From Budget Woes to AI Wins: The Changing Landscape for UK SMEs
Alexander Fahie
CEO of "One of Scotland's most interesting AI start-ups" | taisk.com
As the UK prepares for its upcoming budget, small and medium-sized enterprises (SMEs) are bracing themselves for potential impacts on their growth and investment plans. A significant majority, approximately 74%, of UK SMEs believe that the forthcoming budget will directly influence their future expansion strategies, with nearly a third anticipating a substantial impact[1][2][3].
Economic Pressures and SME Concerns
The current economic climate has already taken a toll on SMEs. Rising costs, including high energy expenses, inflation, and interest rates, have compelled many businesses to adjust their operations. About 30% of SMEs have increased prices, 16% have switched to fully remote working, and another 16% have outsourced more of their business services. These measures have led to a significant number of SMEs either halting or scaling back their investments in innovation and growth[3][5].
As the upcoming budget looms, there are growing concerns that it may not adequately address the pressing issues faced by these businesses. A significant concern for UK SMEs is the potential for tax hikes and policy changes. Approximately 86% of small business owners fear that increases in income tax, VAT, and national insurance contributions (NICs) could hinder their growth. The retail and property sectors are particularly anxious about rises in income tax, which could impact consumer confidence and spending power[6][7][8].
One of the most critical issues for SMEs is the increasing cost of hiring and retaining employees.
Rising National Insurance Contributions (NICs) and pension obligations have significantly increased the financial burden on SMEs. The cost of hiring more staff is proving problematic to many. Additionally, mandatory flexible working policies and potential increases in the minimum wage rate are causing concern, especially in sectors like hospitality and manufacturing, where these changes could disrupt operations and increase costs[8][9].
The Role of Agentic AI in Mitigating Costs
Could agentic AI emerge as a pivotal tool for SMEs to maintain their competitiveness and thrive. Will the face of workplaces evolve into interfaces?
First point, when we talk about agentic AI and AI like ChatGPT, we're looking at two different things. Agentic AI is basically those systems that can act all on their own. Think robots or self-driving cars—anything that can make decisions and do stuff without needing someone to tell them exactly what to do. They're programmed to have specific goals and can decide on the best way to achieve them, even if things around them change.
On the flip side, AI like ChatGPT is all about language. These are the ones you chat with online. They're not there to make decisions or do actions in the world. Instead, they take what you say, understand it, and then generate a response. It's all about engaging in conversation or writing some text—not about acting independently. So, while agentic AI is sort of like having a robot buddy, ChatGPT is more like having a pen pal who's great at writing back!
You can see a more detailed explanation in this video I made:
Could agentic AI emerge as a pivotal tool for SMEs to maintain their competitiveness and thrive? To answer the earlier question, "will the face of workplaces evolve into interfaces"?
Probably not.
I don't see AI replacing jobs, but it can definitely augment tasks lighting the load on the existing workforce and helping SMEs do more with what they already have.
Here are just a few ways agentic AI can already help:
24/7 Chatbots
Chatbots can handle customer inquiries around the clock, reducing the need for additional customer service staff. These AI-powered agents can provide immediate responses, offer documentation based on what URL the visitor is on, and capture leads, thereby enhancing customer engagement and efficiency.
Sales AI
Sales AI can retarget old leads by integrating web search data and updates to re-engage potential customers and scoring their potential. This automated process can significantly reduce the workload on sales teams especially for SMEs with huge databases of past enquiries and customers, allowing them to focus on higher-value tasks.
Automation of Routine Tasks
Agentic AI can automate a variety of routine tasks, from data entry to bookkeeping, freeing up staff to focus on more strategic and innovative activities. This not only saves time but also reduces the likelihood of human error.
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Potential Cost Savings
To quantify the potential savings, let's consider a few scenarios:
Overall Savings
Combining these estimates, an SME could potentially save between £67,000 to £107,000 annually by leveraging agentic AI in just these few examples. Now imagine all of the processes that could be offloaded to agentic AI, the savings could be enormous.
Savings that can be reinvested in innovation, workforce training, and other growth initiatives, helping SMEs to thrive despite the economic challenges.
So what now?
In conclusion, while the upcoming UK budget is likely to present several challenges for SMEs, particularly in terms of increasing employment costs, agentic AI offers a viable solution to mitigate these expenses.
By adopting AI technologies, SMEs should be able to save significant amounts of money, enhance their operational efficiency, and position themselves for growth in a competitive and evolving economic environment.
To begin integrating agentic AI, SMEs need to identify areas within their operations that could benefit most from automation, enhanced decision-making, and workflow optimisation. Then, they just have to give it a try.
References:
Revolutionising how SME’s scale up.
1moInnovating proactively unlocks new growth opportunities for SMEs.