How to Start an AI Business

on 30 Sep 2024, by Bogdan, in Blog, WordPress, Cloud, Guides

by Bogdan

Looking to learn how to start an AI business step by step but don’t know where to begin? This article is here to help.

AI is quickly getting bigger and better every day. Right now, different industries want to incorporate it in their workflows to streamline their operations, customer service, support, experience, you name it.

If you have an entrepreneurial mindset, you can latch on to this high demand to create the best AI solution for specific businesses (e.g. AI-powered chatbots, AI-driven marketing automation, AI website builder, AI video creation, predictive analytics etc) and solve real-world problems.

We’re here to help show you how to get your solution into the market, the right way.

Throughout this guide we’ll cover the following:

Why start an AI business now
Step-by-step guide to how to start an AI business
Some of the challenges and solutions for building an AI startup

So, why should you create your own artificial intelligence company now?

Why start an AI business now?

There are four main reasons you should start an AI business now if you’re interested:

There is a higher demand for specific AI solutions

Out there, businesses want specific AI solutions that solve problems. AI solutions that automate things like inventory management, accounting, marketing, recommendations, customer service, support, etc., and make their work faster and smarter.

You can bridge this gap by creating an AI tool that streamlines any of these operations and solves real-world problems in various sectors. Sectors like ecommerce, healthcare, finance, retail, etc., and easily meet their business demands.

In addition to this, the market is promising in the coming years. The AI market is estimated to reach $184 billion by the end of this year. By 2030, it’s forecasted to hit $826.70 billion. This is a rich ground for any AI startup worldwide.

Securing funds is readily available

According to Insider Intelligence, global spending on AI systems increased by 27% in 2023, and by 2026, this spending is likely to exceed $300 billion.

In simpler terms, as global spending on AI systems rises, investors are more likely to fund AI startups as long as they can create promising AI technologies and solutions. Generally, venture capitalists and companies are eager to invest in startups they think have a high-growth rate potential.

But here’s a little caveat. The AI market is highly competitive. Startups need to demonstrate a strong value proposition, a solid business plan, and a loyal team to attract investors.

Wide range of applications

Forbes Advisor surveyed 600 businesses and listed the following as some of the top ways owners use artificial intelligence:

Source: Forbes Advisor

AI-powered ecommerce chatbot: that’s available 24/7 to respond to customer queries, provide customer support, and enhance customer engagement.
Generative AI for content production: But, in this case, you’ll have to be better than chatGPT and do it specifically for retailers.

Using ChatGPT for ecommerce content helps streamline the creation of marketing emails, product descriptions, blogs, and website content. But, it still requires a heavy human touch.
AI for dynamic pricing like that of Prisync: to analyze market trends and competitor pricing.

and more.

There are still many opportunities to innovate in AI

AI is still a young field with many problems waiting to be solved. Whether it's improving customer experiences, streamlining business operations, or finding new ways to use data, getting into the AI business offers you a chance to innovate in ways that didn't exist before.

More opportunities can mean more chances to grow your business and increase revenue.

That being said, let’s go through a list of some AI business ideas and opportunities to start with.

Viable AI business ideas and opportunities to brainstorm

Every business begins with an idea. It can help you identify and understand industry needs, and create a clear strategy to maximize your chances of success and attract investment.

If you don’t have an idea yet, here is a list of some viable AI business ideas you can start brainstorming.

AI SaaS products like customer support, marketing automation, data analytics, content creation, HR, finance and accounting, etc.
Sentiment analysis. Use AI to analyze social media sentiments and customer reviews to gain insights into customer opinions.

Fraud detection and prevention. Develop AI algorithms that analyze transactions and customer behavior to identify and flag potentially fraudulent activities.
Customer segmentation and analytics. Develop AI algorithms that can analyze customer data to segment customers based on various characteristics, etc.

Inventory management and supply chain optimization. Use AI to optimize inventory levels, delivery routes, and logistics, reducing costs, minimizing delivery times, etc,
AI applications in specific industries: like healthcare, education, banking, robotics, etc.

