Report: Small Businesses Face “Perfect Storm” of AI Disruption in New York

Small business owners have a lot more to be worried about than just inflation.

As the United States economy balances high inflation and cooling consumer spending, the country's small business owners are battling another threat.

Why Artificial Intelligence Could Destroy Small Businesses

While using AI to generate prompts and art pieces has become something of an American pastime, not everyone is enjoying this growing trend.

A report from Goldman Sachs found that more than half of all small businesses in New York State actually fear the impact artificial intelligence will have in their industry over the next decade.

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Taking those numbers further, Alta Technologies decided to put their finger on the pulse to see how industry insiders think what direction this trend will go.

The agency polled over 4,000 business owners and 52% spoke out against AI, believing it will create a "lost generation of workers, leaving many small businesses struggling to function."

How Is AI Threatening Future Employees?

Turns out, those about to enter the job market are gun-shy about joining industries they see can be overtaken by machines. In fact, a growing number of those still in school say they believe AI will soon take over entry-level roles.

This is causing the next generation of employees to avoid applying to roles they see could become redundant over the next few years.

Business owners warn the trend is causing a significant drop in the quality of applicants looking to join their field. This drying out of the talent pool, so to say, is causing business owners to worry about how it'll impact their bottom line.

Some say they are already feeling the pinch.

AI Is Just Insult to Injury for Small Business Owners

For some small employers, they say they have always been duking it out with larger or big-name firms for talent. In fact, seven in 10 small business owners admit they significantly feel the effect of this ongoing rivalry.

Of that number, 24% say it is a significant challenge while 44% classify it as a "serious" problem.

It's a tale as old as time, but they now say AI is exacerbating the competition.

The Irony Is...

Small businesses say they are now thinking of embracing AI to plug the holes and cut back on hiring to ensure they don't lose anymore footing.

About 35% of polled employers admit they have begun transitioning to using AI instead of junior hires.

But not everyone is sold, because the grand majority (65%) feel it is too early to jump the gun. Instead, they are choosing to watch from the sidelines and take notes.

How Small Business in New York Are Adapting to AI Competition

Goldman Sachs found that these small business owners are savvy and aren't ready to wave the white flag.

Of those asked on how they're circumventing the talent drought, about 1 in 3 respondents said they are upskilling their teams and training their new hires personally.

About 1 in 5 respondents say they are offering a more generous pay package and sweetening their job offers with better perks.

A small fraction, just 8%, say they are embedding themselves in schools and universities to poach prospective recruits.

However, the largest number at 42% said they are still taking notes and haven't made any changes to their businesses yet.

Other Findings...

The survey found that two thirds of respondents say small businesses will suffer from AI disruption more than larger companies.

Of everyone polled, 52% fear that small businesses will inevitably struggle to function due to a possible "lost generation" of workers.

Of the industries most likely to feel the crunch, retail and customer service is number 1 while marketing and advertising, alongside education and training are tied in second place.

The projected industry to have the third-worst struggle is manufacturing and logistics.

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