Small and midsized businesses (SMBs) are everywhere in the US. As of August 2025, there are approximately 400 million SMBs around the world, including yours, supplying much-needed jobs, products, services, and tax revenue to the communities you serve. While you and your SMB cohorts are handily fueling the global economy, some within your ranks have chosen to utilize artificial intelligence (AI) and automation, and others haven’t.
Here at Cin7 we wanted to understand why SMBS were investing in technology and why some weren’t. To get to the bottom of it, we asked 530 people (who fulfill roles within supply chain and inventory management in various industries and countries) how they used technology.
In our 2025 State of Inventory Intelligence Report, we discovered:
When we dug into why SMBs haven’t jumped on the AI and automation bandwagon, we discovered it’s not what people think.
Most people think that SMBs are resistant to change, but our research tells a different story. We found that 47% of SMBs not yet using automation for inventory management want to, 41% not using AI for inventory management are eager to make the upgrade, and 35% not using forward-thinking technologies for inventory management are looking to make it happen.
What does this mean? If you want to make the shift and use these tools but haven’t yet; you’re not alone. The issue isn’t wanting to use AI. The issue is the barriers standing in your way. To help you overcome them, here are the top five hurdles we discovered kept SMBs from adopting new technology.
Let’s be honest, making decisions about a new technology can be overwhelming. And it’s even harder when you don’t fully understand the technology. One in five respondents told us that they don’t fully understand the difference between AI and automation. Your schedule is pretty full managing a business so we’ve drafted a simple breakdown to help you close that knowledge gap.
AI learns from your data and improves over time as you feed it more information. This would look like software taking in your sales data and telling you which products are performing best and when you need to re-order based on past consumer behavior. With automation, you set up specific tasks that the technology does on repeat. Think sending out an email with tracking information once a product is shipped.
But just understanding the difference between these two technologies isn’t enough. 62% of SMBs told us they don’t know where to start with this technology or how to use them effectively. Remember to take a breath, every successful business owner has been unsure about new technology at some point. There are a lot of resources out there to learn about AI. Good software, like Cin7, makes it seamless and easy to use so that there’s little to no learning curve.
With countless AI and automation tools flooding the market, 60% of SMBs say they simply don't know which tools to choose. It's like being a kid in a candy store: exciting in theory, overwhelming in practice.
The good news? You don't need to evaluate every option. You just need to find the right fit for your specific needs. Start by asking yourself: what is my biggest pain point? Are you constantly running out of popular items or stuck with dead stock after Q4 sales? Prioritize demand forecasting tools.
This way you aren’t trying to solve everything at once. You’re simply looking for the best tool to solve your biggest headache. Once you have a better understanding of how AI can save you time and improve your bottom line you’ll have the confidence boost you need to use it in other places.
Putting a price tag on how much you’ll pay isn’t possible without getting into the nitty gritty of the exact tools you select, but our study reveals that regardless of the exact cost, 44% of SMBs say they just don’t have the budget right now for such a large investment.
If you’re looking to make the jump even with a small budget, focus on software that assists with revenue generating activities. This will make it easier to track the ROI and make the case for additional tools. Plus, there are tons of free or low-cost starter tools that you can use as stepping stones to something more comprehensive.
We expect business leaders to always know what’s best for a business and to do it. In the case of AI and automation, 35% of SMBs say their leadership doesn’t support the move to AI and automation. This leadership paralysis may be due to a lack of insights into the benefits of AI and automation (more on that in a moment!).
Here's a shortened version:
Finally, trust in AI is a huge factor in the decision to implement it or not, and this concern hits particularly hard for small businesses. Turns out that:
For small business owners, these trust issues are amplified by their unique vulnerabilities. Unlike large corporations with dedicated IT teams, SMBs often lack resources to properly vet AI tools or recover from breaches. Many think, "Why risk my 20-year reputation on technology I don't fully understand?"
Still, AI and automation are here to stay. While small businesses are most cautious about adoption due to trust concerns, they may also have the most to lose by falling behind competitors who overcome these hesitations. By choosing not to implement these tools, SMBs risk being left behind in an increasingly automated marketplace.
WWithout AI and automation tools, you're essentially paying your team to do work that technology should be handling. And the numbers tell a sobering story. Our study reveals that SMBs are losing 16 hours per week on manual data syncing alone. That translates to $21,632 annually per entry-level employee. That’s money that could be reinvested in growth initiatives instead of administrative overhead.
What's particularly concerning is how these inefficiencies compound your biggest operational challenges. Over the past 12 months, SMBs have consistently struggled with:
Here's what this means for your business: these aren't isolated problems—they're interconnected symptoms of manual processes that can't keep pace with modern business demands. When 58% of scaling SMBs cite supply chain disruptions as growth barriers, and 50% identify outdated inventory systems as the culprit, we're seeing a clear pattern.
The question isn't whether automation and AI is worth considering–it's whether you can afford to keep operating without it.
Now let's flip the script. Our survey shows what happens when businesses actually take the leap—and the results speak for themselves.
Companies that implemented AI and automation tools report the following benefits:
Here's the most compelling finding: these businesses are saving an average of 15 hours per week—nearly offsetting those 16 hours your team currently spends on manual inventory syncing.
Think about what that means. Instead of playing catch-up with spreadsheets, your team could be focused on growth opportunities, customer relationships, and strategic planning. The businesses already using these tools aren't just working more efficiently—they're working on entirely different problems than you are.
While it can be argued that trust in AI is low, SMBs in the US and across the globe are contemplating what their future will look like if they don’t hop on the AI train. The impressive inventory management benefits, which also include reducing team burnout for 66% of SMBs, are nothing to sneeze at.
An easy way to incorporate AI and automation without the hassle is investing in a powerful inventory management solution (IMS), like Cin7, that provides the safe and secure AI tools you need. With Cin7, you can automate purchase order processing with AI-powered Intelligent Document Recognition (IDR), and you can accurately forecast demand with Cin7 Foresight AI.
This kind of inventory intelligence was once reserved for Fortune 500 companies, but forward-thinking SMBs are now leveraging it as their competitive advantage.
Take HairCo, an importer and distributor of beauty and barbershop products. General Manager Dion Alessi had spent years wrestling with inventory challenges before implementing AI-powered forecasting.
Now, Alessi and his team can predict their inventory needs three to six months in advance, accounting for lead times, minimum order quantities, and past sales data. And by using ForesightAI recommendations, HairCo saw an incredible 10% increase in sales. “It changed my life,” Dion says.
Cin7 can change your life too. The tools that gave HairCo this advantage are the same ones available to your business today. The question is: how much longer will you let manual processes hold you back while your competitors gain ground? Schedule a free demo today to learn more!