Ryan Stone used Midjourney to create images like this world for Lambda Films.
Video production and animation studio Lambda Films uses generative AI program Midjourney to create images from typed text, bringing a vision to life from copy. — Lambda Films

Why it matters:

  • Small businesses usually have fewer resources than large enterprises, but they can use artificial intelligence to bulk up their operations.
  • AI can help small businesses do more in less time at a lower cost or for free — from automating expense management to producing a sales pitch to generating creative imagery from text.
  • We are at the early stages of adoption—an estimated 25% of small business respondents in a May 2023 survey said they are using or testing generative AI — so SMBs can outpace competitors by embracing the technology.

Ryan Stone sometimes lost business because Lambda Films, his small video production and animation studio, did not have a concept artist on board, someone who could translate vision to images for client approval.

But all that changed when Stone started using Midjourney, a generative artificial intelligence (AI)-based program. Generative AI generates content—images or copy—from typed prompts. Midjourney delivers images from typed text, literally bringing Stone’s vision to life. “Working in a creative industry, we have ideas in our head, and we can see them. But being able to communicate those ideas to a client can be really difficult,” Stone said. Midjourney allows Stone to move those ideas from his head to a vision board.

As a result, “the client now understands the concept you’re going for, so it’s a lot easier to sell ideas,” he said.

In its adoption of generative AI, the UK-based Lambda Films is among a small but growing segment of small businesses tapping the technology. A quarter of 1,000 U.S.- or Canada-based small business owners said they were currently using or testing generative AI tools, according to a FreshBooks May 2023 survey. In addition, two of out three said they would try the technology in the subsequent 12 months.

SMBs’ mighty helper — from doing expense reports to writing blog posts

The relatively recent hype over AI notwithstanding, small and medium-sized businesses (SMBs) have already been using AI-based tools without knowing it.

“Just like AI has quietly enhanced the vehicle driving experience over the last few years through automated driving or route recommendations, and without the fanfare of this being AI-powered, the same is also true for business and consumer software that leverage highly targeted machine learning models to accomplish specific tasks,” said Mike Morton, VP of Dynamics 365 Business Central, Microsoft’s business management platform for SMBs.

Case in point: “A popular use of machine learning amongst SMBs is automating expense management where photos of receipts or PDF invoices are automatically analyzed and converted to structured data, greatly reducing manual data entry,” Morton said.

AI can help in many additional ways. Chatbots based on conversational AI, for example, are a powerful tool for front-line customer service agents and ease the burden of providing round-the-clock support. And generative AI can help sales and marketing not just by creating images from text as Lambda Films’ Stone does, but by also drafting text, image, and video content for ads, social content, and blog posts.

[Read: How Artificial Intelligence (AI) Is Changing How Marketers Sell Everything From Food to Fashion]

For those in the sales field, AI could generate a sales pitch and accompanying slide decks that are tailored to a particular customer, dramatically reducing the effort to research and prepare tailored content.

Mike Morton, VP, Dynamics 365 Business Central

The AI advantage for small businesses

AI delivers a range of advantages to SMBs, such as:

Cost savings due to improved processes.

“I love AI because it maximizes efficiency. The struggle for businesses such as ours is that we are time-poor and we can’t really afford enough staff to be able to lighten the workload,” Stone, who employs a staff of eight, points out. Incidentally, close to half the SMB respondents for the FreshBooks survey are expected to hire fewer people due to AI.

“​For those in the sales field, AI could generate a sales pitch and accompanying slide decks that are tailored to a particular customer, dramatically reducing the effort to research and prepare tailored content,” Microsoft’s Morton says.

Helps small businesses focus on what they do best.

“AI democratizes the space and helps people focus more on what they do best instead of all the external elements of running a business or putting together a successful presentation,” said Javid Louis, Director of Social for Ticketmaster and ex-Twitter Senior Brand Strategist. “The magic is not in the decks or the slides, it’s in the SMB’s creativity.”

Accelerates new products to market.

Copilot for Business Central, a feature of Microsoft Dynamics 365, helps SMBs to accelerate scaling by producing AI-generated product descriptions. ​The feature suggests copy for engaging product descriptions tailored to a brand using a product’s title and key attributes, such as color, material, and size.

Makes talent more easily accessible.

A big enterprise might have at least a few concept artists on board, Stone says, but his video production business can’t afford to hire a concept artist for every pitch with no guarantee of winning the work. “AI tools mean that we can do it all in-house and do it really effectively,” he said.

SMBs don’t have to use AI to cut down the time wasted on routine tasks; they can start with more basic automation. Journalist and content marketing writer Anna Burgess Yang is a small business of one, who uses Zapier to run about 1,200 tasks a month. While Zapier offers AI-based improvements, Yang has not yet leveraged them. Instead she uses the tool’s automation capabilities to streamline her work. Using Zapier, Yang connects different apps like her project management and social media management tools, her calendar scheduling app, Google Drive, and more. Doing so allows streamlining of tasks. When Yang signs a new client contract for example, related tasks are automatically funneled into her to-do app.

A variety of AI-based tools can help SMB business operations. These include Jasper for content creation and marketing copy; Zapier for workflow automation; Midjourney for generating creative imagery from text; ChatGPT for research and content ideas; and Flick for social media management.

[Read: 3 Big Picture Trends Set to Drive Business in 2023]

Potential pitfalls to watch for: ‘AI-generated output is not always correct and often requires human review’

Microsoft’s Morton cautions against over-reliance on AI tools. “AI-generated output is not always correct and often requires human review of the outcomes,” he said.

“Implementing AI often requires an upfront investment that might be steep for smaller businesses,” cautions Dmytro Sokhach, Digital Entrepreneur and Founder of digital marketing firm, Admix Global. “There's a learning curve and training period needed to effectively use AI tools. Finally, privacy and security concerns can arise, as AI systems often handle sensitive data and could become targets for cyberattacks,” he added.

There is also some concern about whether AI-generated art can qualify as art. “As a creative business, the thinking around AI is very complex as the core values of our industry are originality and human-centered creation,” Stone acknowledges. But in Lambda Films’ case, once a project is approved, the final execution is all from the team at Lambda Films without AI. AI only serves as a tool, he says, to aid them in making more sales.

Ticketmaster’s Louis agrees and points out that AI only delivers an “elevated starting point.” Just like students know not to regurgitate CliffsNotes on an exam, “SMBs shouldn’t be leaning solely on AI output but instead use that output to work smarter,” he said.

The note of caution notwithstanding, SMBs cannot afford to ignore the growing versatility of AI, sources said. “It’s no longer a secret sauce but something that should be baked into every reasonable element of your business in order to increase efficiency in the way that you’re operating,” Louis said.

Using AI does not guarantee positive results. But there are occasional encouraging signs. Case in point: A few months ago, Lambda Films used Midjourney to win one of its biggest projects to date.

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