AI can boost small-business growth — if policymakers close the trust gap

The useful part

Our latest research at the Federation of Small Businesses shows adoption has risen sharply, with 55% of small firms now using AI, compared with just 20% in 2023. The question now is not whether AI will affect small firms, but whether they will be able to share fairly and confidently in its benefits. The prize is clear with FSB's analysis suggesting that deeper adoption by SMEs could add more than £42 billion a year to the UK economy.

How it works

• They include trust in providers, data privacy, compliance, intellectual property, legal liability, inaccurate outputs and security.
• Small firms need clear answers on who owns content, how their data will be stored and used, whether it may be used to train future models, and who is responsible when an AI tool gets something wrong.
• It also means stronger protections for small businesses' data and intellectual property, alongside practical support to help owners and employees understand how to use AI legally, ethically and securely.
• That should include helping small businesses understand where AI can add value, what risks they need to consider, and how to use the technology with confidence.
• Many owners need to see how AI can solve real problems in their business, whether by improving customer service, reducing administrative burden, forecasting demand or responding to procurement opportunities.

What to take from it

If AI becomes something only larger firms feel able to adopt with confidence, we risk widening the gap between businesses with the time, money and legal support to experiment, and those already stretched by day-to-day pressures. That matters because small businesses are rooted in communities across Wales. The Welsh and UK governments should work together to make sure these foundations are in place, because a business cannot take advantage of new technology if it is still struggling with the basics.

Example or evidence

• Peer examples, trusted advice and sector-specific guidance will do far more to build confidence than abstract promises about transformation.
• Used well, it can help firms respond faster to customers, improve decision-making, identify new opportunities and compete in markets that previously felt out of reach.
• For a small business owner, they are the kinds of questions that determine whether a tool feels like an opportunity or a threat.
• When they are supported to become more productive, the benefits are felt in high streets, supply chains and local employment.

Details worth keeping

Yet confidence is not keeping pace with adoption. That is why trust must sit at the heart of AI policy. They also need guidance that is practical, accessible and shaped around the realities of running a small firm, rather than assuming the time, resources and compliance capacity of a major corporation.

Related coverage

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• Youngupstarts: The businesses succeeding in this new era aren't the loudest or the most automated. They're the most trusted.
• Fastcompany: In the current landscape of corporate reputation, the old playbooks are failing.
• Forrester: Customers now navigate a world where they increasingly expect to be misled, manipulated, or deceived. That raises the stakes for every AI investment organizations make.