small firms confident but light on use

Seven in ten UK small business owners say they are confident using artificial intelligence, but fewer than half use it regularly, according to research published today by Small Business Britain and Alibaba.com.

The study of 1,000 small business owners found that 70 per cent are somewhat or very confident using generative AI, while 48 per cent use it regularly. The organisations describe the difference as an emerging “AI productivity gap” between confidence in the technology and its measurable effect on how businesses run.

The report, titled AI Could Give Small Business Owners Their Most Precious Commodity Back: Time, was produced with Accio, the agentic AI platform for businesses operated by Alibaba.com.

Marketing dominates current use

Among small businesses that use AI, 74 per cent apply it to content creation and marketing, making it by far the most common use recorded in the survey. About a third use it for data analysis or reporting, and 5 per cent for supply chain management.

The report attributes the concentration on content to generative AI offering “an accessible entry point”, with social posts, marketing copy and emails described as “immediate, visible applications with relatively little technical knowledge required”.

It argues that the larger productivity opportunity lies elsewhere. “Small businesses have begun to use AI to help them create, but there is enormous scope to help them use AI to analyse, decide, organise and act,” the authors wrote.

Saving time was the benefit most commonly cited by respondents. Four in five (80 per cent) identified it as a key advantage of AI, compared with 43 per cent who pointed to creativity and innovation.

The findings follow research from Simply Business, which found that AI use by UK small businesses had more than doubled to 47 per cent in a year. The Office for National Statistics reported in July that self-reported AI use among businesses with 10 or more employees had risen from about 12 per cent in late 2023 to about 35 per cent by June 2026.

Low awareness of agentic AI

The report distinguishes between generative AI, which produces an output in response to a request, and agentic AI, which it says can help carry out “more complex, multi-stage tasks” such as researching options, comparing information and moving a task towards completion.

Awareness of agentic tools is limited. Only 44 per cent of respondents had heard of agentic AI, and 5 per cent are regular users. However, 68 per cent said they want to learn more about it.

Asked about its potential advantages, 60 per cent of owners cited improved work-life balance and 50 per cent said it could give them more time for marketing and finding new customers.

Michelle Ovens CBE, chief executive and founder of Small Business Britain, said: “We know small business owners wear many different hats when running their businesses, so it’s hugely encouraging to see growing confidence in AI as a critical tool. However, the research also makes clear AI’s, and particularly agentic AI’s, untapped potential.”

She added: “There is a real opportunity for technology to completely revolutionise how small business owners manage their business, potentially freeing up more time to focus on the areas that can really take their business to the next level.”

Time spent on suppliers

The survey points to sourcing as one area where owners spend significant time. Half (50 per cent) said comparing price options takes up a significant amount of their time when working with suppliers, and 45 per cent said the same of finding suppliers.

Around a third of the businesses surveyed already source internationally, according to the report, while around a third source only within the UK. Businesses selling through several online stores reported that they largely update each store individually rather than simultaneously, with updating stock content cited as a particular difficulty.

Michelle Lau, managing director of Alibaba.com, said: “AI has had a transformative effect on many small businesses across the UK, but when we look a little closer, much of the adoption today has been at a surface level.”

She said: “We’re entering the era of agentic AI with tools like Accio, which can research markets, evaluate suppliers and manage day-to-day operations on a business’s behalf, enabling small businesses to progress more business-critical workstreams at once, access more insightful information on suppliers, trends and market data and save more time day-to-day for greater work-life balance or other areas of their business.”

AI as a source of advice

The research also asked owners where they turn when faced with difficult business decisions. A partner was the most common answer, at 23 per cent, while 15 per cent said they already turn to AI. According to the report, AI ranked ahead of friends, family members, business advisers and mentors among the options measured.

The authors said this “should not be interpreted as AI replacing human advice”, describing AI instead as “another source of information and perspective” for owners who may have nobody within their business with whom to discuss a decision.

Respondents also recorded reservations. Data privacy and security were a concern for 69 per cent, reliability and accuracy for 61 per cent, and 46 per cent expressed some discomfort about AI making decisions on their behalf.

The report said these findings “underline the importance of education”, adding that small businesses need to understand “both what AI can do and where human oversight remains essential”. It called for “transparent tools, practical demonstrations, trusted training and clear guidance around responsible use”.

The use of AI by smaller companies is also under scrutiny in Parliament, where the Business and Trade Committee has been examining whether British firms are benefiting from the technology.

Recommendations on training

The report recommends practical training “based around real business problems rather than technical explanations of AI”, covering tasks such as comparing suppliers, understanding data, managing multiple sales channels and streamlining administration.

It said business support organisations and technology providers can help by creating accessible training, demonstrations and case studies. “The goal should not be to turn small business owners into AI experts,” the authors wrote. “It should be to give them sufficient understanding and confidence to make AI work for them.”

About the author

Amy Ingham

Amy Ingham is a reporter at Business Matters, covering UK business news with a focus on breaking news, business policy, late payments and insolvency. She joined the magazine in 2026 after completing the NCTJ Diploma in Journalism at Harlow College’s journalism school. Her recent reporting includes British Steel’s nationalisation and its impact on SME suppliers, the decline in late payments by large firms, and Insolvency Service director disqualifications. Reach her at aingham@cbmeg.co.uk.

Advertisement