GUEST COLUMN:
Josh Miles
Head of Wales
Federation of Small Businesses
Artificial intelligence has moved rapidly from future possibility to day-to-day reality for many of the UK’s small businesses. Our latest research at the Federation of Small Businesses shows adoption has risen sharply, with 55% of small firms now using AI, compared with just 20% in 2023.
We hear stories every day from FSB Wales members about how they are using AI in practical, business-led ways, including suggesting basket items for online customers, writing marketing copy, improving stock control and even helping identify and deter shoplifting.
The question now is not whether AI will affect small firms, but whether they will be able to share fairly and confidently in its benefits. The prize is clear with FSB’s analysis suggesting that deeper adoption by SMEs could add more than £42 billion a year to the UK economy.
Many small businesses are finding that AI gives owners and staff valuable time and headspace. Used well, it can help firms respond faster to customers, improve decision-making, identify new opportunities and compete in markets that previously felt out of reach.
Yet confidence is not keeping pace with adoption. FSB’s research found that 92% of small businesses now have concerns about AI, up from 73% in 2023. Those concerns are not abstract. They include trust in providers, data privacy, compliance, intellectual property, legal liability, inaccurate outputs and security. For a small business owner, they are the kinds of questions that determine whether a tool feels like an opportunity or a threat.
If AI becomes something only larger firms feel able to adopt with confidence, we risk widening the gap between businesses with the time, money and legal support to experiment, and those already stretched by day-to-day pressures. That matters because small businesses are rooted in communities across Wales. When they are supported to become more productive, the benefits are felt in high streets, supply chains and local employment.
That is why trust must sit at the heart of AI policy. Small firms need clear answers on who owns AI-generated content, how their data will be stored and used, whether it may be used to train future models, and who is responsible when an AI tool gets something wrong. They also need guidance that is practical, accessible and shaped around the realities of running a small firm, rather than assuming the time, resources and compliance capacity of a major corporation.
The UK Government has an important opportunity to set the conditions for trusted AI adoption. With Welsh MP Kanishka Narayan, the Minister of State for Artificial Intelligence, now attending Cabinet, there is a clear route to ensure AI policy is shaped around the needs of the small firms that make up so much of the economy. That means making sure the technology is not only innovative, but usable, safe and worthwhile for small businesses.
This should include clearer standards from AI providers, with plain-English information about data use, ownership of outputs and accountability when things go wrong. It also means stronger protections for small businesses’ data and intellectual property, alongside practical support to help owners and employees understand how to use AI legally, ethically and securely.
There is a distinct Welsh dimension too. The Welsh Government’s proposed new development agency offers an important opportunity to reshape business support around the practical needs of firms looking to start, scale and invest. That should include helping small businesses understand where AI can add value, what risks they need to consider, and how to use the technology with confidence.
Many owners need to see how AI can solve real problems in their business, whether by improving customer service, reducing administrative burden, forecasting demand or responding to procurement opportunities. Peer examples, trusted advice and sector-specific guidance will do far more to build confidence than abstract promises about transformation.
Infrastructure cannot be an afterthought. AI adoption relies on reliable digital connectivity, affordable access to tools, appropriate skills and routes into innovation funding. The Welsh and UK governments should work together to make sure these foundations are in place, because a business cannot take advantage of new technology if it is still struggling with the basics.
The opportunity is significant, but it is not automatic. If policymakers get this right, AI can help small firms increase productivity, grow revenue and free up time to focus on customers, staff and innovation. If they get it wrong, uncertainty and mistrust will prevent many businesses from adopting tools that could help them grow.
For small businesses, confidence will be a condition for adoption. If we want AI to deliver for the whole economy, then government and business support must start by closing the trust gap.