Consider specific ideas like personalized recommendation engines, chatbots and virtual assistants, visual search, and dynamic pricing. There are a lot of ideas you can search on the Internet — these are just a few.

Let’s highlight some pointers before we start building your AI startup from the ground up.

Do I need specific skills and a strong team to start an AI business?

Building an AI startup requires a solid understanding of core AI concepts.

Business owners should have a basic grasp of areas like machine learning, deep learning, data science, data engineering, software engineering, and cloud computing. This knowledge helps you recognize what AI can achieve and where its limitations lie.

Then there’s also understanding your market and business acumen. This means you can make smart, informed decisions based on insights and understanding of the industry you're targeting to position yourself as the go-to expert or problem solver.

What about a team?

Simply put, nobody who’s ever scaled a business from the ground up did it alone.

If you want to succeed, you'll need to build a team that won't sink your startup but turn your vision into a reality. It all starts with you.

Hire a team capable of accomplishing things instead of just spouting off ideas.
Build a team of skilled AI professionals with a strong tech stack. The team needs to be diverse also, including marketing and sales, product design and development, research and development, etc.

But is it possible to quickly introduce your AI-powered business idea without lengthy development times? Is there a shortcut?

Can I fast-track your startup with white-label AI solutions?

Generally, using white-label AI solutions can significantly fast-track your AI startup depending on the business idea you come up with.

In this business model, white-label AI solutions come prebuilt so you don't have to spend months developing complex AI models from scratch. Yours is only to customize, rebrand, and resell it as an additional revenue stream. Therefore, your focus and resource go into marketing, sales, onboarding and customer satisfaction, not in the technical part of the business.

For instance, let’s suppose your AI business idea was an AI website builder. Instead of building from scratch, you can partner with Brizy AI website builder to accelerate time-to-market. This platform connects to Google Business profiles to generate local SEO-optimized sites. And, without building the product from scratch, you have a powerful AI website builder that you can sell to your own customers. The beauty of it? Being AI-based, it practically does the job by itself so your users will not be required to have technical skills or design expertise.

Other common examples of white-label AI tools include chatbots, virtual assistants, custom GPT, etc.

So far, you should have a business idea and an approach you’ve landed on to launch your business. It’s now time to start building your AI business.

How to build an AI startup step by step

In this section, we’ll walk you through the steps for building an AI startup from the ground up.

Conduct market research

The biggest question you should ask yourself at this point is: “What is missing in the world?” This gap you’ve identified will generally be your business idea. Then, start conducting thorough market research around the idea:

Analyze the AI market: Explore if there’s demand for your AI business idea to take off, in the industry you plan to enter. Check for trends, growth rate potential, and major players. Doing this will help you determine if there's genuine demand for your idea. Or, it's a solution that addresses a current market need.

Identify your target audience. Determine who would benefit most from your AI solution. What are their pain points? What specific problems can your AI idea solve for them?

See if there are competitors. How many competitors share a similar concept to your business idea? What do they do well? Where are their weaknesses? Understanding your competition can help you refine your AI product and find ways to stand out.

Validate your AI business idea. Conduct surveys, interviews, or focus groups with potential customers to gauge interest. If there's a problem, this is the time to fine-tune your business idea.

Examine pricing. What is the price customers are willing to pay for products and services in your market? How does it compare with your competitors?

Overall, conducting thorough market research will enable you to tell if your AI business idea is feasible. It also helps you determine the product demand. Or, if you're well-positioned for success.

Next, write this business plan down.

Create a solid business plan

This is where you write down all the details about your business model. It doesn’t have to be long or formal, but it helps you organize your thoughts. A good business plan can also help you convince investors or get outside funding to start your business.

For this, you can use a business plan template and outline the following details:

Give a brief overview of your business idea, target market, and goals.
In the business description, provide more details about your business. Its core concept, the industry you're entering, and your company’s mission. What sets you apart from the competition?

Describe your business structure: the team, their roles, etc.
Demonstrate demand for your business idea/product. You’ll get this information from your market research findings.

