How AI Is Leveling the Playing Field For Small Businesses to Compete With Industry Giants

The public perception of artificial intelligence often hinges on reducing workforces and replacing workers. But what about its power to help established teams outperform their limitations without expanding in size?

Small and medium-sized businesses (SMBs) are often held back by a lack of time and resources. While larger organizations go after lucrative opportunities, SMBs are forced to sit back and watch simply because they don’t have what it takes to run with the big dogs. As AI and related tech advancements go mainstream, 2025 is beginning to look like the year when SMBs find they can finally go toe-to-toe with larger corporations and hold their own.

If you’re an entrepreneur of a startup or growing organization, here are some key ways you can utilize tech to equip your SMB to compete on an enterprise level this year.

1. Accelerate digital transformation

It’s easy to understand how a new technology can help your business in theory. Integrating it into your existing operations can be more difficult. This process of digital transformation is essential to SMBs taking the next step in keeping up with enterprise-scale organizations.

Heading into 2025, leaders of smaller organizations are recognizing the imperative nature of digital transformation. All-in-one small business management software Thryv revealed in its 2024 Small Business Index Report that 31% of small business owners were using AI last year. In comparison, 43% expect to use it in 2025.

This rapid growth is a necessary first step in SMB competitiveness. If they want to tap into the potential of AI and other technologies, small business leaders must be on the lookout not just for the best software in their industry but for ways to effectively integrate it to improve their unique business activities.

Entrepreneurs looking to compete with larger companies should ensure that they are embracing digital transformation. They should consider the options in each area (administrative, R&D, financials, etc.). Once a tech tool is chosen, they should set KPIs and clear expectations. Then, measure over time to ensure any new technology is not just present but properly integrated into their companies.

Related: You Must Embrace Digital Transformation to Stay Ahead of the Competition — Here’s How to Seamlessly Weave It into Your Organization

2. Target your AI adoption

Developers have released a smorgasbord of AI applications since ChatGPT came out in late 2022. However, many of these have felt rushed, have been limited in scope and have lacked scalability and accessibility. Thus far, it has been hard for small business owners to find an applicable and effective way to use them in niche or limited settings.

In 2025, AI tools should become more targeted and accessible for smaller operations. SMBs can expect to have access to a growing number of AI tools that are tailored to their industry, too. One example is financial services.

TechTarget points out that AI and machine learning are making it easier for financial companies of all sizes to analyze historical and real-time data to gauge the legitimacy of a user near-instantaneously. AI also helps in other niche areas like wealth management, stock trading and loan approvals.

SMBs can expect similar AI tools to become available in all industries. In addition, these tend to be scalable, offering cost-effective, long-term solutions for smaller businesses that can grow with a company over time.

In 2025, SMB leaders should look for industry-specific AI tools that target specific activities and give them unique advantages over larger competitors. They can anticipate these developments by following industry publications and influencers to observe the latest tech innovations and associate them with industry benefits.

3. Migrate to a cloud infrastructure

In the past, small businesses have lacked the internal capabilities to migrate to a cloud infrastructure. Limited budget and lack of in-house expertise were primary factors holding many companies back.

AI is quickly making it easier for SMBs to move away from centralized data centers. Companies are utilizing AI to build community-driven cloud network options that draw on a global network of devices.

These are more sustainable and affordable cloud-based options. They enable enterprises to create flexible, resilient and adaptable infrastructures. These scale easily, have lower risk and can accommodate things like remote work, giving SMBs access to a larger talent pool.

If you’re an SMB owner in 2025, you should be taking active steps to take advantage of AI-powered cloud-based infrastructure. Assess your current infrastructure. Review your cloud-based options. Also, remember things like flexibility, security, and scalability when considering a migration.

Related: During Uncertain Times, SMBs Can Rely On What They’re Best At: Talking to Their Customers

David overcoming Goliath

Small and medium businesses have historically been at a disadvantage when competing with larger enterprises. No matter how much they’ve leaned on things like personalized service or niche product offerings, smaller companies have always faced a lack of resources that creates barriers to competitive growth — barriers that are quickly disintegrating thanks to the rapid evolution of technology.

If you are a small or medium business owner, 2025 is the year you can get out ahead of the competition, no matter how big it might be. If you have a competent, creative and committed team equipped with well-integrated, updated tech tools, you can create quality results at a scale that makes you look like you’re one of the big dogs.