Jessica O'ConnorSmall and medium-sized enterprises (SMEs) across the UK risk falling behind their larger rivals as artificial intelligence (AI) adoption gathers pace in big business, according to Joe Phelan, business savings expert at money.co.uk.
While AI is transforming how organisations work, compete and innovate, many smaller firms remain held back by skills shortages, unclear strategies and doubts over investment.
Phelan explained: “AI adoption is accelerating across larger companies, leaving many small businesses at risk of losing ground.
“From skills gaps to strategic uncertainty, we explore what’s holding SMEs back, and what they can do to move forward.”
Studies by the Institute of Coding and Employment Hero reveal that fewer than one in three SMEs feel confident in embracing AI, despite more than half believing it will be critical to the future of business.
Training gaps are the most significant obstacle, with only a quarter of smaller firms confident they can implement AI tools safely and effectively.
Over half of SMEs use AI tools less than once a month, and more than a third have never used them at all.
The reluctance to adopt stands in stark contrast to the benefits reported by early adopters. Employment Hero found that among businesses already using tools such as ChatGPT and Otter.ai, 66% said it improved work quality, 62% felt more creative and less overwhelmed, 57% procrastinated less and 51% worked fewer hours.
Despite these outcomes, only 24% of professionals believe their organisation is investing meaningfully in AI tools or training.
Generational divides are also shaping adoption rates.
Millennials are leading the way, with 39% using AI daily or several times a week, compared with 17% of Gen X and 13% of Baby Boomers.
Analysts say this difference is less about resistance and more about a lack of clear, accessible guidance on AI’s benefits, limitations and safe integration into business operations.
Government-led support is beginning to emerge. The UK’s AI Opportunities Action Plan and TechFirst programme aim to train 7.5 million workers by 2030, but experts warn that adoption strategies must also prioritise data security, ethics and compliance.
In light of thos, Phelan suggested starting small by piloting projects can help SMEs test AI’s value, learning what works and refining their approach before committing to a full rollout.
He concluded: “AI isn’t just a buzzword – it’s a gamechanger. But without investment in people, processes and financial infrastructure, many SMEs risk falling behind.
“With training available and the right financial support in place, the moment to act isn’t somewhere down the line – it’s right now.”
