Could AI be the solution to SMEs struggling to stay afloat?

“You can’t demand change from an owner with no spare hours”: In arguably one of the toughest periods for small-business profitability, SME employers are being urged to consider where artificial intelligence may fit into the equation.

With small businesses employing almost two-thirds of the Australian private sector, Tech Council of Australia chief executive Dr Kate Cornick said improving small-business productivity would impact the economy at large, but there remains a significant gap “between what AI could deliver and what small businesses are currently getting from it”.

In light of the over $130,000 in projected productivity gains for a small business that moves from no AI use to broad adoption, as noted in a recent report released by the Tech Council of Australia, HR Leader spoke to James Keene, Asia-Pacific managing director at Employment Hero, to break down the biggest challenges facing small businesses in Australia and whether AI addresses them.

The Accelerating AI Impact for Small and Medium Enterprises report, undertaken by Delwood Advisory and with support from Employment Hero, Google and Deputy, found that only 5 per cent of Australian SMEs have broadly adopted AI across their organisation.

Of those harnessing AI even partially, however, 94 per cent found productivity improvements, and 54 per cent of employees reported improved job satisfaction.

Keene said that admin remains one of the biggest pressures SMEs face, with productivity sitting 20 per cent lower than larger businesses as they contend with a mountain of payroll, rosters, compliance, and hiring themselves.

Noting that 57 per cent of SMEs reported burnout in the last year, Keene said AI may be able to handle some of the load, while keeping owners in control.

“It can flag payroll errors before a pay run, answer routine HR questions and rank applicants on skills, freeing owners to focus on customers and their team,” he said.

The report also signalled location as a significant factor in AI adoption, with a substantial gap between regional and metropolitan businesses of approximately 14 per cent.

With these businesses often struggling the most with recruitment and margins, Keene said they have the most to gain from AI, but that accessibility and expert advice remains deficient.

With the report finding that access to affordable and practical training remains one of the biggest barriers to small business AI adoption, Keene called for the expansion of government advisory services and programs such as the AI Adopt Centres.

“Training also needs to be sector-specific. A regional cafe owner needs help with rosters and award rates, not a lecture on large language models,” he said.

“It should be delivered live, not just as recorded webinars where possible.”

For employers, Keene said the first priority should be on AI sentiment.

The first job is making it acceptable. That starts with leaders using AI openly. Next, set simple guidelines that cover what’s allowed, what needs a conversation and what’s off limits, including which data never goes into an AI tool,” he said.

“Start with what people can do, not what they can’t.”

Employment Hero co-founder and chief executive Ben Thompson said: “You can’t demand change from an owner with no spare hours.”

“Give them practical training, guidance and tools that work, especially in the regions and the sectors furthest behind. Lift small business productivity and you lift the country’s.”

Keene said: “Above all, humans do the human work. AI handles the admin so your people can focus on judgement, relationships and the decisions that matter.”

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