2025 Small Business AI Report

Introduction

Artificial Intelligence (AI) is rapidly transforming industries, but how are small businesses navigating and adapting to this technological shift? To find out, we conducted this survey to better understand how small businesses are navigating the rapidly evolving world of AI.

Unlike many AI studies focusing on large corporations with significant resources, our survey specifically targeted small to medium-sized businesses of 500 employees or fewer, exploring both those that have adopted AI and those that have not.

By focusing on small business perspectives, we aimed to uncover unique challenges and opportunities often overlooked in broader AI discussions, as well as adoption rates, feelings toward AI, spending patterns, and more.  

What we found was eye-opening. Small businesses are approaching AI with optimism and caution, recognizing its potential to streamline operations, enhance customer experiences, and drive growth. 

However, concerns around costs and lack of expertise highlight a prevalent lack of understanding regarding AI. These insights reveal that while the promise of AI is exciting, many small businesses are still figuring out how to make it work for them in practical, affordable ways.

Key Findings

While our survey revealed a ton of interesting data points and trends, here are some of the highlights:

• Widespread AI Adoption: 77% of small businesses have adopted AI in some capacity, indicating a significant shift toward AI integration.
• Positive Impact on Business: Companies using AI report substantial benefits, including increased productivity (87%), effectiveness (86%), and business growth (86%).
• Barriers to AI Adoption: Lack of understanding about AI’s benefits (62%) and a lack of in-house resources (60%) are the primary reasons for non-adoption.
• Roadblocks to Success: Among AI adopters, the most commonly reported challenges are AI integration and usage (72%) and concerns about data and privacy (70%).
• Diverse AI Applications: AI is used across various business functions, with marketing (53%), sales (49%), and customer support (46%) being the most common areas of implementation. 
• Business Size Impacts Adoption: Sole proprietors are significantly less likely to adopt AI than small businesses with employees (47% compared to 83%).
• Future-Oriented Strategies: Companies already using AI plan for further integration and expansion, with 90% looking to add more AI tools to their tech stack. 
• Feelings Trend Positive: Across the board, the majority of small businesses (76%) report positive feelings toward AI, with confidence (24%) and eagerness (19%) being the top feelings reported. Among negative feelings reported, the most common was uncertainty (12%).

Plot Twist! Most Small Businesses Are Using AI Every Day

An overwhelming 77% of respondents reportedly use AI on a daily basis. This offered us the ability to really understand how those AI users at small businesses think, feel, and approach AI.

Companies that use AI report adopting the technology across various business functions. Sales, marketing, and customer support enhancements are the most common areas where AI is utilized. 

Interestingly, employee productivity is the lowest reported use of AI for small businesses. Despite the fact that from a high-tech perspective, AI is largely being promoted as a productivity tool, small businesses are thinking about its uses differently.

43% of Businesses Use 4-6 AI Tools Weekly

The number of AI products a company uses weekly can significantly impact its operations, challenges, and outcomes.

Companies using 1-3 AI products are typically focused on use cases like sales (37%) or marketing tools (45%), which can lead to early-stage benefits like improved customer acquisition and marketing efficiency. 

As AI usage increases, companies that use 4 or more AI tools expand further into areas like customer support (50%), finance management (44%), and product engineering (35%), leading to gains in areas like cost reduction, operational efficiency, and better decision-making.

AI Leads to Positive Business Outcomes

The majority of AI-using businesses report tangible improvements in their operations.

Among the top benefits cited are increased productivity (87%), effectiveness (86%), and improved growth (88%). AI is helping these companies automate routine tasks, allowing teams to focus on more strategic initiatives.

AI Adopters Plan to Increase AI Use

Companies already using AI are not only satisfied with current implementations—they are planning for further integration and expansion, with 90% of companies looking to add more AI tools to their tech stack.

For small businesses considering AI, these insights suggest that adopting even a few AI tools can lead to significant operational benefits. As businesses grow more comfortable with AI, they tend to expand their usage, which translates to greater productivity and revenue gains.

Hesitant Yet Curious: The Non-AI User Perspective

Lack of Understanding is the Top Reason Businesses Don’t Adopt AI

The most common reasons cited by the respondents who do not use AI fall under the category of lack of understanding (62%), which includes a lack of knowledge about AI and being unclear about its benefits. Businesses also struggle with limitations brought on by in-house resources or company culture (60%), which includes misaligned company culture and lack of budget.

Limited AI Knowledge is a Key Barrier

Of businesses that have not yet adopted AI, 25% report the lack of knowledge about AI tools as a major obstacle. Companies might not be aware of how AI could benefit their specific business model or may need clarification about the applications available to small businesses. 

