Could UK SMEs generate £42.6bn in extra revenue through greater AI use?
New research suggests greater AI use could add billions to small business revenue, but any potential gains are liable to depend on how firms use it and what they want from it.
AI is already widely used among the 1,015 SME leaders surveyed for the SMF’s report, with 79% saying their business uses it in some capacity.
UK SMEs could generate an extra £42.6bn in revenue by using AI more, according to research from the Social Market Foundation (SMF).
The estimate assumes that businesses already planning to expand their use of AI go on to do so, with the potential revenue gains based on results reported by businesses that are already using the technology.
How are small businesses using AI?
AI is already widely used among the 1,015 SME leaders surveyed for the SMF’s report, with 79% saying their business uses it in some capacity. However, adoption varies by business size: while 92% of medium-sized firms and 86% of small firms currently use AI technologies, the figure falls to 60% among microbusinesses.
Of the businesses using AI, 87% said it had had a positive impact, while just 1% cited a negative effect. The most commonly mentioned benefits were time savings (88%) and improved quality of work (79%). More than half (55%) also reported an increase in revenue.
However, the benefits varied according to how businesses used AI. Those making more advanced use of the technology saw stronger outcomes than basic users, while specialist tools were more consistently associated with positive results. The research also identified HR, sales, supply chain and IT as areas where AI appeared to deliver the greatest benefits.
Businesses also highlighted concerns about data security (33%), the quality or reliability of AI (31%) and a lack of skills (26%). Smaller firms may face additional barriers, including limited staff, budgets and technical know-how, which could help explain why adoption rates are significantly lower among microbusinesses.
What about jobs?
The SMF found that most firms reported no change in headcount, while more reported increases than decreases. The British Chambers of Commerce (BCC) found a similar pattern, with 95% of SMEs using AI saying it had not affected workforce size over the past year.
But not all studies have reached the same conclusion.
A Morgan Stanley study found that UK firms using AI recorded an 8% net job loss linked to the technology over 12 months, twice the international average. The study covered firms already using AI across five industries, rather than SMEs specifically.
Additionally, analysis by the University of Essex’s Institute for Social and Economic Research (ISER), using BCC data, found that around one in five firms using bespoke AI reported staffing reductions.
What does this all mean for small business owners?
Unlocking a share of that £42.6bn projection means looking beyond adopting technology for its own sake. The potential gains will look different for every business: for some, the value will lie in simplifying time-consuming tasks; for others, it could be about improving the quality of work, freeing up staff to focus on other priorities, or finding ways to stand out from competitors.
Understanding what your business is trying to achieve is central to figuring out where AI could make a difference. That means knowing where you want to grow, what is currently holding you back, and where your strengths lie.
The challenge is to identify where AI can help your business perform better, rather than simply finding more ways to use it.
About Joe Phelan
Joe is an experienced writer, journalist and editor. He has written for the BBC, National Geographic, and the Observer. As a business expert, his work frequently spotlights the ventures and achievements of small business owners. He writes a weekly insight article for money.co.uk, published every Tuesday.
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