How AI in Small Businesses Helps Leaders Compete and Grow
The emergence of new AI tools and solutions serving small businesses is letting companies of all sizes adopt HR solutions that are increasing productivity, reducing costs and improving the employee experience.
Widespread adoption: 75% of small businesses have embraced AI, leveraging specialized tools to enhance efficiency and competitiveness.
Productivity boost: 79% of HR leaders believe AI increases productivity, while 79% also note it helps reduce costs.
Simplifying tasks: AI tools save employees up to an hour daily by streamlining everyday tasks, improving both speed and quality of work.
Enhanced customer and employee experience: AI is being used to automate payroll, scheduling, and onboarding, leading to significant improvements in employee experience.
Streamlined operations: 70% of small businesses utilize AI for payroll and HR functions, enhancing compliance and recruitment processes.
Business growth: AI adoption is linked to gains in productivity, insights, and reduced security risks, with 63% of businesses reporting improved efficiency.
Human-centric approach: Emphasizing that AI should support human roles, not replace them, and involving employees in AI strategy development is crucial.
Real-world success: Case studies, like that of the Children of Life academy, demonstrate how AI can simplify complex processes, allowing owners to focus on core business aspects.
Accessible solutions: Small businesses can adopt AI solutions to target pain points, improve HR practices, and drive growth in a manageable way.
How small businesses are using AI in practice
AI isn’t just for large enterprises. It’s increasingly helping small businesses compete and thrive in new ways. From specialized tools that automate everyday processes to solutions that streamline payroll and HR, AI is already delivering measurable value. According to ADP’s 2025 Market Pulse survey, small business leaders are largely positive about its impact, with 79% of HR leaders saying it boosts productivity and 79% saying it helps reduce costs. Small businesses are using AI right now across the HR function to improve business outcomes.
As specialized solutions designed for small business hit the market, there’s an increase in adoption. Recent research from Goldman Sachs notes that three-quarters of small businesses have embraced AI. AI helps small businesses simplify everyday tasks, improve customer interactions and support day-to-day operations. Key areas where AI is at work now include:
Simplifying everyday tasks
Bloomberg reports that AI tools are saving workers up to an hour per day on everyday tasks. In the same report, three-quarters of employees said AI tools help improve the speed or quality of their work. By leveraging AI to simplify and speed up everyday tasks, businesses increase productivity and free up employee time to focus on high-value tasks.
Improving customer interactions
Businesses are rolling out customer-focused AI solutions, and HR departments are doing the same to improve the employee experience. Automating payroll and time-tracking, scheduling, onboarding and access to information and support can have meaningful impact. HR.com found that 57% of organizations embracing emerging technologies reported seeing improvements in their employee experience as a result.
Streamlining operations
AI solutions are being deployed to streamline payroll, stay on top of compliance requirements and improve the speed and quality of the recruiting process. The 2025 Market Pulse survey found that 70% of small businesses are already using AI in some way to support payroll and HR tasks, for example.
Check out ADP’s AI Insights to learn more about how AI is changing the way we work.
The benefits of AI for business growth
Organizations that embrace AI across the human resources function are seeing real gains. Capterra’s 2025 HR Software Trends Survey found that 63% of businesses adopting AI reported improved productivity or efficiency, while 48% saw better insights and 38% reduced security risks. On the human side, 35% reported better candidate or employee experience.
AI offers several benefits to small businesses focused on growth. The first is the ability to automate repetitive tasks and free up your staff to focus on strategic initiatives. Instead of doing data entry, HR reps can get face-to-face with employees for training and check-ins, for example. Small businesses can also use AI-driven data solutions to help give managers real-time business insights and give HR a clearer view of what is working and where improvements are needed.
Keeping people at the center
As small businesses develop an AI strategy, it’s important to keep in mind that AI should support, not replace, the human side of the business. Take time to assure your people that AI is a catalyst for their performance, not to replace your workforce. Increase excitement and adoption by including employees in tool selection and offering training so they understand the possibilities. An AI-powered employee recognition program can help identify awards that are meaningful to specific employees or groups for greater impact. Those suggestions should be reviewed and ultimately deployed by your HR relations team.
AI in small business: A case study
When the wanted to modernize their payroll, they partnered with ADP to implement RUN. Instead of spending time on manual payroll processes, streamlined and automated solutions allowed the manager to complete the process in about 15 minutes. “Using RUN gives me more time to connect with parents, focus on my business and not worry about things I shouldn’t worry about, like payroll,” says Barbara Richardson, the academy’s owner.
By identifying the areas where small businesses are spending significant amounts of time that take employees away from the core mission, it’s possible to develop a plan to embrace AI in a way that supports an organization’s needs.
Getting started with AI for small business
AI is no longer just for large enterprises. A variety of solutions can help growing organizations tackle their most important challenges. Small businesses can take practical, managed steps to adopt AI by focusing on their most urgent pain points. AI tools can help employees get more done, HR teams craft a winning employee experience and drive growth while keeping people at the center of the business.