It’s worth noting that AI tools are changing rapidly, and businesses with limited time and resources may struggle to find the bandwidth to educate themselves and stay up to date. 

This knowledge gap presents a major opportunity for education and outreach, helping businesses understand the potential ROI of AI without overwhelming them with technical details.

Implementation is a Major Barrier To AI Adoption

One of the biggest reasons companies are hesitant to adopt AI is implementation, with non-AI adopters reporting that the complexity of implementation is a major reason their company isn’t using AI (18%). Integrating AI tools into existing systems can be a complex and time-consuming process, requiring careful data preparation, system upgrades, and employee training. 

Many small businesses need more internal expertise to manage these technical and operational demands. With companies with fewer than 50 employees also reporting that insufficient in-house AI expertise (16%) and difficulty finding qualified AI talent (7%) are major barriers, we can see that implementation seems to be an insurmountable hurdle.

Small businesses need a clear strategy and a phased approach to overcome this hurdle. Starting with a single, high-impact AI tool that’s easy to integrate—such as marketing automation or customer service chatbots—allows businesses to test the waters without overhauling their systems. 

Additionally, investing in training and partnering with AI vendors who offer implementation support can help ensure a smoother transition. By taking incremental steps and leveraging external expertise, businesses can gradually build confidence in AI, making implementation less daunting and more achievable.

78% of Those Who Don’t Use AI Have No Plans to Adopt

78% of non-AI adopters have no plans to try it in the future. These respondents report overwhelmingly negative feelings toward AI, with high levels of uncertainty (42%) and suspicion (15%). These respondents report that if they were to adopt AI in the future, it would most likely be in marketing or customer support.

Of the 21% of non-AI adopters who report being open to trying it in the future, they are interested in using it for sales, marketing, and customer support. These businesses report feeling optimistic about AI (43%) while also reporting some levels of uncertainty (21%) and anxiety (14%). 

For small businesses not yet using AI, starting with simple, cost-effective AI tools can help alleviate concerns about complexity and cost. Learning more about the specific benefits AI can offer may help these businesses alleviate concerns associated with AI adoption.

Roadblocks to AI Success

Businesses that currently use AI report numerous challenges. The most commonly reported are struggles with AI integration and usage (72%) and concerns about data and privacy (70%). Small businesses often lack the resources and expertise to ensure compliance with complex data protection regulations. This can make it difficult to securely manage and leverage customer data without risk. 

These challenges become even more intriguing when we segment the data by size and budget. We are able to see how different factors affect what small businesses report as major challenges with AI success.

Limited Resources Present a Challenge with AI Adoption

The two biggest challenges that sole proprietors face with AI adoption are budget and funding to pay for AI tools (31%) and keeping up with AI advancements (36%). Due to their size, these small businesses likely struggle with these issues because they lack the resources of larger companies.

Mid-range businesses express concerns about quantifying the value of AI investments (38%). While they see potential in AI, proving the ROI can be difficult, making them hesitant to allocate large portions of their budget toward AI tools.

Larger businesses, while more willing to invest in AI, also face challenges with scaling AI spending effectively. In fact, nearly half of businesses between 50 and 200 employees report budget as a concern. 

As AI adoption increases, so do concerns about data privacy, which 40% of larger businesses (more than 50 employees) report as a challenge. Only 20% of businesses with fewer than 50 employees reported the same challenge. As businesses scale AI usage, the tools can become more complex and typically require higher levels of privacy and data protection, which can be a hurdle for SMBs at any size.

Challenges Become More Complex as Spending Increases

The data suggests that businesses with AI budgets of less than $5,000 encounter foundational challenges like integration (30%) and keeping up with AI advancements (29%). 

Businesses with budgets between $5,000 and $25,000 face more complex issues. These challenges are related to data quality and accessibility (49%) and training their staff to use AI properly (44%). 

Companies with budgets of more than $25,000 face challenges with AI integration (46%) and funding/budgeting (45%). Although businesses with low budgets also struggle with integration, it is likely for different reasons than businesses with higher AI budgets. 

High-budget businesses will likely have larger teams, making integration more complex. This, combined with budget as a major challenge, highlights that as businesses scale up their AI, the tools become more complex and require higher levels of management to overcome challenges. 

This all highlights the importance of aligning AI budgets with a company’s capabilities and strategic goals to tackle challenges effectively at each adoption stage.

Job Title Has Major Impact on Challenges Faced by SMBs

For small businesses, understanding how different roles view and interact with AI is essential for successful adoption. A respondent’s role in their organization impacts what they view as a big challenge with AI adoption. 