Outline your marketing plan and strategy.
Share financial documents
If you need funding, clearly state how much you’re asking for and how you plan to use the funds. Investors want to know exactly where their money will go.

This list is endless. Generally, you need to be creative with your business plan to get the most out of it.

Create a prototype or minimum viable product (MVP)

MVP is a barebones version of your AI product. It includes only the most essential features necessary to solve the core problem. An MVP lets you and your team test the product in the market before it is fully developed or launched officially.

The main goal of testing an MVP is to ensure you're building a product for customers, not for yourself. Then, gather feedback from real users early on. This process is a combination of your pitch, product, and metrics.

An elevator pitch tells the story around your product: market size, potential problems and solutions, and who your customers are. Metrics are things like the number of early adopters, etc. Aim to show the prototype, for example, to 100 people.

Note: Don’t equate these metrics to a successful product: email signups, signups for a free trial, or customer interest in segment surveys. Customer interest doesn’t mean they’ll spend money and buy your product.

Testing an MVP will also help you understand how your AI solution performs in practice, identify issues, and make necessary improvements. Through iterative updates based on user input, you can refine the MVP into a full-fledged product that better serves your target audience.

A well-executed MVP can help you raise funds for your business. You’ll know where to spend your money.

Raise capital for your business

There are many ways you can get the resources to start your business.

Start with your savings or the business’s revenue. You can also leverage personal relationships by asking friends and family for a loan or to invest in your business. Although it's a long process, bootstrapping your business gives you full control and ownership of your company. No need to give up equity, take on a loan, or answer to investors.

Other funding options you can explore include:

Online crowdfunding

Platforms like Kickstarter or GoFundMe allow you to raise small amounts of money from many people. This can be a good option if you want to build a community around your product and get early customer buy-in.

Venture capital investors or local angel investors

Reach out to venture capital firms who invest in startups with high growth potential. They may provide large sums of money in exchange for equity in your company. On the other hand, angel investors are people who invest their funds in early-stage businesses.

Note: Be careful who you give equity to. If you disagree with them, you’ll either have to find an agreement, let them continue as decision-makers at your business, or buy them out.

Buying out bad partners can be costly.

Get a bank loan or a line of credit

Applying for a bank loan is easy, but you should do so only if you need a bank loan and if you’re eligible. You can head over to the Small Business Administration to look for loan opportunities.

Other options can be to apply for small business grants from the government to supply the capital needed to kickstart your business.

Develop your AI product

This is the phase when your business idea finally comes to life. It takes a lot of people to make this happen.

Oftentimes, you’ll have a different set of requirements based on your AI product. For instance, if you want to build your product from scratch, you’ll need a team with technical skills. Whereas, if you opt to fast-track your AI startup with a white-label AI solution, you’ll need to find a partner that sells licenses: the right partner.

Note: Looking to build an AI business that provides website-building services? Consider using the Brizy Cloud white-label program to fast-track your startup. It licenses a fully white-label platform to enterprises that want to resell page builders as a new revenue stream. Clients can build professional websites, landing pages, web stories, etc., under your brand.

If you’re building the product from scratch, choose the right technology stack for the job.

How will you know everything works? You’ll need data to train your AI system.

If it is an AI chatbot, this data can be real-world examples of customer questions and responses to teach the AI how to respond correctly. AI systems learn and improve based on the data they're exposed to. The more quality and quantity of data the system is fed will determine how well it performs in real-world situations.

Launch and scale your startup

Once everything is in place, launch your product into the market as soon as possible and start engaging with potential customers.

Focus on generating sales by developing a marketing strategy. The strategy should include content marketing, social media campaigns, email marketing, paid campaigns, and influencer partnerships to introduce your business, generate buzz, and draw attention to you. Influencers can also help build your brand.

Gather customer feedback in every campaign to understand their wants, needs, likes, and dislikes. This insight will help identify areas for improvement and refine your product.

How to scale the business

As you start to grow, concentrate on scaling your business by expanding your customer base. Use targeted ads to find an audience that fits your business. At this point, you’ll also have to figure out the right sales funnel and strategy to generate leads and convert them into paying customers.

