AI in SMB - 1 Year In

There have been a lot of posts about leveraging AI on day-one and building efficiencies into financial models and I wanted to share my experience after closing a year ago. I'm sure the opportunity varies greatly by industry but until you are in it I would be incredibly cautious about building in efficiencies, especially in the blue collar businesses that many of us are trying to buy. Anyone who has had any involvement in financial analysis, operational modeling, or software has heard the old adage "Garbage in, garbage out". AI doesn't change that. In many ways it gets more challenging because it is more of a black box than excel or off-the-shelf software since it doesn't have set rules that you can trace back. AI also has the tendency to be confidently incorrect. My team has a method, we have best practices, but they aren't all on paper. Even the ones on paper were written years ago and we have changed steps without changing the procedure. I can decipher how to take an interview, physical examples, old scraps of notes (I literally have a note on my desk right now that was written on a piece of scrap galvanized metal) and make an SOP that can be refined by AI but this isn't a day one task. I also know this isn't just a small business issue, I spent years writing procedures at big companies as well. That isn't to say that AI doesn't have a place. I have used it from day one to understand QBO, taxes, permits, reports, contracts, etc. It helped me learn enough to be dangerous from day one. We also recently rolled out an internal engineering screening tool and I am trying to go-live on a estimate pricing tool today. I would just caution that the hard part isn't the AI, it is just giving it accurate information in a way that it can understand and you can verify the output. I still think I have it better than most, I bought a company with meticulous files. They include invoices, estimates, drawings, contracts, etc for over 10 years of operations. The downside is that those files look like this:I'm not saying this as an anti-AI person, I use both ChatGPT and Claude daily, but just make sure you go in with realistic expectations. You also have to work through the human part, getting buy in isn't easy. I firmly believe that AI will change the business but I envision it as exponential. Take the time to build the base.