LONDON, 19 MAY 2025: Small businesses increasingly believe AI will be vital to their survival and growth over the next five years, with a new report from Small Business Britain and BT calling for the UK to boost support to capitalise on the transformative power of AI and avoid smaller firms falling behind.
‘The AI Opportunity for Small Businesses’ report – which surveyed 2,000 business owners – shows 60% of small firms predict AI will be essential for them to thrive and continue in the next 5 years, with 62% now using AI¹.
With the help of AI, small businesses are automating time-consuming tasks, improving customer service, and streamlining operations, freeing up valuable time to focus on innovation and growth. The most common applications include marketing (47%), operations (17%), and customer service (8%).
However, the data also shows the potential of AI is being held back by significant barriers to entry, which disproportionately affect smaller firms. Over two thirds (68%) want more affordable AI solutions, with half of entrepreneurs admitting they lack understanding of the new technology (60%) and want more practical support (51%).
With many small firms at vastly different stages of adoption, the report has issued thirteen recommendations for Government, technology providers, educators, and business networks to bridge this gap and avoid creating an ‘AI disparity’ among the nation’s 5.45m small businesses. It calls for coordinated, targeted action to open up the AI opportunity for all small businesses, helping them to increase productivity, reduce costs, and open new markets.
The recommendations include a need for more cost-effective AI solutions, as well as incentives to encourage early adoption, such as funding, grants and tax-breaks, alongside help for small businesses to measure return on investment. Expanded and simplified AI support and education is also recommended, alongside more promotion of easy-to-use and affordable AI tools. The idea of a centralised, national AI resource hub is also being put forward to pool practical guidance, AI tool reviews, training, and FAQs. This should be accompanied by peer-led learning and mentoring opportunities, which are tailored to individual sectors. Authors of the report also believe increased regulatory clarity is needed, with easy-to-understand guides on compliance and ethics.
Michelle Ovens CBE, Founder, Small Business Britain, said, “AI is transforming industries across the UK and is now a critical conversation for small businesses. While there is excitement, there is also a clear need for expert guidance and support, as entrepreneurs are at vastly different stages of understanding and adoption. While some have fully integrated AI into their operations, others are still grappling with what AI is and how it can help. We cannot risk any small businesses being left behind. Through its extensive research and targeted recommendations, this report aims to bridge that gap, particularly for marginalised communities who stand to gain significantly from accessible AI solutions.”
The report further argues that AI has the potential to level the playing field for all entrepreneurs, provided the right resources and training are made available and accessibility and inclusivity are built into the design of tools and support. Under-represented founders, particularly Disabled entrepreneurs, show high engagement with AI, with 64% already utilising it, but only 14% reporting a strong understanding of its benefits.
Dr. Chris Sims, Chief Commercial Officer, BT Business, said, “Small businesses are the beating heart of the UK economy, yet our report highlights an uneven adoption of AI, risking a divide where some gain a competitive edge while others are left behind. There is an urgent need for accessible training, affordable tools, and inclusive pathways to AI adoption, helping to democratise the technology. Our goal is to empower businesses of every size to leverage AI for growth and efficiency, ensuring that no small business is excluded from the transformative power of this technology.”
Amelia Peckham, co-founder of Cool Crutches, said, “Incorporating AI in the right way to have maximum impact is key. Every founder should be using it—we have implemented it into our marketing, and it has transformed the speed at which we can work, as well as efficiency for me as a founder, and the team.
With a much bigger output without adding cost, it’s a no brainer – the key is knowing how to use it the right way, from experts who know. That’s where Small Business Britain comes in – teaching us what tech to use, when and most importantly what to avoid to ensure we are on the front, not back foot when growing businesses to last!”
The report will launch with an event at the Science Museum in London, welcoming entrepreneurs from across the country, AI experts, and other business representatives.
To read the full report visit smallbusinessbritain.uk/ai-opportunities.
Full Recommendations
- Expand AI education initiatives: Offer practical, sector-specific training and upskilling to close the knowledge gap.
- Facilitate peer learning: Share small business case studies and success stories that inspire confidence.
- Provide easy-to-use AI tools: Promote platforms that are intuitive, low-cost, and designed with small businesses in mind.
- Develop sector-specific AI solutions: Tailor support and tools to industry-specific use cases.
- Help businesses measure ROI: Introduce clear benchmarks and frameworks to evaluate success.
- Encourage early adoption incentives: Create funding streams, grants, and tax breaks for AI adoption.
- Simplify AI education: Cut the jargon and focus on storytelling and real-life application.
- Make AI cost-effective: Support more affordable solutions through public-private collaboration.
- Increase regulatory clarity: Publish easy-to-understand guides on compliance and ethics.
- Create AI mentorship programmes: Match small business owners with digital mentors and AI experts.
- Launch a national AI resource hub: Centralise guidance, tool reviews, training, and FAQs.
- Host industry-specific AI workshops: Offer hands-on learning across regions and sectors.
- Break down barriers for marginalised groups: Ensure inclusive co-design of training, tools, and support for Disabled and underrepresented entrepreneurs.
For more information, please contact media@smallbusinessbritain.uk
Case studies
Interviews are available on request. Case studies available on request, including:
- Sanjay Aggarwalco-founded Spice Kitchen with his mother, and has integrated AI into his business as an extra team member to save time for him and his team
- Miranda McCarthyfounded Adaptive Yoga Live and finds that AI makes running the business a much easier and accessible process, especially for Disabled entrepreneurs
About the Research
In early 2025 Small Business Britain and BT ran the ‘Small Business AI Big Survey’, which gathered responses from over 2,000 small business owners across the UK. Respondents represented a diverse range of sectors, regions, business sizes (with a focus on those with fewer than 50 employees), and stages of business development. The survey explored:
- Current levels of AI use
- Perceived benefits and barriers
- Future intentions around AI adoption
- Specific use cases and tools in practice
Differences between Disabled and non-Disabled entrepreneurs Data was collected via an online survey and analysed to generate both quantitative insights (e.g., percentage of AI adoption) and qualitative feedback through open-text responses.
About Small Business Britain
Small Business Britain is the UK’s leading champion of small businesses, supporting the UK’s 5.45 million small businesses, no matter their location, their sector, or their ambition level. Through a series of campaigns, networks, training and reports, Small Business Britain champions and informs small businesses in the UK. Committed to making entrepreneurship as inclusive as possible, it brings small business owners together to foster growth and increased confidence.
https://smallbusinessbritain.uk
Facebook: @smallbusinessbritain
Instagram: britainsmallbiz
About BT
BT Group is the UK’s leading provider of fixed and mobile telecommunications and related secure digital products, solutions and services. We also provide managed telecommunications, security and network and IT infrastructure services to customers across 180 countries.
BT Group consists of three customer-facing units: Consumer serves individuals and families in the UK; BT Business* covers companies and public services in the UK and internationally; Openreach is an independently governed, wholly owned subsidiary wholesaling fixed access infrastructure services to its customers – over 650 communication providers across the UK. British Telecommunications plc is a wholly owned subsidiary of BT Group plc and encompasses virtually all businesses and assets of the BT Group. BT Group plc is listed on the London Stock Exchange.
For more information, visit www.bt.com/about
*BT Business was formed on 1 January 2023 from the combination of the former Enterprise and Global units. It will commence reporting as a single unit from 1 April 2023, with pro forma reporting information to be produced ahead of BT Group’s Q1 FY24 results.
