Pros & Cons of Generative AI for Small Business

In recent years, the rise of Generative AI (GenAI) tools like Gemini, ChatGPT, Claude, Grok, and Bing’s Co-pilot, among others, has revolutionized how businesses operate. From automating mundane tasks to providing novel solutions, GenAI is reshaping how we get things done. However, as we advance at what some would consider to be reckless speeds, we are exposed to a variety of risks. Data security, ethical dilemmas, IP issues, and stakeholder backlash are just some of the challenges businesses face when integrating GenAI into their operations.

Ironically, the biggest risk for small businesses might just be the failure to adopt the use of GenAI in the first place. In today’s rapidly evolving market, the wait-and-see approach, whether justified due to the risks or not, means falling behind and losing out to competitors. This article aims to guide small business owners and decision-makers through various pros and cons of using GenAI, providing insight into safe and effective implementation along the way.

Pros of Using GenAI in Your Small Business

1) Improved Efficiency and Productivity

From automating repetitive tasks to faster decision-making, the first pro on most small business owners’ minds is improved efficiency and productivity. Like the 1970s Steve Austin, the Bionic Man, GenAI helps our businesses become better…stronger…faster. How much could your business grow if you could double or triple your output, or more, with the same resources? How can Generative AI help you improve efficiency and productivity in your small business today? Here are a few examples:

• Streamline electronic communication.
• Automate your response to RFPs.
• Draft marketing copy, documentation, and training materials.
• Idea generation and brainstorming.

2) Enhanced Customer Experience

GenAI is not only available 24/7, but it can also instantly tailor recommendations to individual customers, enhancing their experience and increasing satisfaction. If used properly, GenAI can help us build emotional connections with our customers that help forge lasting bonds. According to “The New Science of Customer Emotions,” published in the Harvard Business Review, fully emotionally connected customers are 52% more valuable, on average, than those who are just highly satisfied. Some exciting ways small businesses are using GenAI to enhance their customer experience include:

• Manage customer pre-sales inquiries.
• Provide technical support.
• Improve customer onboarding.

3) Cost Savings

The idea of doing more with less has been a running theme for GenAI for Small Business owners. Larger organizations see opportunities to cut costs by automating tasks and reducing labor, however, for small businesses, this means finally being able to work on ideas you previously couldn’t afford to do or do the way you wanted it to be done. Examples:

• Provide multi-lingual customer service chatbots.
• Generate images and videos for marketing or other communications.
• Write code or formulas for your websites and spreadsheets.

4) Competitive Advantage

The world is changing faster than ever before and with the advent of GenAI a new era is born. An era that is presenting all of us with new opportunities to bring our ideas to the world; ideas that will change how we live, work, and play moving forward. GenAI puts the ability to innovate and adapt in all of our hands. These are essential abilities our businesses are going to need to survive and thrive in today’s rapidly changing business landscape. Considering that people all over the world now have these tools, maintaining a competitive advantage has become a matter of life or death for all businesses.

The Cons of Using GenAI in Your Small Business

Despite all the advantages the use of Generative AI brings to our businesses, there are numerous risks associated with its use that we as small business owners, managers, and operators need to be aware of. Decisions about when, where, and how we use these new tools should be made only after examining the overall circumstances and weighing the risks and rewards. Now that we’ve seen a few of the many rewards GenAI can bring to small businesses, let’s dive into a few of the cons.

1) Data Security Concerns

The use of GenAI raises concerns about the security of sensitive business and customer data. Of course, people worry about data breaches, but that threat exists everywhere in our digitally connected world today. What is more concerning about GenAI specifically is its rapidly growing, unfettered, and occasionally reckless use that is increasing the ability for anyone to share any potentially sensitive information so easily and in ways that may unknowingly cause harm. Coupled with the fact that each of the growing number of platforms follows different security practices, and treats the data differently, makes data security a top concern and challenge.

2) Ethical Considerations

Although misinformation and misuse of information are concerns, they have been around since before AI and will continue to be long after. Biases and discrimination in GenAI output, whether unintended or not, bring less obvious concerns that small businesses need to be aware of, especially as the number of decisions we and others are making using AI is growing at breakneck speeds. The biases being found are unfortunately a result of AI having been trained on real human experiences which have been found to contain biases that the AI picks up on.

As our use of GenAI continues to grow, keeping an eye on these ethical considerations and maintaining transparency in how we use GenAI will be crucial to gaining and maintaining the trust of our customers and stakeholders.

3) Legal and Compliance Issues

Navigating legal and regulatory frameworks surrounding the use of Generative AI may seem cloudy at the moment, considering widespread standards have yet to be adopted. However, many existing frameworks for conducting business and handling information do exist and should be followed, even if we think they don’t apply because we’re using some new technology that hasn’t had specific laws written for it yet. Existing privacy laws are a perfect example.

4) Copyright Laws and Intellectual Property Protection

The numerous lawsuits against OpenAI, the creators of ChatGPT, claiming they violated copyright laws when training their AI using copyrighted works is just one piece of the puzzle. Arguments over the ownership of works produced using GenAI are already taking place and the future IP protection of products created using these tools may be in doubt. Whether or not your business relies on having IP protection for your products or not, understanding what’s happening in the legal landscape regarding intellectual property rights in the context of GenAI is a growing concern for those using or planning to use these tools in their businesses.

5) Employee and Customer Resistance

Fears of AI taking our jobs have gotten a lot of attention in the past and that will surely continue. These fears are re-runs of the same fears that pop up each time new technologies are introduced. What’s different this time is how the never-before-seen rate of adoption of ChatGPT and the like may displace so many workers before giving us a chance to transition to new things, as we’ve done in the past. Privacy concerns, the #1 con on our list, are another driver of fear, especially among customers. When people feel threatened, they fight back. Whether their resistance is expressed through strikes, boycotts, or clandestine internal sabotage, the resulting damage to your business can be devastating.

6) Stakeholder Worries

Similar to employee and customer resistance, worries coming from business stakeholders, those who have an interest in a company and can either affect or be affected by the business, can be a major con for many small businesses if you have stakeholders who are against the use of GenAI in your business. Their objections, whether valid or not, could lead to negative actions should those stakeholders feel strongly enough that the threat to them is real.

7) Unleveled playing field

As certain businesses rush to take advantage of all that AI has to offer, they’re going to be making leaps and bounds over what will become their former competitors. As with the advent of past technologies, this isn’t new, but what’s new is how quickly these changes are going to happen. Businesses who are adopting AI are now speeding past those that aren’t and the consequences of this will be huge.

The Role of Generative AI Risk Mitigation

Despite the numerous cons of Generative AI, small businesses cannot afford to sit back and wait for the technology to mature as they may have done in the past. GenAI is a game-changer, whether you’re playing the game or not. Failing to do so can be catastrophic, but just jumping in and hoping for the best isn’t safe either.

Engaging with GenAI requires careful consideration and planning. Implementing risk management strategies is crucial for your safe and effective use of GenAI.