Unless you are still using a flip phone and shopping exclusively in stores, you have probably utilized the most advanced—and controversial—technological advancement since the dawn of the computer – Artificial Intelligence (also known as AI). Whether you’ve used Apple’s Siri, Google’s Translator or just those friendly customer service chat boxes when shopping online, it seems that AI is everywhere.

Common examples prevalent in the personal and business environments include search engines, autofill and autocorrect functions in word processing, digital assistants like Alexa, and facial and speech recognition. Computers can now be taught to write articles, press releases, email messages and advertising copy. They can even design corporate logos and branding, sometimes better than humans can. Indeed, more and more office tasks that people assumed could only be performed by humans are now being done by AI-driven programs.

What does this mean for small to medium-sized businesses (SMBs) that struggle to manage rising costs of goods and labor in order to compete in today’s marketplace? It can mean lower costs and less risk, which should be enough of a reason for them to embrace AI lead technologies in everyday business practices. While many SMBs mistakenly believe that AI is too expensive, too difficult to adopt, or doesn’t apply to what they do, it will likely cost them more if they ignore it.

The fact is many AI tools are affordable and easy to use. Companies that are embracing these technologies are able to offer faster and more efficient services to their clients. As a result, business owners can spend less time managing their business and more time growing it.

Here are just a few ways AI can help small and medium-sized business services companies become more efficient, profitable and valuable:

• Human Resources: HR departments have been using AI for years to filter through hundreds of job applications, saving time but also increasing the likelihood of finding the right candidate. But that’s just the start. AI can also be used to reduce time and expense in the onboarding process once the person is hired, such as helping to answer their questions about benefits and company policies.
• Cybersecurity: Just as cybercriminals use AI to automate their attacks, software vendors and companies use AI to quickly respond and defend themselves. They use AI to learn, detect, predict and prevent these attacks from malicious emails, email trackers and other intrusions. AI enhances cybersecurity by quickly identifying unusual network activities and anomalies, indicating potential threats. It analyzes vast data volumes to discern patterns and trends, aiding in threat intelligence and helping professionals stay ahead of emerging attack types.
  • AI can respond immediately to threats, either by isolating affected systems or blocking malicious activities, reducing response times significantly. It can detect phishing attempts by scrutinizing emails and messages for suspicious links and sender details. AI assists in vulnerability management by identifying system weaknesses most likely to be exploited, enabling more effective security efforts. It also automates routine tasks like intrusion monitoring and firewall management, freeing up security teams to handle complex tasks. AI can also predict future attack patterns using pattern recognition, facilitating proactive security infrastructure strengthening. Finally, AI enhances user authentication security by employing biometric authentication systems like facial or voice recognition.
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• Data Analysis: Most businesses gather and generate more data than they can practically use, mainly because the amount of information is overwhelming. But companies can use AI to sift through it all quickly and help determine what’s useful, such as analyzing website traffic, customer preferences and satisfaction, and the like. Doing so can increase sales and make marketing campaigns more efficient.
  • Business intelligence tools such as Microsoft’s Power BI have had AI capabilities for years and they’re getting a lot better. AI tools are rapidly being integrated with an increasing amount of data and can aid in data exploration, comb through the data to automatically find patterns, help users understand what the data means, and predict future outcomes to help businesses drive results.
  • For example, ChatGPT’s new Code Interpreter can analyze data, generate charts, resolve mathematical problems, and modify files, among other functionalities. Additionally, it now supports file upload and download operations, features that were previously unavailable in ChatGPT.
  • Tableau’s new “Business Science” offering helps people elevate their human judgment with practical, ethical AI that brings predictions into their business problems today. This helps organizations make even faster, more confident decisions across their lines of business, while expanding their analytics use cases and deepening their understanding of their own data.
• Customer service: Chatbots and interactive voice response (IVR) systems have gotten increasingly smarter, to the point where it’s hard to tell sometimes if there is a real person at the other end of the conversation or a computer. These systems enable businesses to communicate with their customers 24/7, no matter where they’re calling from, freeing up employees to tackle questions and requests that the bot can’t handle. But that’s just the start. These systems can also be used to schedule appointments. For example, hospitals in the U.K. use chatbots to determine if the person needs to see a doctor or not, book appointments as needed, and manage their care, all in the name of providing a better customer experience.
  • Conversational AI, such as chatbots or voice assistants, can greatly enhance customer service in several ways:
    • 24/7 Customer Support: Conversational AI can provide round-the-clock customer support, answering queries or providing assistance at any time. This helps businesses to accommodate customers in different time zones and those requiring support outside of normal business hours.
    • Immediate Response: AI-powered chatbots can respond to customer queries instantly, reducing customer wait times and improving satisfaction levels.
      Handling High Volume Inquiries: Conversational AI can handle numerous interactions simultaneously, enabling businesses to cater to a large customer base effectively and efficiently.
    • Routine Task Automation: Conversational AI can automate routine tasks such as appointment scheduling, confirmation of orders, or answering frequently asked questions. This allows human agents to focus on more complex customer queries and issues.
    • Personalization: By analyzing past interactions and data, AI can provide personalized recommendations and support, enhancing the customer experience.
      Multilingual Support: Conversational AI can support multiple languages, enabling businesses to cater to a global customer base.
    • Customer Data Analysis: Interactions with conversational AI can provide valuable insights into customer behavior, preferences, and common issues. These insights can be used to further improve customer service and overall business strategy.
      Cost Efficiency: By automating routine queries and tasks, conversational AI can reduce the operational costs of a customer service department.
    • Customer Engagement: Conversational AI, with its interactive nature, can be used for engaging customers in a more conversational and interactive manner, promoting better customer engagement and experience.
    • Integration with Other Systems: Conversational AI can be integrated with customer relationship management (CRM) systems, databases, and other business systems to access and update information seamlessly during customer interactions.

