AI: Supercharging SMBs or Destroying Them?

June 11, 2024

by a searcher from Louisiana State University - E. J. Ourso College of Business in Baton Rouge, LA, USA

Labor is more expensive than ever and getting harder to find. Automation and technology have advanced to the point where they are ready for deployment. Look at Klarna, the buy now pay later company. They added $40 million to their bottom line just this year by augmenting their customer success teams with generative AI. My passion for automation is one of the reasons I'm searching for small businesses to acquire and to bridge the gap into this new generation

I started an automation agency with the intention of making technology and automation more readily available for small and medium businesses. SMBs are most at risk from the current technology paradigm shift and ironically can also benefit the most from it. It is this paradox that led me to think there's got to be a better way to do it. SMBs are too small to stay up to date with advancements in AI and technology given the increasing rate of innovation. Just like SMBs outsource IT, web design, and legal services, shouldn’t there be AI as a Service for SMBs?

I'm writing this post on search funder because I found this community after reading Buy Then Build and wanted to gauge what people think of the idea. I've been working with small businesses to do some of this work while also searching for a business of my own. Successful AI and automation implementation reduces COGS, reduces SG&A, and boosts revenue. For SMB owners, this directly translates to more money on the bottom line.

This is a group of people looking to drive change and growth in SMBs so I’m keen to get your thoughts. What do you all think of this new paradigm shift? Do you see things the way I do? Let me know what you think in the comments! Message me if you think what I’m trying to do is something that could help you too.

Cheers,

Nick

Reply by an intermediary
from University of California, Irvine in San Diego, CA, USA

So I use AI in almost every department of our company. From answering questions buyers have about our listings using transcripts from every call we have with buyers and the seller and all the document we collect .... to creating CIMs to ....creating social media etc. (obviously all double checked by a human). So incorporating AI is the same way of "having a website" when the internet came on. Some industries will have to have it, some dont, bet as the famous quote goes, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change" - Charles Darwin

Do you plan on having this be a professional service or a recurring billing model?

Obviously you should try to aim for recurring billing, problem with recurring billing for this is what are you charging them consistently for? Can you keep providing value every month? Its possible with the consistent change of AI.

This sounds more like an MSP play, here is a good article about it: https://www.northriverit.com/blog/the-changing-role-of-the-msp-in-an-aas-world
What you are describing sounds closer to how they define MSP in that article.

I would say set up a company to be an MSP for AI for SMBs. take the time to understand their business needs, formulate a plan, charge a implementation fee, followed by a monthly MSP fee.

Reply by a professional
from Wilfrid Laurier University in Calgary, AB, Canada

I like where you are going with this, ^redacted‌, The introduction on AI systems in all their forms will transform SMEs. The strongest will survive. In the meantime, there is the opportunity to buy low and sell high after increasing market share, reducing costs and streamlining labour costs.
Generally, the biggest costs in any business are the direct wages in COS and Salaries and wages in OpEx.
Surprising to me is the expected replacement of highly educated labour but not hands-on labour. The use of Business Intelligence and Analytics and Financial and Accounting Management will replace a lot of the really expensive labour - reducing costs. (Look out CPAs, the robots are coming for you!) LLMs with Creative AIs in conjunction with CRMs and other Marketing Automations should help with increasing revenues and should reduce the mid-market cost of labour.
We will still need people to 'do' things. I think it will be a long time before we have an AI plumber fix the leaky pipe!

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