Operating margin (the percentage of revenue left after paying your day-to-day running costs) is one of the clearest indicators of business health. Improving it doesn’t always mean charging more or selling more. It often means running what you already have more efficiently. That’s where AI earns its keep.
According to the UK government’s AI Opportunities Action Plan, IMF estimates suggest a full embrace of AI could boost national productivity by up to 1.5% annually, adding an average of £47 billion to the UK economy each year over a decade. For individual businesses, the gains can be considerably larger.
Cut the administrative overhead
Administrative overhead is the quiet killer of operating margins. Meetings that could have been emails, reports that take hours to compile, invoices sitting in someone’s inbox waiting for approval, all of it eats into your margin without generating a penny of revenue.
Microsoft 365 Copilot can turn meeting notes into action items, draft emails from bullet points and generate reports from raw data. Fireflies.ai records and transcribes meetings, then pushes key takeaways and actions directly into your CRM. The time savings compound quickly. A team of five, each saving 30 minutes a day, recovers over 600 hours per year, roughly a third of a full-time salary.
Automate the repetitive workflows
Process automation is where margin improvement becomes most tangible. Platforms like Zapier and Make let you build automated workflows between your business tools without any coding. When a new order comes in on Shopify, it creates an invoice in Xero and notifies your warehouse. When a client books a meeting, it updates your CRM and sends a confirmation email. Each automation removes a manual step, reduces the chance of error and frees up staff time for work that actually generates revenue.
Keep inventory lean
For product-based businesses, AI-driven demand forecasting helps avoid the twin margin-killers of overstocking and understocking. Carrying too much inventory ties up working capital. Running out loses sales. AI analyses historical sales patterns, seasonality and market signals to recommend stock levels that balance both risks.
Reduce the cost of customer service
AI chatbots can handle routine enquiries – order tracking, FAQs, booking confirmations – without human involvement. Tools like Zoho Desk and Tidio offer AI-powered customer support that resolves straightforward issues instantly, escalating only the complex ones to your team. The result is better response times, lower support costs and staff freed up for higher-value work.
Improving operating margins with AI isn’t a single big bet. It’s a series of small improvements across the business that collectively make you leaner, faster and more efficient. The best place to start is wherever your team is losing the most time.
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