While conversational AI offers numerous benefits, it is most effective when used in conjunction with human customer service agents. AI can handle routine queries and tasks, while human agents deal with more complex issues or situations requiring empathy and emotional understanding.

Since OpenAI’s ChatGPT was introduced earlier this year, there has been a huge increase in AI-driven customer service tools. But many similar solutions have been available for a number of years.

• Sales and Marketing: Using the information it gathers and analyzes on each individual customer, AI can then generate highly targeted, personalized marketing campaigns, including written content, logos, and other messages, even photos and videos. This process can then be automated as part of the company’s CRM system.
• Financial reporting: AI also plays a role in the business office, including budgeting, managing inventory, tracking income and expenses, and generating financial reports.
• Contract management: AI software can scan and analyze large documents within seconds and pick out the most important parts that require action, such as signatures, deadline dates, and the like. This is especially important with so many employees working remotely. Now everyone on your team will know what’s expected of them.

We believe small and medium-sized business service companies—not just large corporations—need to adopt AI and automation into their processes to streamline their operations, reduce errors, improve productivity, cut costs, and increase sales, which leads to richer valuations and attractiveness to prospective acquirers. In fact, it may be more critical for small businesses to embrace AI than large ones. After all, large companies can more easily hire more workers, but small businesses often can’t.

Next steps

The best way to get started with AI is slowly. Don’t try to automate everything you do. Analyze your biggest problems that are consistently increasing your costs and determine your biggest pain points. Maybe it’s customer support. How long does it typically take to get back to a customer with a question or problem? Start with simple tasks that can have a big impact. The next step is to find out what’s the best system for your type of business, how easy it is to use, and how much it costs.

Failing to stay on top of the latest technologies is a quick way to be left behind. But not every company wants to or can make the leap, so selling out or combining with another company that is prepared to make the investment is a perfectly reasonable move. If you need help exploring your options, give us a call. FOCUS Investment Banking has been providing M&A advisory services to business owners and investors in the Business Services sector for more than three decades. We’re here to help.

Anna Brumby White, a FOCUS Principal, has over 25 years of experience as an influential business leader working with Fortune 500 companies and small businesses on multiple continents. Mrs. White has broad industry experience in mergers and acquisitions, business development, and transaction execution.

Mitch Prust, a FOCUS Managing Director, has over 30 years’ experience in technology, strategy, and mergers and acquisitions. Over the course of his career he has worked on the client end of sell side, buy side and capital raise assignments.