‘The AI Opportunity for Small Businesses’ report – which surveyed 2,000 business owners – shows 60% of small firms predict AI will be essential for them to thrive and continue in the next five years, with 62% now using AI.

With the help of AI, small businesses are automating time-consuming tasks, improving customer service, and streamlining operations, freeing up valuable time to focus on innovation and growth. The most common applications include marketing (47%), operations (17%), and customer service (8%).

However, the data also shows the potential of AI is being held back by significant barriers to entry, which disproportionately affect smaller firms. Over two thirds (68%) want more affordable AI solutions, with half of entrepreneurs admitting they lack understanding of the new technology (60%) and want more practical support (51%).

With many small firms at vastly different stages of adoption, the report has issued thirteen recommendations for Government, technology providers, educators, and business networks to bridge this gap and avoid creating an ‘AI disparity’ among the nation’s 5.45 million small businesses.

It calls for coordinated, targeted action to open up the AI opportunity for all small businesses, helping them to increase productivity, reduce costs, and open new markets.

The recommendations include a need for more cost-effective AI solutions, as well as incentives to encourage early adoption, such as funding, grants and tax-breaks, alongside help for small businesses to measure return on investment.

Expanded and simplified AI support and education is also recommended,  alongside more promotion of easy-to-use and affordable AI tools. The idea of a centralised, national AI resource hub is also being put forward to pool practical guidance, AI tool reviews, training, and FAQs. This should be accompanied by peer-led learning and mentoring opportunities, which are tailored to individual sectors.

Authors of the report also believe increased regulatory clarity is needed, with easy-to-understand guides on compliance and ethics.

Michelle Ovens CBE, Founder, Small Business Britain, said: "AI is transforming industries across the UK and is now a critical conversation for small businesses. While there is excitement, there is also a clear need for expert guidance and support, as entrepreneurs are at vastly different stages of understanding and adoption. While some have fully integrated AI into their operations, others are still grappling with what AI is and how it can help. We cannot risk any small businesses being left behind. Through its extensive research and targeted recommendations, this report aims to bridge that gap, particularly for marginalised communities who stand to gain significantly from accessible AI solutions."

The report further argues that AI has the potential to level the playing field for all entrepreneurs, provided the right resources and training are made available and accessibility and inclusivity are built into the design of tools and support. Under-represented founders, particularly Disabled entrepreneurs, show high engagement with AI, with 64% already utilising it, but only 14% reporting a strong understanding of its benefits.

Dr. Chris Sims, Chief Commercial Officer, BT Business, said: “Small businesses are the beating heart of the UK economy, yet our report highlights an uneven adoption of AI, risking a divide where some gain a competitive edge while others are left behind. There is an urgent need for accessible training, affordable tools, and inclusive pathways to AI adoption, helping to democratise the technology. Our goal is to empower businesses of every size to leverage AI for growth and efficiency, ensuring that no small business is excluded from the transformative power of this technology.”

Amelia Peckham, Co-Founder of Cool Crutches, said: “Incorporating AI in the right way to have maximum impact is key. Every founder should be using it – we have implemented it into our marketing, and it has transformed the speed at which we can work, as well as efficiency for me as a founder, and the team.

With a much bigger output without adding cost, it’s a no brainer – the key is knowing how to use it the right way, from experts who know. That’s where Small Business Britain comes in – teaching us what tech to use, when, and most importantly what to avoid to ensure we are on the front, not back foot when growing businesses to last.”

The report will launch with an event at the Science Museum in London, welcoming entrepreneurs from across the country, AI experts, and other business representatives.