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AI Challenges for Small Businesses

AI in the Workplace

3 June 2025 (Last updated 18 Sept 2025)

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Artificial Intelligence is designed to solve business problems, but can quickly become the cause of them. If you are considering harnessing the power of AI in your business, read our shortlist of the AI challenges that you should watch out for in your small businesses.

The latest generative AI solutions 

Artificial Intelligence is nothing new – the first AI program was written by Christopher Strachey at the University of Oxford in 1951. However, the world has recently been rediscovering the possibilities of AI following the release of ChatGPT on 30 November 2022.   ChatGPT is what's known as generative artificial intelligence (generative AI). That is, using AI to create new content in seconds by responding to prompts. The content could be written, images, music, audio or video.  

Generative AI can be used to create an ‘about’ page, a corporate white paper, or even a tagline for a marketing campaign – the possibilities are endless. It's important to note the more detailed your prompt the more accurate the end result.

In just a few short years the range of generative AI platforms has increased considerably with Google (Gemini) and Microsoft (copilot) growing in popularity. But they are far from the only options available. Depending on your specific needs there is a vast number of generative AI tools you can use. They are:

  • Writing and editing tools
  • Video creation tools
  • Image creation and editing tools
  • Voice and music creation tools
  • Website builders
  • Presentation apps to streamline creating presentation slides.

And this is just the tip of the generative AI iceberg.

The difference between AI and generative AI

While it might sound strange, many businesses, including small businesses, have been using AI for some time. Known as non-generative AI, or discriminative AI, it's artificial intelligence focused on analysing and classifying existing data rather than creating new content like generative AI.

This could be:

  • Analysing company data.
  • Producing business reports and forecast projections.
  • Filtering job applications for HR.
  • Calculating accounting figures.
  • Personalising marketing campaigns.
  • Debugging and fixing code.
  • Providing customer service via chatbots.
  • Responding to social media posts.

The challenges of implementing AI  

AI technology remains experimental, and many companies who choose to use it are effectively acting as test-cases, discovering both its possibilities and flaws.

Business leaders investing in AI systems should evaluate the risks and challenges that come with using innovative tech for business processes.  

Making roles redundant  

The biggest AI challenge for businesses is the ethical implication of reducing the need for human workers. Ideally, AI should enhance productivity and simplify jobs without making them redundant.

Many businesses benefiting from digitalisation will intentionally deploy AI in a supporting role. Used in this way, AI can automate lower-level and repetitive tasks, freeing-up employees to perform more high-value work. Using AI tools can increase efficiency and allow employees to deliver projects faster.

When generative AI creates new content, it is not yet at a stage where it can be used immediately. Generative AI creates the new content by pulling in information from existing content across the internet. All written content will still need to be reviewed, edited, and any statistics included verified and the source cited. This can still only be done by a human.

The financial cost of AI for businesses

The amount of money you invest in AI will be determined by the scope of your initiatives.

If you are using AI to create written content or web graphics, the process will be quick and only cost a monthly subscription.  

However, if you plan to use AI to analyse your company data, this could easily be a significant investment. Businesses often need higher computing power, database integration, or even a lengthy process of data training. 

Data security in the age of AI 

While AI increases the amount of information you have to make critical business decisions, it also increases the risks of mishandling sensitive business and Personally Identifiable Information (PII). While businesses are using AI to enhance processes, cybercriminals are using it to create sophisticated malware and phishing scams.

Ensuring customer data is properly secured is one of the biggest AI challenges for small businesses. Many businesses implement additional cybersecurity measures, such as multi-factor authentication or encryption to ensure they maintain strong data protection and governance. 

Lack of technical skills 

As a branch of machine learning and data science, AI is a specialised skill set that demands extensive knowledge and training. A routine change to your AI system might require a programmer to write neural network algorithms. This is every bit as complicated as it sounds. 

To maximise the benefits of AI in your business, you may need to outsource to external tech specialists or invest in training your existing IT staff.  Either way, small businesses should carefully consider the ongoing costs involved.

The importance of data quality 

The results of AI are only as good as the input data. In most businesses, data is siloed, disorganised or of low quality. Unreliable data poses a major obstacle for businesses looking to benefit from AI.

The quality of data will have a direct influence on the performance, reliability and accuracy of your AI results. A key benefit of high-quality data is AIs ability to identify and correct inconsistencies in real time. Through Machine Learning (ML) and high-quality data it's possible for AI to detect anomalies and predict the possibility of future errors based on consistent past mistakes. AI utilise the dataset to fill in missing values-based information.

So called “dirty data” can be outdated, inaccurate, incomplete, or inconsistent, and must be cleaned before it can be used. Most businesses contemplating large data-driven AI projects will start by evaluating the amount of work required to prepare their data sets. Inputting the wrong information results in getting the wrong information out. And that can be costly, especially if it relates to payroll and miscalculating wages.

The future of Artificial Intelligence for small businesses 

There is always an opportunity for businesses to increase operational efficiency, and companies have a lot to gain from embracing AI. For small business owners, the cost is likely to be the biggest barrier keeping them from exploring the full potential of AI tools.  

However, with demand growing and the industry making rapid progress, AI is likely to be much more affordable. In the coming years, expect to see businesses of all sizes lean into the possibilities and benefits of AI. 

Please note that this is general information. Peninsula is not an IT specialist – you should consult an AI expert before implementing any changes in your business.

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