Chicago Small Businesses Ramping Up Use of AI

During the COVID-19 pandemic, Chris Clark was furloughed from his corporate job. So he started giving tennis lessons in Lincoln Park’s Oz Park.

The former college tennis player has built his onetime side hustle into the racket sports company Toss and Spin, which has offered more than 8,000 classes.

Clark says he was overwhelmed at first by needing to deal with 50 to 100 inquiries a day from customers.So he searched for a system to handle customer service and email and SMS marketing.

He evaluated 15 different platforms and chose Chicago’s ActiveCampaign, which uses AI to automate responses to customers. He says its real-time AI analytics also offered quicker customer insights and replaced months of manual research for Toss and Spin. ActiveCampaign tailored promotions to Toss and Spin’s customers and helped launch specialized sports programs that sold out. And automated texts converted first-time customers into repeat clients.

Like Toss and Spin, many small business owners have turned to AI, though many are still trying to understand how to apply it and are in the early stages of adoption, according to a report by the U.S. Chamber of Commerce. Yet the AI momentum for small business appears to be growing as business owners look for ways to hold down costs in the face of inflation and labor shortages.

Nationwide, AI usage has ramped up sharply. In the United States, 87% of small- and medium-sized businesses in a survey are using AI in marketing, according to an analysis released in June by online marketing firm Constant Contact. That’s a big jump from the 26% that reported using AI in 2023.

Founded in 2003, ActiveCampaign is a $3 billion AI marketing platform used by small businesses worldwide, according to the company, whose offices are in the Loop. In February, ActiveCampaign bought the AI startup Feedback Intelligence in San Francisco and helped ramp up its AI capabilities.

In August, ActiveCampaign launched an AI service called Wavelength that it says continuously analyzes a client’s account, including sent messages and who’s engaged. “The more it runs, the sharper it gets,” according to the company, which says it reflects “customers’ evolving behavior rather than a playbook scraped from everyone else.”

“The era of prompt and response is over,” says Jason VandeBoom, ActiveCampaign’s chief executive officer. The company’s AI-driven marketing “means a model that can look at how past campaigns have performed, ideate a new campaign unique to the user’s offering and their target audiences, then execute on it, if approved by the user.”

Many small businesses are using AI for routine tasks such as drafting emails and marketing content, summarizing documents and managing schedules, according to the U.S. Chamber. Businesses are using AI scheduling assistants to reduce missed appointments and increase weekly service calls. Companies are also using AI for billing, invoicing, inventory tracking and basic customer service.

“Many of our customers are very small marketing teams that need a tool that can ideate and produce the work of a much larger team,” VandeBoom says.

Saving time

Mona, a tech platform that connects small businesses to loans and grants, works with thousands of small businesses across the United States. Many have adopted AI tools, according to Mona co-founder Andrew Leon Hanna.

“In general, the small businesses that are most successful with AI are not using it just for the sake of using AI but toward a clear business goal — tied directly to increasing revenue or decreasing costs, including saving time, as that is small business owners’ greatest asset,” says Hanna, who is also an adjunct professor at the University of Chicago Booth School of Business.

Hanna says common AI tasks among small businesses include using OpenAI’s Codex to pre-draft emails, using AI voice agents to summarize meetings and draft invoices or proposals while driving or in transit and building AI agents to respond to customer reviews on Yelp.

Chicago accessory maker Ecodunia noticed a low conversion rate of browsers to buyers on its e-commerce site, Hanna says.

Ecodunia founder Cera Muchiri revamped the website’s product photos using AI photo editing tools like Nano Banana, which led to increased sales.

Half of Constant Contact’s survey respondents said saving time is the top benefit of using AI, with 42% using it to write emails and social media posts. Forty percent are investing in AI usage rather than advertising and 38% are using it to analyze data.

Contractors are testing AI on more complex tasks such as flagging scheduling risks and estimating project costs, according to the U.S. Chamber, which says manufacturers are using it to predict equipment maintenance issues before they cause breakdowns.

The ways small businesses are using AI range widely, with some testing it out to tech companies that are investing heavily in it. But many lack the training to scale up AI. Concerns around cost, unclear return on investment and compliance risks are also barriers, according to the national business group.

This past spring, Chicago tech startup Yourco got a $6 million investment in its platform that lets organizations use text messages to communicate with deskless employees in industries such as construction, manufacturing, hospitality and transportation. Some of Yourco’s fresh funding helps expand its new AI-powered system.

Many of Yourco’s customers have employees who are not native English speakers. Yourco’s AI system automatically detects the language each employee is using, then translates the messages to the user’s preferred language.

Yourco’s AI systems eliminate administrative work for HR and managers, according to CEO Brodie Meyer. Instead of requiring employees to log into a portal or wait for a manager to respond, an employee can send a text to call off from work, adjust schedules or ask a question.

Yourco’s AI system also analyzes texts between employees and employers to help identify patterns around safety concerns, turnover risk, attendance, scheduling confusion, payroll questions and employee morale.

“We believe a human still needs to monitor and understand the actions occurring, but AI is empowering more automated workflows and improving daily operations for both us, our customers and their frontline employees,” Meyer says.

‘Like the Wizard of Oz’

Mary Nguyen Aregoni, owner of West Loop restaurant Saigon Sisters, started using Gemini, Google’s AI tool, early this year. She took free online courses about AI and a webinar from Goldman Sachs’ 10,000 Small Businesses program.

“It’s pretty easy and intuitive to use, but you have to know how to ask the right questions or prompt,” she says.

Aregoni says she pays about $25 a month for Gemini and uses it for email campaigns, social media and taking notes at meetings. She also uses Gemini to respond to reviews and emails and reviewing legal documents to spot red red flags.

“It’s so nice,” Aregoni says.

English is not her first language, so AI’s help with drafting correspondence “saves so much time,” says Aregoni, who is ethnically Vietnamese and immigrated to the United States from Laos as a child.

She also uses AI to help answer questions that arise while running a busy restaurant Aregoni asked Gemini to check whether 100 catering trays would fit into her car. After supplying her car’s make and model, Gemini told her the trays would fit. AI is “like the Wizard of Oz. You don’t have to wonder,” Aregoni says.

Food business Laos to Your House makes readymade Lao meals that are sold in stores including Mariano’s and Fresh Market. Founders Stacy Seuamsothabandith and Byron Gully started using ChatGPT last year and Claude Premium several months ago for market research, consolidating orders and checking the legality of various ideas.

Retailers they work with require so much paperwork; AI can help with that, according to Gully.

They started with free AI systems but now pay $20 a month for ChatGPT and $21 a month for Claude Premium. They say AI can quickly help Laos to Your House research potential retailers to work with.

They also used AI to create new food labels for their meals. It took about 20 minutes of prompting ChatGPT to come up with a concept and design, then another 15 minutes to get the final design, says Gully, who then asked ChatGPT to walk him through creating the label layer by layer in Adobe Illustrator, which took about a day.

“This is where I thought we got the most value because we did not know how to use Adobe Illustrator before,” Gully says.

Laos to Your House would have hired a designer or sought help from a relative. But Gully says that using ChatGPT “took our reliance off of ‘experts’ and gave us the power to be our own experts in a matter of a few minutes.”