Insight: AI, the game changer for small and midsized businesses (Part 1)

Exploring how artificial intelligence can serve to improve business operations and decision-making.

The latest buzz around technology corners is undoubtedly artificial intelligence. Technology pundits abound sharing their views of the dawn of a utopian world or the advent of a Terminator-like apocalyptic future. Truth be told, history has shown that technological revolutions have yielded a positive outcome, pushing humanity along toward a more evolved and positive evolution. 

There is a place for all opinions on this subject, but this column only focuses on today’s benefits of this technology within the business realm. This is the first of two columns providing a perspective on the potential benefits of AI to small and midsized businesses.

AI models are powerful tools; they rely on the quality and quantity of the data available, with their predictions being probabilistic rather than certain. External factors like economic shifts, regulatory changes and unpredictable market behaviors can influence their accuracy. Thus, while AI can provide valuable insights and predictions, it is crucial to combine its output with human expertise and judgment. 

The right model can significantly enhance the ability to predict expenses, profits and future growth, aiding in making more informed business decisions, which is crucial to smaller businesses looking for ways to improve their competitive positioning.

This powerful set of AI tools, now available in myriad formats, was not available to the entrepreneur and SMB base until recently. In the span of the last three years, we have witnessed an explosion in new AI-based applications that are poised to be game changers for all businesses. 

We are just at the dawn of the potential benefits that AI technology will deliver to your business, whether as a consumer, service provider or manufacturer.

It is important for you to understand the ways in which an AI tool can contribute to your specific business needs such as:

• Predictive analytics: AI can analyze historical data to forecast future outcomes. This includes predicting revenue, expenses and potential market shifts, enabling businesses to plan more effectively.
• Scenario analysis: AI models can simulate various business scenarios and their outcomes. For example, they can model the financial impact of a new product launch or changes in market conditions.
• Optimization: AI can help optimize resource allocation, pricing strategies, and supply chain operations to maximize profits and reduce costs.
• Real-time insights: AI systems can provide real-time data analysis, helping businesses respond quickly to changes in their operating environment.
• Risk assessment: AI can identify potential risks and their impacts, allowing businesses to develop strategies to mitigate these risks before they become problematic.
• Detailed financial forecasting: AI models can delve into granular details to predict expenses by analyzing historical spending patterns, seasonal trends and industry benchmarks. For instance, they can forecast energy costs based on historical usage and anticipated changes in energy prices. On the profit side, AI can analyze past sales data, customer behavior and market trends to predict future revenue streams. This can include predictions about which products will perform best or which new markets have potential for expansion.
• Enhanced scenario analysis: AI can evaluate the potential financial impact of various strategic decisions under different scenarios. For example, it can model outcomes of entering new markets, adjusting product prices or changing suppliers. This helps businesses explore the potential outcomes of decisions before committing resources. Such models can also incorporate external data, like changes in economic policies or competitor moves, to simulate how these factors could impact the business.
• Supply chain optimization: AI can optimize the supply chain by predicting the best routes, managing inventory levels and identifying potential bottlenecks before they cause problems. This helps reduce costs and improve efficiency. Predictive maintenance powered by AI can foresee equipment failures and schedule maintenance proactively, reducing downtime and maintenance costs.
• Real-time data processing: AI systems equipped with real-time data processing capabilities can adjust forecasts and provide updates as new data comes in. This is particularly useful in dynamic industries where conditions change rapidly, allowing companies to react promptly and effectively.
• Risk management and mitigation: AI can identify patterns indicating potential financial risks, such as credit risks or fraud. By predicting these risks, businesses can take preemptive measures to mitigate them. Furthermore, AI can assess the impact of various risk factors on business growth and sustainability, allowing for more robust strategic planning.
• Regulatory compliance and economic changes: AI can help businesses stay compliant with regulatory changes by predicting how new regulations could affect operations and finances. It can also monitor economic indicators to forecast market conditions and help businesses prepare for economic downturns or capitalize on upswings.

While AI provides powerful capabilities for forecasting and decision-making, it is essential for businesses to maintain a balanced approach. This includes ensuring data integrity, continuously updating and training AI models with new data and integrating AI insights with expert human judgment to account for nuanced factors that AI may not fully capture. 

I always recommend that you educate yourself and begin your initial due diligence along with a knowledgeable and experienced consulting resource, such as Global 1080 Business Solutions, to help you identify the best AI implementation path to follow.

In the second part of this column, I will provide a perspective on a variety of AI tools that are designed to be affordable and user-friendly and that will help you improve efficiency, enhance customer experiences and make better decisions. Stay tuned for part two!