For example, while 71% of executives report challenges with overcoming data privacy implications, only 29% of individual contributors report the same as a major barrier to AI adoption. Similarly, 44% of owners and senior leaders report that onboarding and training for AI is a major challenge, while 30% of managers and team leads reported it as a challenge.

By addressing the needs and concerns of employees at all levels, small businesses can better implement AI and ensure a smoother, more effective adoption process.

Mixed Feelings and Positive Results

Company Feelings Toward AI Trend Positive

Companies report many feelings about AI, from optimism and excitement to uncertainty and anxiety. Overall, 76% of businesses reported positive sentiments, with 24% reporting negative-leaning feelings. However, when we asked specifically about feelings related to AI in the workplace, we saw more hesitancy, with 39% of respondents feeling neutral or negative about it.

Businesses Are Seeing Positive Results from AI Adoption

Companies that use AI see significant results, including improved productivity, effectiveness, and higher growth potential.

We found that the majority of small businesses, no matter how they feel about AI, are seeing these positive results. 

It’s unsurprising that companies who feel positively about AI often see significant productivity improvements, with 93% reporting that AI makes their business more productive. 

What was surprising, however, was that 50% of companies who reported negative feelings about AI also reported increased productivity. Half of these businesses also reported that AI can help them grow their business (54%) and is an effective part of their business strategy (48%). 

This ultimately leads us to conclude that even when businesses feel negatively about AI, they are still seeing improved results when they adopt it into their strategy. 

B2B vs. B2C: Different Approaches to AI

The data reveals distinct patterns in AI adoption between businesses that primarily sell to other businesses (B2B) versus those that sell to consumers (B2C).

B2B Companies Have an Advanced Approach to AI

Businesses serving other businesses are generally more advanced in their AI usage. They tend to implement AI in sales (54%), marketing (51%), and finance (48%). 

They see increased revenue, improved customer satisfaction, and enhanced operational efficiency, which aligns with longer sales cycles and complex operational needs in the B2B space over the B2C space.

B2C Companies Focus on Customer Experiences

In contrast, businesses that sell directly to consumers primarily use AI to enhance customer experiences and increase efficiency. AI tools in B2C settings focus more on customer support and marketing to engage with customers more effectively.

B2C companies also report more feelings of uncertainty and suspicion with AI than B2B companies. Additionally, while 74% of B2B businesses feel positive about AI in the workplace, only 41% of B2C businesses report positive feelings about AI in the workplace.  This could be due to the fact that 28% of B2C businesses struggle to integrate AI into their existing systems.

Despite that, both types of companies report positive results with AI and they both overwhelmingly intend to add more AI tools into their techstack (97% B2B and 74% B2C).

AI Usage Shifts as Businesses Scale Up in Size

The data collected also shows interesting differences in AI behavior between sole proprietors and larger businesses.

Sole Proprietors Have Reduced AI Usage

Sole proprietors are less likely to use AI compared to businesses with more employees (47% adoption rate versus 85%). They often cite challenges like lack of budget, insufficient knowledge, or unclear understanding of AI tools as key barriers.

When sole proprietors do adopt AI, they tend to use it in a more limited scope, focusing on marketing or customer support. 

Their usage is more likely to be exploratory, reflecting the fact that they typically have fewer resources and may be more cautious about investing in advanced technologies. This is further shown by the fact that the two biggest challenges sole proprietors reported facing with AI adoption were budget/funding for AI tools (31%) and keeping up with AI enhancements (36%).

Businesses with More Employees Scale Up With AI

In contrast, larger businesses are more likely to integrate AI across more complex functions such as finance and product engineering. 

These businesses, particularly those with more than 5 employees, tend to invest more in AI tools and are more confident in their ability to see returns on AI investments. They are also more likely to increase AI spending in the future, with 62% of businesses with more than 20 employees planning to spend more than $5000 within the next 2 years on AI versus only 25% of businesses with 20 or fewer employees.

This could be because larger businesses have more resources at their disposal, which can lead to more opportunities for expansion.

In other words, AI can be beneficial at any size, but larger businesses tend to have more opportunities to fully integrate AI across their operations than sole proprietors.

The Role of Revenue in AI Decision-Making

More Annual Revenue Leads to Increased AI Tool Usage

The data reveals clear trends in AI adoption based on company revenue levels. Companies with higher revenues are more likely to adopt AI tools and integrate them across multiple functions, while smaller businesses or those with lower revenues are often unable to adopt AI due to resource limitations.

Companies making less than $1,000,000 annually are typically smaller and less likely to invest heavily in AI, with a quarter reporting no use of AI in their business functions. 

