Small Firms, Big AI: How SMBs Use AI to Compete with Big Businesses

Published Date : 07/06/2025 

Small and medium-sized businesses (SMBs) are turning to AI to bridge the gap with larger enterprises. From sales training to customer service, AI is helping SMBs level the playing field. 

When Alex Schlesinger, founder and CEO of insurance firm Active Mutual, faced the challenge of training sales agents without the budgets or trainers that larger firms could afford, he turned to an unexpected solution: an AI chatbot.

“Our small business had been struggling for a while to give our agents the kind of in-depth training bigger companies can afford,” Schlesinger told PYMNTS. “But that changed this year when we started using Gemini to roleplay tough conversations.”

Instead of hiring expensive coaches or having sales agents attend lengthy workshops, Schlesinger’s company used Gemini to simulate conversations so agents could rehearse responses in a realistic setting. The outcome was significant. “It prepares my agents better and faster than any sales course,” Schlesinger said. “They actually find the practice sessions incredibly helpful and build real skills.”

While sales didn’t suddenly jump by 50%, Schlesinger noticed something more valuable. “That new level of confidence and the positive client interactions that result are a huge ‘bonus’ for our whole team.”

For Schlesinger, Gemini became the in-house trainer his team never had, leveling the playing field between his firm and much larger competitors. Schlesinger’s story isn’t unique. Small and medium-sized businesses (SMBs) across the country are embracing artificial intelligence (AI) as a way to compete against large enterprises.

By automating processes, augmenting talent, and accelerating decision-making, AI enables smaller firms to bypass legacy systems and leap directly into an AI-first business model—one that can rival what large incumbents offer. New data from Verizon Business’ 2025 State of Small Business Survey showed that 38% of SMBs are integrating AI into operations. Over a quarter (28%) are deploying AI for marketing and social media, while 24% use it for written communications. Nearly a quarter use it to power digital personal assistants that can help with customer service. Other uses include cybersecurity and hiring and retention of workers.

“Small business owners are entering a new chapter of digital business with the rise of AI,” said Aparna Khurjekar, chief revenue officer, business markets and SaaS at Verizon Business.

Staying competitive is an imperative for smaller companies, especially in uncertain economic times. According to a May 2025 PYMNTS Intelligence report, half of SMBs must rely on funds they get from day-to-day sales or from the bank just to survive. “This highlights the precarious financial position of a significant portion of the SMB landscape, leaving them vulnerable to fluctuations in revenue caused by a shifting business environment,” the report said. Particularly dependent are hotels, restaurants, and entertainment businesses.

Competing on Smarts, Not Scale

The adage “work smarter, not harder” applies to SMBs and AI. “Smaller businesses can’t compete with bigger businesses on scale—so they need to compete on smarts,” said Mary Kay Bowman, executive vice president and general manager of payments and financial services at software provider BILL. “The smartest thing small businesses can do is use AI to unlock top-tier finance expertise and tools that were only ever available to enterprise companies.”

Bowman told PYMNTS that the best AI tools for SMBs aren’t flashy tech add-ons but are built with small business needs in mind. “Silicon Valley needs to be delivering AI that actually delivers tangible outcomes that small businesses need: saving time, improving accuracy, and freeing up bandwidth to focus on growth.”

Jackie Sinclair, a consultant who works with SMBs, agreed. “Let’s face it—running a small business often means doing everything yourself. But AI is flipping that script. It’s giving small business owners the power to operate like they’ve got a full team behind them, minus the overhead.”

Kevin Green, chief marketing officer at Hapax, added that smaller businesses have the opportunity to “leapfrog” larger institutions by using customized, industry-specific solutions and focusing on operational and process improvements that are critical to success. “There is so much innovation happening around AI with big tech pumping out new features every week. We are shown countless examples of tactical use cases that are impressive, but often don’t integrate elegantly into how we do business.”

One example of customization comes from LegalZoom. CEO Jeff Stibel told PYMNTS that his company’s partnership with Perplexity gives small businesses direct access to their legal tools inside AI-powered search. “This first-of-its-kind collaboration reflects how small businesses are increasingly turning to AI not just for efficiency but for confidence as well. While AI cannot replace legal advice, it can be the first step from which we at LegalZoom can then complete the process.”

Customer service is another area of disruption. Robin Westerling, CEO of Longvadon, said AI agents from Salesforce’s AgentForce let them mitigate and resolve customer issues and enabled the company to shrink from three to one customer support staff while maintaining quality service.

For SMB leaders unsure where to begin, Schlesinger advised them to “explore how AI tools might help you fill gaps where you don’t have big-company resources. … This can help you offer truly top-notch service that makes your customers feel understood and valued, just like the bigger players do.”

What Businesses Are Using

Here are some tools SMBs are using, according to Sinclair:

- Marketing: Tools like ChatGPT, Jasper, and Copy.ai help SMBs write captions, blogs, and emails faster and smarter.

- Design: Canva’s Magic Studio, Runway, and Lumen5 let business owners create professional graphics and videos without a designer.

- Accounting and finance: QuickBooks AI, WaveApps, and Xero simplify bookkeeping and forecasting.

- Admin and legal: DoNotPay and Spellbook help draft contracts and other legal documents and answer FAQs.

- Operations: Notion AI, GoHighLevel, and ClickUp Brain automate workflows so businesses don’t lose track when things get busy. 

Frequently Asked Questions (FAQS): 

Q: What is AI and how does it benefit small businesses?

A: AI, or Artificial Intelligence, refers to systems or machines that mimic human intelligence to perform tasks. For small businesses, AI can automate processes, improve decision-making, and enhance customer service, helping them compete with larger enterprises.

Q: What are some common AI tools used by SMBs?

A: Common AI tools used by SMBs include ChatGPT for marketing, Canva’s Magic Studio for design, QuickBooks AI for accounting, DoNotPay for legal tasks, and Notion AI for operations.

Q: How can AI help small businesses with customer service?

A: AI can help small businesses with customer service by using chatbots to handle frequently asked questions, automating responses, and providing 24/7 support, which can improve customer satisfaction and reduce the need for a large customer service team.

Q: What are some challenges small businesses face when adopting AI?

A: Challenges can include the initial cost of AI tools, the need for training to use the technology effectively, and concerns about data privacy and security. However, many AI solutions are becoming more affordable and user-friendly, making them accessible to small businesses.

Q: How can small businesses ensure they are using AI ethically?

A: Small businesses can ensure ethical use of AI by being transparent about how AI is used, protecting customer data, and ensuring that AI systems do not perpetuate biases. Regular audits and updates to AI systems can also help maintain ethical standards. 

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