Email marketing works equally well to create and nurture a dedicated customer base. So, make good use of it. Keep in mind that one of the key aspects of long-term growth is having a dedicated customer base and reducing customer churn.

What are the legal considerations when starting an AI business?

There are legal aspects of an AI business that you need to lock down before you can launch or even reach out for funding in the first place. This way, you won’t have to worry about someone stealing your idea, ending up in a bad partnership, or getting sued.

The first step is usually to determine your business structure — if it’s LLC, sole proprietorship, partnership, etc. This the legal and tax requirements you will have to meet.

Register your business: both the name and domain name.
Enlist a tax professional’s services for accurate tax filing and documentation.
Register for data protection and privacy compliance

Prioritize intellectual privacy protection. This includes trademarks, copyrights, and patents.
Insurance coverage

and more.

It’s best to consult a lawyer to cover everything you need. You can always work out things on your own, but sometimes it’s best to ask an expert.

What are some of the challenges (and solutions) in building an AI startup

Starting an AI business presents a unique set of challenges to watch out for during the startup process. Below are some common hurdles and their solutions.

Data quality

AI models require large amounts of labeled data for training. Obtaining or creating high-quality datasets can be expensive and time-consuming.

The solution?

Leverage public datasets, partner with organizations for data sharing, or use synthetic data generation techniques. Start small with available data from your MVP campaign and refine it as you grow.

Model accuracy

Sometimes, the model may make wrong predictions or recommendations. Inconsistent predictions can also make it difficult to explain their decisions to stakeholders. Or, users may lose confidence in the AI system if it consistently produces inaccurate results.

One of the solutions is to ensure the data used for training is clean, accurate, and reflects real-world conditions. In addition, use robust algorithms that can handle different types of data.

Regulatory and ethical concerns

AI technologies can also raise ethical concerns, including privacy issues, bias in algorithms, and compliance with regulations (e.g., GDPR). So, ensure you integrate ethical AI practices from the start.

Conduct regular audits to check for bias, ensure transparency, and stay updated on evolving legal frameworks.

Tip: The startup world is tough so make sure you’re hiring passionate employees who are ready to commit to work with you for the long haul.

That’s it.

Conclusion

We’ve covered everything you need to know to start an AI business.

Overall, launching an AI startup requires funding, business partners, a business plan, a marketing strategy, an AI product, software, websites, and so much more. Before you launch, validate your idea through market research, first. Develop an MVP, test if it’s what the target audience wants, and refine it based on customer feedback.

Want to fast-track your AI startup and earn additional revenue?

Partnering with Brizy AI website builder can help launch your AI website building services as soon as possible as a new revenue stream.

Frequently Asked Questions

How much investment is needed to start an AI business?

The investment required to start an AI company varies widely based on various factors including development, hardware, data quality, feature complexity, integration with existing systems, etc. Overall, the startup costs can range from $5,000 for simple models to over $500,000 for complex solutions.

Can I build an AI model on my own?

Yes, you can build your own AI model in three different ways. The easiest way is to build using no-code/low-code platforms to design workflows, connect common business data sources, and configure model parameters. Or, use autoML platforms like Google AutoML, H2O.ai, and Azure AutoML. The only con is the resulting AI models can act as black boxes and hinder your team from explaining the outcomes.

The third and hardest way to build AI models is using traditional programming and machine learning libraries.

What are white-label AI products?

White-label AI products are pre-built AI solutions that businesses can rebrand and offer as their own. Instead of developing the AI product from scratch, you can license these products, customize them, and sell them under your brand.

Which AI businesses are most in demand?

The common AI businesses in high demand include chatbot services for customer support, personalized recommendation engines, customer insights, inventory and supply chain management, predictive analytics, AI for fraud detection & cybersecurity solutions, etc. Solutions that improve efficiency and decision-making across industries are especially sought after.

Article by Bogdan

Co-founder & Head of Design, Bogdan has a passion for everything that works great and looks awesome. Guilty for most of the UI and UX around this place, you can say "Hi" to him at bogdan at brizy dot io