs
- 45% have employees
Source: Venture Forward.
Entrepreneurs are using the technology to automate time-intensive jobs such as copywriting (70%), summarising information (51%) and to create content (40%), which is allowing many to focus on expansion.
Meanwhile, in the next 12 months, 36% of entrepreneurs using AI plan to hire more staff, compared to one in six (15%) who are not. They are also three times as likely to anticipate "substantial" workforce expansion in the coming year.
Analysis of the Venture Forward data by economic consultancy Frontier Economics suggests that every micro-business founded could generate five new jobs, either directly or indirectly. Analysis of micro-business density, which measures the concentration of micro-businesses against local population sizes, found that just a 10% increase in regional micro-business density correlates to a £320 hike in median annual wages for full-time workers.
Written by Rachel Miller.