Small businesses have long been the scrappy innovators of the American economy—quick to adapt, lean by design, and eager to make the most out of limited resources. But when it comes to adopting one of today’s most transformative tools—artificial intelligence—a surprising number of entrepreneurs are tapping the brakes.
That’s the takeaway from Verizon Business’s latest State of Small Business Survey, which found that while 55% of small business owners upgraded some form of their IT infrastructure in the last year, only 38% have actually adopted AI in their operations. The contrast is striking: small businesses are investing in better Wi-Fi and point-of-sale systems, but hesitating to embrace a tool with the potential to revolutionize how they manage everything from customer service to staffing.
So what gives?
For many entrepreneurs, the hesitancy isn’t about resisting change—it’s about prioritizing what feels tangible. Faster internet, better cybersecurity platforms, or upgraded inventory systems make immediate sense. They improve known pain points and are easy to visualize. AI, on the other hand, is often seen as a black box, hard to implement and even harder to trust.
According to the Verizon survey, over half of non-adopters cited security risks and uncertainty around the accuracy of AI tools as reasons for staying away. Others said they simply don’t know what AI could do for them—or worry that their employees would resist it out of fear of being replaced.
Still, there’s growing evidence that for those who do take the leap, AI is delivering real value. Businesses that adopted the tech reported lower error rates, improved staff management, and increased workflow efficiency, especially in areas like inventory and online transactions. One of the more unexpected benefits? Helping ease return-to-office friction by streamlining employees’ workloads.
AI isn’t just about automation—it’s about intelligent automation, where the tech doesn’t just do things faster but makes decisions based on data that humans don’t always have the time (or capacity) to parse.
Still, that nuance is often lost in the marketing messages bombarding small business owners. There’s a growing push that frames AI as a one-size-fits-all solution, and that’s part of the problem, according to George Kailas, CEO of Prospero.AI.
“The narrative right now is that small businesses need to automate everything to stay competitive. But for many, that’s just not true.” Kailas says. “You can’t expect a local contractor or bakery to replace what makes them special—personal service and community connection—with chatbots and generic automation.”
Instead, he argues, AI should enhance, not replace, what small businesses do well. The back office is where AI shines: scheduling, inventory tracking, fraud detection, and even social media content generation, areas where many entrepreneurs are stretched thin.
“Use AI to get your time back—so you can reinvest it in the parts of your business that customers actually notice,” Kailas says.
What’s Really Holding Business Owners Back?
Much of the hesitation boils down to mindset and messaging. Despite 76% of small business owners acknowledging that AI has improved their outreach on social media, only 28% use it to manage those efforts regularly. And while more than half of non-users say they’re aware of what AI could do for them, only a fraction feel confident enough to take the next step.
There’s also a knowledge gap. Many business owners aren’t tech-phobic—they just don’t have a clear starting point. They’re looking for tools that integrate smoothly into their existing workflows without needing a crash course in data science or a complete operations overhaul.
That’s where AI providers need to step up—not just with tools, but with education, real-world examples, and customer support that meets small businesses where they are.
The Bottom Line
The AI opportunity for small businesses isn’t just about keeping up with Silicon Valley—it’s about getting smarter with limited time and resources. Whether it's helping teams do more with less or reducing friction in an increasingly digital economy, AI has a place in small business. But only if it's deployed wisely and with clarity.
As Kailas puts it: “AI isn’t a magic bullet—but used right, it’s a force multiplier. The sooner small businesses can shift from fearing it to shaping it around their goals, the more competitive—and human—they’ll stay.”