These businesses often face barriers such as limited budgets, lack of in-house expertise, and uncertainty about AI’s benefits. As a result, AI usage in this group is often limited to one or two functions, such as basic marketing or customer support tools.

On the other hand, companies making more than a million annually are more likely to see AI as a valuable tool, with only a mere 3% of these businesses not currently using AI. These businesses also integrate multiple tools. We see a correlation between the revenue a company generates and the number of AI products they use weekly as well. 

As a company earns more revenue, it is more likely to view AI as an integral part of its business strategy. These companies also plan to invest more money into AI tools in the next 12 to 24 months.

For small businesses, the data shows that the impact of AI tends to grow as company revenue increases. Lower-revenue businesses often start small with AI, focusing on areas like marketing or customer service where they can see quick wins.

As businesses grow and generate more revenue, they have more resources to invest in AI tools that enhance operational efficiency and decision-making. The key for small businesses is to start with affordable, high-impact AI solutions and expand their AI strategy as revenue increases, allowing for greater productivity, cost savings, and revenue growth.

Understanding AI Spending Patterns in Small Businesses

Most Businesses Are Willing to Spend Money on AI

From our data, we found that AI budgeting varies significantly depending on the size, revenue, and stage of AI adoption within businesses. But, across the board, it’s clear that businesses are willing to spend money on AI. In fact, more than half of small businesses spend more than $10,000 a year on AI products and services.

Bigger Companies Plan to Spend More on AI

Business size tends to influence the amount of money companies are looking to spend over the next 12-24 months on AI products and services.

58% of businesses with fewer than 10 employees plan to increase their AI budgets by more than $5000 over the next 12 to 24 months. This group is likely to allocate additional funds toward AI marketing tools, CRM enhancements, and customer engagement platforms.

67% of businesses with 10 to 50 employees are more willing to increase AI spending by more than $5000. They are planning to invest more in AI solutions that can deliver clear, measurable returns, allowing them to make more informed strategic decisions.

77% of businesses with more than 50 employees plan to increase AI spending by more than $5000. These businesses are already heavily invested in AI and plan to continue increasing their AI budgets accordingly.

From Owners to Employees: AI Adoption by Role

Job Roles Have Varying Levels of Positivity About AI

Vice presidents, managers, team leads, and individual contributors feel overwhelmingly positive about AI, reporting a high level of confidence, excitement, and optimism. 

Higher-ups tend to have mixed feelings, appreciating AI’s efficiency benefits but balancing those with concerns about how it affects their business. 17% of owners and C-level employees feel overwhelmed and suspicious about AI despite 22% also reporting eagerness and optimism. It’s worth noting that 42% of owners are sole proprietors, who have lower adoption rates than respondents who work at companies with employees. 

For small businesses, it’s crucial to maintain open communication about AI’s role, emphasizing how it can help employees be more efficient without threatening their jobs.

The Top Feeling Reported by Different Job Titles:

• Individual Contributor: Confidence
• Team Lead: Confidence
• Manager: Confidence
• Senior Manager: Confidence
• Vice President: Eagerness
• Owner: Uncertainty
• C-Level: Eagerness / Excitement (tie)

All Job Titles See AI Gains

Across the board, all job titles report increased revenue, improved customer satisfaction, and enhanced operational efficiency as the top results they see from AI implementation. 

In addition, owners and executives report high levels of new product development (43%) and reduced costs (38%). Senior managers and VPs also see reduced costs (28%) and new product development (35%), as well as better internal decision-making (27%). 

For small businesses, ensuring that all levels of the organization understand the broader benefits of AI can improve buy-in and lead to better overall results.

Conclusions

As the survey results show, AI holds tremendous potential for small businesses, offering everything from increased efficiency to improved customer interactions. However, the path to full adoption is still filled with hurdles. While some businesses are already embracing AI tools and enjoying the benefits, others are hesitating due to concerns over cost, complexity, and a lack of understanding.

Despite these challenges, the future looks promising. More than 3 out of every 4 small businesses have already adopted AI, and that number is growing. 

The businesses that have taken the plunge are reporting tangible productivity improvements. As AI technology becomes more affordable and accessible, we expect to see even more small businesses adopt it. 

Ultimately, the sentiment is clear: small businesses are excited about what AI can do for them but need guidance and solutions tailored to their unique needs and constraints. 

In the coming years, AI is poised to become an even more integral part of small business operations, helping owners focus on what really matters—serving their customers and growing their businesses. It’s an exciting journey, and we’re looking forward to seeing how small businesses continue to innovate and thrive with the help of AI.