Beyond efficiency: Small businesses look to AI for competitive edge, new survey shows

Reimagine Main Street Survey of 1,000 small businesses reveals that 82% think adopting ai is essential to stay competitive in today's business environment.

San Jose, Calif/Washington, June 10, 2025 – Over 50% of small businesses are exploring AI implementation in their operations, according to a survey from Reimagine Main Street, a project of Public Private Strategies Institute in partnership with PayPal. The survey of nearly 1,000 small businesses with annual revenue between $25,000–$5,000,000, also found that 25% have already integrated AI into daily operations. These findings reveal that the adoption of artificial intelligence (AI) among small businesses has reached a tipping point—evolving from a question of "if" to "when."

"Small business owners are already putting AI to work," said Tammy Halevy, Executive Director, Reimagine Main Street. "One in four are using it today, and more than half are exploring the possibilities of AI for their businesses. But these 'Explorers' want to see how AI advances their businesses. They need tools that are simple to use, secure, and built for how they actually run their businesses. And it matters — because when small businesses adopt AI in ways that work for them, the benefits will also accrue to local economies, supply chains, and the broader economy."

The survey identified three distinct segments of small businesses: "Active Users" who have already integrated AI into daily operations, "Explorers" who are testing or researching AI solutions but haven't fully committed, and "Non-Users," those with no current plans to use AI.

Having experienced AI's early benefits, Active Users are now seeking more sophisticated capabilities that move beyond efficiency to provide strategic business advantages:

·Business Automation: More than three in four (77%) report that marketing and customer engagement represent uses where new AI solutions would have the greatest impact to their businesses, with 84% willing to automate the creation of marketing content and 59% willing to automate customer service inquiries.

·Financial Intelligence: 53% report AI-powered cash flow forecasting would solve a "critical pain point."

·Predictive Revenue: 45% are extremely likely to adopt a tool that predicts revenue trends to help with staffing, inventory, and marketing decisions.

·Real-Time Customer Insights: 40% are extremely likely to adopt tools providing real-time trend analysis of customer buying behavior in order to recommend dynamic pricing and promotions.

"This comprehensive survey clearly illustrates how AI is fundamentally changing small business operations," said Rhett Buttle, President of Public Private Strategies Institute. "As businesses experience tangible benefits from initial applications, they are seeking increasingly sophisticated solutions that can transform their decision-making processes and competitive positioning. What we're seeing is a strategic shift where small businesses recognize that AI isn't just a nice-to-have tool for saving time—it's becoming essential for maintaining competitiveness in today's market."

"When it's accessible, understandable, and built for real-life use, AI can be a great equalizer for small businesses," said Michelle Gill, General Manager, Small Business and Financial Services, PayPal. "At PayPal, we see the opportunity that AI presents to our merchants, specifically small businesses. We are developing AI-driven tools that act as smart partners to small businesses allowing them to reap the benefits of AI – from delivering personalized shopping experiences to order fulfillment to merchant discoverability – in a safe, simple and scalable way."

The largest segment—51% of surveyed businesses—are "Explorers" experimenting with AI tools but not yet fully committed. Despite interest and enthusiasm, these businesses face barriers:

·Security Concerns: 38% worry about data privacy and security

·Resource Constraints: 37% lack the time or resources to properly explore tools

·Uncertain Value: 34% don't yet see a clear use case or return on investment

The survey reveals these Explorers aren't skeptical—they're stuck. Explorers are hungry for AI solutions but need specific support to move forward, including proven business value (74% would adopt with clearer ROI evidence), user-friendly solutions (73% want easier-to-use AI tools), and practical training (ranked as the top support needed across all segments).

Together, Active Users and Explorers represent 76% of small businesses—indicating not resistance to AI adoption, but rather varying stages of engagement on a trajectory toward adoption. The question for most small businesses is no longer whether to adopt AI, but rather how quickly and in what ways.