Artificial Intelligence (AI) is no longer just a futuristic concept—it’s a game-changer for small business owners across Canada. From automating daily tasks to enhancing customer experiences, AI is helping small businesses operate more efficiently, reduce costs, and stay competitive in an evolving digital economy.
The Growing Importance of AI for Small Businesses
Many small business owners may assume AI is only for tech giants, but that’s no longer the case. Affordable AI-powered tools are now accessible to businesses of all sizes, helping them streamline operations, improve marketing strategies, and deliver personalized customer service. Whether it’s chatbots handling customer inquiries, AI-driven analytics optimizing advertising campaigns, or automated accounting software reducing financial errors, AI is making business management smarter and more effective.
Why Canadian Small Businesses Need AI
Canada’s small business landscape is highly competitive, with over 1.2 million small and medium-sized enterprises (SMEs) playing a vital role in the economy. To stay ahead, business owners must embrace digital transformation, and AI offers the perfect avenue to enhance productivity and profitability.
By implementing AI, businesses can make data-driven decisions, improve operational efficiency, and enhance customer engagement. AI tools are particularly useful in overcoming common challenges such as high operational costs, time constraints, and the need for personalized customer interactions.
Biren Agnihotri
Canadian small businesses are only beginning to explore the potential of artificial intelligence (AI), says Biren Agnihotri, Chief Technology Officer at EY Canada.
“In a crawl, walk, run journey, I would say we are still in a crawl stage,” says Agnihotri. “Small businesses have started identifying the areas of impact, which can be repetitive, time-consuming, where they can easily automate. This can be in marketing, customer service, inventory management, financial reporting kind of stuff.”
Agnihotri says that while AI adoption should not be done “just for the sake of technology,” the strategic use of AI offers serious advantages in today’s competitive retail and business landscape.
“There is a competitive advantage over here,” he says. “How to be competitive in the market, how you can do more things with less resources, how can you penetrate a bigger market now with the help of AI, and how you can protect your revenue and grow your revenue with the usage of AI.”
Agnihotri emphasizes that small businesses need to stay focused on tangible business outcomes when exploring AI tools. “Don’t look at the shiny stars, but look at the proof of value,” he advises. “How you can use AI to generate net new revenue, customer retention, customer enhancement, proliferation into the new market sort of stuff.”
And AI, he adds, is not just for large enterprises. “Absolutely, AI is applicable for every industry because every industry is dealing with data, processes, technologies,” says Agnihotri. “You can get new insights from the data, you can streamline your processes, and the technology is evolving so fast that now there are things you can leave to technology and let humans be in the loop.”
That level of accessibility means businesses of any size — even individuals — can now benefit from the democratization of AI. “Everything started at the individual level. If every individual is using AI — we are using AI deliberately or undeliberately every day in various apps — the same goes for small businesses as well,” he says. “It’s not just confined to the large enterprises.”
For small businesses unsure of how to begin leveraging AI, Agnihotri offers three key pieces of advice:
- “Start small, learn fast and scale intelligently.”
- “Choose tools that grow with your business. Think scalability and cost efficiently.”
- “Data is the new fuel, so invest in your data analytics and ethical data practices.”
George Minakakis
George Minakakis, Founder and CEO of Inception Retail Group, says the large players with sophisticated AI infrastructures are silently taking share from smaller businesses.
“In our current state of tariff and annexation threats, these same businesses are using AI, that is, data, insights, and operational execution to meet their needs,” he says.
“Smaller businesses can’t keep up to this level of sophistication. Unless a company is in a unique ecosystem, remote with little competition or a community with a defined service and product, they are otherwise facing a tough game. Basically, what I am pointing out, it is a mistake for anyone to believe it is still early days and that businesses have time.”
Minakakis says up to 95% of ecommerce businesses eventually fail; physical businesses, especially those in a very strong competitive space, are dealing with the same level of failures, perhaps at a slower pace.
“But what that tells us is if you are failing at ecommerce, you will most certainly fail with AI. Unless you have a vision and choose the right service providers, they will miss opportunities,” he says.
“Without AI, businesses will miss out on competitive advantages and operational efficiencies to automate more tasks. It will also be challenging to compete in an environment where your competitors operate in real time, with a higher level of personalization and engaging customers through AI personal Assistants. Not to forget new advances are being announced every day.”
Minakakis says businesses have a number of product and service options to choose from when it comes to adopting and deploying AI.
“Sadly, Canada is slow to adopt, Statistics Canada said a few months ago that about 6-10% of businesses are adopting AI to some level. Of course, there are other stats out there, higher adoption rates, however many of those are about large companies. One such company is Shopify which offers AI tools like “Shopify Magic.”
“How far a business develops its AI capabilities ultimately comes down to whether it is planning to simply meet competitors with the basics such as chatbots or whether they have a vision of how it can leverage data, define strategies, or want to lead with innovation. AI offers a lot of potential. Why more are not signing up is more likely, because they do not know where to start and have failed or met with mediocre results when it came to ecommerce or through the use of other technology services.
