The negative impact of Covid-19 is hard to see past at the moment, but once we are on the other side, do you think it will be a reset moment for SMEs?
Until now most small firms have been rightly focused on survival, given the huge uncertainty they have faced. Many are now starting to recover, rebuild and look to a better future.
Amid this catastrophic backdrop there have been thousands of small firms making radical changes to their business models and working patterns through digitisation.
Those businesses operating traditionally are now discovering that digital processes offer far greater scalability and resilience. Covid-19 is accelerating this transformation. Small firms that were not using cloud computing or automating certain processes will be considering such technology now. With more than 600,000 small business customers in the UK, we are seeing first-hand how firms are quickly adapting.
For instance, Jules at Home, a village shop near Northampton, has moved all trading online since the pandemic. The firm has diversified its product range to meet increased demand for garden products and is using e-commerce platform Shopify in its full capacity to support sales. As a result, the firm has grown its customer base and increased revenues. Going online is improving their cash flow, raising their profile locally and has even made them question the need for a physical store.
To support such small businesses, we are doing all we can to make accounting, tax, and payroll more simple, smarter and seamless to create the right conditions to recover and rebuild. Through data, AI and machine learning, we are able to give small firms deeper insight into their business. This helps them make more informed, and ultimately better, decisions.
How can AI and automation help small businesses pick up the pieces and move forward following the pandemic?
Small businesses will become increasingly digital at their core. Everything will be digital because it will have to be. In recent weeks, we have all seen the benefits as technology take up has accelerated. That will only increase.
AI and automation can help small businesses to streamline time-consuming processes so they can focus on the most important things like getting their business up and running and serving their customers.
In the short term, platforms like Xero can help small business owners get a better understanding of where their firm is right now. We know from Small Business Insights, our snapshot of the health of the small business economy, that at any one time only 50 per cent of firms are cash flow positive.
We have launched Business Snapshot, our new tool in pilot, to enable firms to view their critical metrics in real-time. It gives them insights into their company’s income, expenses, gross and net profit, cash and balance sheet. As a result, business owners can understand their current performance and take action.
In the medium to long term, such technology helps business owners to forecast more accurately and plan for the months ahead. Making better use of digital tools is about being better prepared, improving business resilience and driving performance.
Small businesses are having to rapidly transform. They are moving from being analogue at the core to being digital at the core – and automation and AI will be key.
To help small firms with this transformation, we would like to see the government provide tax relief to small firms to reskill and upskill in critical digital technologies. We would also like to see the government improve awareness and access to digital training to help firms rebuild.
In 2020, what are the most developed examples of AI or automation for SMEs already in use?
AI and automation encompass everything from chat bots to data analysis. It is used to help businesses create more personalised experiences for their customers and drive revenue. It is also used to free up employees from routine and repetitive tasks that take time.
Just look at accounting. Platforms like Xero use AI and machine learning to help accountants save time by cutting out data entry and administration tasks. This frees them up to provide more strategic advice to their clients.
Another example is an AI or machine-learning enabled smart assistant like Siri. Our Business Rewired report found that 12 per cent of small business owners use a smart assistant to organise their personal life while just 3 per cent use one to help run their business. However, our research found that such smart assistants will become much more widespread in business within the next ten years.
Many are concerned about the impact of automation on people, but research shows just 5 per cent of jobs are fully automatable. What will this mean for SMEs and how will the roles of “people” change?
Automation and AI will increasingly handle monotonous and manual tasks. For employees and business owners, it will mean less number crunching,
fewer human errors, less invoicing, fewer pieces of paper and less laborious data entry.
But in this environment, people and relationships will remain extremely important. That level of human interaction will not disappear, it will be augmented by technology. When communicating with customers or employees, a human approach will always be needed.
AI and automation will lead to fewer low-value jobs but more high-value jobs. No matter how advanced the automation, there will always be a greater need for people with soft skills and their creativity, collaboration and cooperation.
Technology like AI and automation helps make life a little simpler, more seamless, and smarter for small business owners. In doing so, this can create the right conditions to help these small businesses to recover and rebuild in the months ahead.
Gary Turner is the managing director of Xero UK.