AI has been both a blessing and a curse for small businesses. Cheaper technology means that more minor players can level up their competitiveness without having to scale rapidly, but the technology’s reliance on data raises a host of concerns about privacy. This doesn’t come as much of a surprise. The news these days is dominated by stories of data breaches that erode trust and force organizations to take drastic action to prevent further harm.

More data is emerging that small businesses are successfully navigating the tightrope between embracing exciting new technology and approaching a mystifying piece of AI with caution. Earlier this year, Zoho partnered with Michael Fauscette and Arion Research to conduct a global privacy and AI survey titled, The AI Privacy Equation — Balancing Innovation with Protection in the Modern Enterprise. The study spoke to 4,782 global business professionals, 47% of which are small or medium sized businesses. Plus, 33% of the companies surveyed have less than 100 employees.

The results of this survey, published in September, paint a mixed but ultimately optimistic picture of how small businesses are wading into unknown privacy terrain. Ultimately, they understand the privacy risks presented by AI and have taken steps to get out ahead of them—and as the survey says, those companies who appropriately emphasize privacy are poised to create sustainable competitive advantages.

Here are some factoids from the survey and what they mean for small businesses:

“When examining organizational privacy concerns, customer data breaches dominate at 40.8% of top-ranked responses.”

As the study lays out, “This primary focus reflects the reality that customer data breaches carry the highest potential for reputational damage, regulatory penalties, and business disruption. Organizations understand that customer trust forms the foundation of business relationships, making customer data protection the highest privacy priority.”

While larger businesses can try to perform damage control when a data privacy issue arises, small businesses do not share that luxury. Their resources are stretched too thin and the competition for customer attention to begin with is far too fierce. News of an issue can proliferate quickly and ground a small business that would otherwise have launched.

Rather than act reactively, it’s up to small business owners to proactively get ahead of privacy concerns before they become even remotely a reality. This process starts by codifying a stance on data privacy to be published on the company’s website and shared far-and-wide. Once this is in place, prospective customers will be able to compare it against those of other companies when they’re conducting exploratory research, meaning that these privacy policies will become competitive differentiators. It’s far easier for a small businesses to stake a claim in data privacy than, say, promising a gargantuan customer service team or the latest flashy pieces of technology.

It’s also up to small businesses to address the other two major concerns identified by the privacy survey: employee privacy (18.6%) and regulatory compliance (14.6%). Luckily, the approach doesn’t have to be all that different. By developing data privacy policies for their customers and posting these policies online, small businesses will demonstrate to employees that they take data privacy seriously (perhaps even include employees in the creation of privacy policies) and provide a framework upon which to build mechanisms to maintain compliance.

“Rather than weakening privacy protection, 41.3% of organizations report significantly strengthening privacy measures since implementing AI technologies, with an additional 25.5% somewhat strengthening their privacy approaches.”

It may seem counterintuitive at first that greater AI adoption would lead to stronger privacy measures. After all, much of the chatter around privacy has to do with how AI has added much complexity to the privacy formula, as understanding of the technology is sparse and regulations or governance is even sparser.

But as the survey highlights, the process of implementing AI requires companies to take a deep look at their inner workings best practices. These have to be fully fleshed out so they can be articulated to an AI’s large language model (LLM), thus ensuring new AI technology works within the proper contexts to best serve the business. Often in the hustle-bustle of trying to simply keep the lights on, small businesses will forego formalizing certain processes and continue business as usual, thinking the time will come later when big-picture reflection makes the most sense. AI implementation forces that sort of thinking in the more immediate future.

It’s heartening to see that companies are increasing their AI knowledge along with the rise of that technology. According to the study, 37.2% of the companies surveyed strongly agree (5 out of 5) that they clearly understand the privacy implications of their AI systems, while 33.9% said they mostly agree, rating it 4 out of 5. This demonstrates that companies are confident in their ability to venture into unknown territory rather than view AI privacy as an insurmountable challenge.To succeed moving forward, small businesses have to meet this challenge head-on. A wealth of analytics and data help with these endeavors by supplying information about each step of a company’s workflow, particularly when analyzing risk. For example, according to the study, businesses correctly identified recording customer calls, training AI models on customer interactions, and remote work were three facets of a business that carried the highest privacy risks. Analytics focused on those three areas of operations will ensure that privacy efforts remain targeted for maximum effect, shoring up critical points where exposure may occur.

“Organizations face three primary barriers to successful AI implementation — privacy and security concerns (37.2%), lack of technical expertise (36.6%), and cost concerns (32.3%).”

Not surprisingly, the second and third most prominent blockers of a company’s AI implementation are skills gaps and high costs. But what’s a bit surprising, and heartening, is that the leading cause of pause is related to security and privacy. This indicates that companies are, rightfully, taking these topics seriously.

As previously discussed, it’s unlikely that a small business will be able to avoid AI altogether. This means that these companies must begin focusing on upskilling their employees if they haven’t already. These folks need to learn how to get the maximum benefit from AI tools and how to interpret its output to make more informed business decisions.

Fittingly, the survey found that companies are prioritizing data analysis and interpretation skills (55.7%), AI literacy and understanding (47.1%), and prompt engineering capabilities (39.6%) within their workforce development initiatives. The emphasis on data analysis skills shows that AI effectiveness requires high-quality data management and interpretation capabilities. Organizations willing to invest in these foundational skills create sustainable competitive advantages in AI implementation.

Small businesses would be forgiven if they felt that the above level of technical knowledge far exceeded the demands they place on their employees. But given the rapid reimagining of almost every competitive landscape, it’s always helpful for companies to learn more about what they don’t already know in order to minimize surprise disruptions. Even a survey lesson on interfacing with AI can ease the transition to new technology down the road.

In conclusion

The AI Privacy Equation global survey offers many more encouraging data points. It demonstrates that all businesses need to focus on privacy, not just enterprise organizations. Companies of all sizes understand that AI is a powerful tool when used ethically and sustainably, and the risks of getting it wrong are simply too high.

Ultimately, what small businesses should take away from this survey is that AI privacy is not something that can be solved in one fell swoop. Instead, companies should continue to adapt as the landscape changes around them. The survey suggests that organizations are willing to tackle this challenge head-on and understand the proper investments to make along the way—prioritizing people, processes, and governance structures to ensure AI finds its footing without becoming too invasive.

As with most things, patience is also a virtue to AI privacy.

This article, “AI Privacy Remains an Ongoing Priority, Even for Small Businesses” was first published on Small Business Trends