“Today, everyone sees AI as a tool. Eventually, this view will change, and we will begin to see AI as an industry driving powerful economic growth and that businesses need to learn to create, work, and develop from within this new industry. AI will be with humanity for thousands of years and it will be disruptive. So, it is best to be inside than on the outside.”
Gary Newbury
Gary Newbury, an international expert on supply chain, says AI is already reshaping forward-thinking small retail businesses, primarily through automating routine tasks, enhancing customer insights, and optimizing inventory management.
“Today, AI-driven tools help SMBs personalize marketing, streamline operations, and improve demand forecasting—capabilities that were once reserved for larger retail chains,” he says.
“In the near future, AI will further democratize advanced retail analytics, allowing smaller players to predict trends, reduce waste, and compete more effectively against larger chains. The key shift? Although we remain in much of a hype cycle around AI, AI tools are no longer a luxury; they are essential tools for survival and growth.”
Newbury says ignoring AI isn’t just a missed opportunity—it’s a competitive risk.
“Businesses which resist AI-driven efficiencies will face higher costs, slower decision-making, and reduced customer engagement. In retail, where speed and personalization really matter, failing to leverage AI tools means losing customers to those who can offer better experiences, smarter promotions, and seamless omnichannel interactions. Over the next couple of years, non-adopters will likely find themselves outpaced by AI-powered competitors who operate with greater agility and precision,” he explains.
“SMBs don’t need deep pockets to start with AI. Simple applications like AI-powered chatbots for customer service, personalized email campaigns, and automated pricing tools can deliver immediate, profitable impact.
“SMBs can also use AI to optimize inventory, reducing overstock and stockouts. Visual AI can improve product recommendations online, while AI-driven analytics can fine-tune promotions based on real-time customer behavior. The key is to start small—leveraging plug-and-play AI tools—then scale based on impact.”
Photo by George Milton
How AI is Transforming Key Business Areas
- Customer Service
AI-powered chatbots and virtual assistants provide 24/7 customer support, answering common questions and freeing up human resources for more complex tasks. This improves customer satisfaction while reducing operational costs. AI can also analyze customer feedback and suggest improvements to enhance service quality.
- Marketing and Advertising
AI-driven marketing tools analyze customer behaviour, allowing businesses to create highly targeted ads and content. AI can optimize email campaigns, social media engagement, and website experiences, ensuring better conversion rates and higher ROI. With AI, businesses can automate audience segmentation and personalize marketing efforts, leading to higher engagement and brand loyalty.
- Operations and Efficiency
AI automates repetitive tasks like scheduling, inventory management, and bookkeeping. This allows business owners to focus on strategic growth rather than administrative burdens. AI-driven inventory systems can predict stock needs, reducing waste and ensuring businesses always have the right products available at the right time.
- Sales and Lead Generation
AI-powered CRM (Customer Relationship Management) systems analyze customer interactions, predict sales trends, and suggest personalized recommendations. This helps small businesses close more deals and build stronger relationships with clients. AI-driven sales forecasting enables businesses to anticipate market trends and adapt their strategies accordingly.
- Cybersecurity and Fraud Prevention
With cyber threats on the rise, AI enhances security by detecting and preventing fraudulent activities. AI-driven security systems monitor transactions and online activities, safeguarding both businesses and their customers. AI-powered fraud detection algorithms identify unusual patterns and alert business owners to potential risks, ensuring a safer digital environment.
- Human Resources and Employee Management
AI is also transforming HR processes, from recruiting and onboarding to performance evaluation. AI-powered software can screen job applications efficiently, match candidates with job requirements, and even analyze employee satisfaction through sentiment analysis. This enables businesses to make informed hiring decisions and create a better workplace environment.
Photo by Ketut Subiyanto
Real-World Examples of AI in Small Businesses
Small businesses across Canada are already leveraging AI to improve efficiency and profitability. For example:
- Retailers use AI-driven recommendation engines to offer personalized product suggestions, increasing sales and customer satisfaction.
- Restaurants implement AI-based inventory management systems to minimize food waste and streamline supply chain operations.
- Service providers use AI chatbots to handle bookings, answer FAQs, and provide real-time assistance.
- E-commerce businesses utilize AI for dynamic pricing, adjusting product prices based on demand, competition, and customer behaviour.
The Future of AI for Small Businesses in Canada
As AI technology continues to evolve, Canadian small businesses that embrace AI will gain a competitive edge. The key is to start small—integrating AI tools gradually into different aspects of operations. Whether through AI-powered email marketing, smart chatbots, or automated financial tracking, the benefits of AI are undeniable.
AI is not just the future—it’s the present. Small business owners who leverage AI can save time, cut costs, and enhance customer satisfaction, ultimately driving business growth. With government incentives and affordable AI solutions available, now is the perfect time for Canadian small businesses to explore AI’s potential.
Here are some reports / resources on AI:
- EY’s Responsible AI Framework and EY.ai Confidence Index [Canada]
- Case study: How EY transformed itself with AI | EY – Global
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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