How a Brilliant AI-Inspired Solution Can Cut Your Business Costs by 20%

Inflation in the United States has hit a 40-year high, leaving companies scrambling to find ways to combat shrinking profit margins. Some have been quick to pass the blame on to consumers by raising prices or downsizing products (a practice known as “shrinkflation”). But for many, offloading rising costs through these methods is a surefire way to scare away business. As disjointed companies seek to defy inflation, artificial intelligence has the answer: Efficiency.

By focusing on efficiency, companies can do more with what they have. Because consumers shouldn’t be the only ones looking to save money. Companies should too.

To save money, you must start by improving efficiency. In AI, efficiency means optimizing operations with accurate forecasting, predictive maintenance, quality control, and risk reduction. But it also means identifying and correcting areas of inefficiency that are costing businesses dearly. It increases productivity and maintains profit margins in an environment of rising costs. Simply put, it saves you money.

According to an analysis by the Boston Consulting Group, AI can reduce conversion costs by up to 20%, with up to 70% of the cost reduction resulting from increased workforce productivity. But AI is also expensive, time-consuming, and out of the question for many small businesses and start-ups. The good news is that startups and small businesses can use Big Data – without AI – by leveraging fundamental data science strategies.

Focus on the useful data

To mimic the function of AI and effectively cut costs to offset inflation, start with data. This does not mean that you should collect all possible data. But that means you have to compile the data that is available and useful to you.

As simple as it sounds, it’s not uncommon for small businesses and startups to be too busy to collect data and analyze a myriad of data points. There is a tendency to rely on industry standard Key Performance Indicators (KPIs). But depending on your business and industry, these might not effectively reveal the big picture you’re looking for.

So if you run out of data, work on getting it. And if you have data, work on finding ways to use it.

Improve human efficiency

Businesses are made up of people – and people, well, probably won’t run as efficiently as they can. This doesn’t mean that you should force your staff to work in overdrive, but it does mean that you should look for ways to make the process easier for them. From better training to help staff work smarter rather than harder, to using technology that makes people’s lives easier, the average business can do a lot to improve efficiency.

According to a McKinsey study, for the majority of all jobs, at least 30% of activities can be automated through technology. For example, an advertising agency could use invoicing software, which would save time by eliminating the need to manually send payment reminders for unpaid invoices.

For a restaurant, this could mean using a mobile payment processor to reduce back and forth for servers. But it can also be done without any technology. In fact, the number one way to improve efficiency within a restaurant is to organize the kitchen so that the chef can cut steps into a shift, according to culinary arts school Auguste Escoffier.

Optimize production and/or process

One area where AI really shines is optimizing the manufacturing process by identifying weak spots. But you don’t have to be in manufacturing to take this approach.

Almost all companies have room for improvement when it comes to their processes. These may be steps that take longer, are more prone to error, or are simply more expensive or even more risky.

For example, a plumbing company, the answer to saving money might mean optimizing routes so staff aren’t wasting time, miles and fuel commuting across town the day to the homes of various customers, according to Fleet Equipment Magazine. This can be done manually or via route optimization tools.

In a restaurant, this could reduce menu options. By cutting out a long menu, many facets of the business can be optimized for efficiency, from ordering from suppliers and stocking supplies to prep work, says the Motley Fool.

It boils down to doing more with what you have and leveraging what is readily available to you. Find ways to improve your process, make life easier for your staff, and do more with what you have. Make decisions in the field using Warren Buffett’s powerful 5-word quote and Elon Musk’s 3 C’s rule to make strategic decisions and build billion dollar businesses. Increased efficiency opens the door to increased productivity – a golden ticket to saving money and fighting inflation.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.