Why Small Businesses Can Finally Compete Again
Right now, an auto mechanic and a freelance graphic designer use the same accounting software. A physical therapist and a restaurant owner use the same scheduling tool. These are completely different businesses with completely different needs, but they’re all stuck with the same generic products because until recently, that was the only option.
That’s starting to change. AI has made it dramatically cheaper to build software, which means people with real industry experience can now create tools designed for their specific field. At the same time, customers are getting tired of one-size-fits-all solutions and looking for something better. Put those two things together, and I think we’re heading back toward a world of smaller, more specialized businesses — and away from the big generalist companies that have dominated for the past few decades.
Generic to Niche
If you look at something like accounting software, almost every business uses a generic version like QuickBooks or Xero. This software works okay for everyone but isn’t optimized for anyone specific.
In the past, companies had to address the most people possible because the cost of developing software was so high, often hundreds of thousands or millions of dollars. They built everything for the mass market because that was the only way to remain profitable.
But think about what this actually meant: an auto mechanic and a freelance graphic designer use the same accounting tool, even though they have completely different needs:
- Different types of expenses to track
- Different tax considerations
- Entirely different cash flow patterns
The software doesn’t fail them, but it doesn’t truly serve them either.
The AI Edge
Now that people can use AI to handle repetitive coding, data processing, and even initial product design, development costs have collapsed. Someone with ten years of experience as an auto mechanic can now build accounting software specifically for that industry. Software that automatically categorizes parts inventory, tracks warranty work differently than regular repairs, and integrates with the specific supply chain tools mechanics actually use.
You don’t need hundreds of thousands of dollars to build something anymore. Do the simple math on a specialized tool: charge $99 a month, get 500 paying customers, and you’re making about $600,000 a year. That’s enough to pay a small team, keep improving the product, and run a real business. In the old model, you needed 50,000 users at a lower price just to cover what you spent building the thing. That changes everything about what kinds of businesses can work.
Now, finding those 500 customers is still hard. You’re going up against tools with big brand names, tons of built-in features, and large sales teams. But 500 people in one specific industry who feel ignored by the big players? That’s a group you can find if you know the space. You’re not buying TV ads. You’re showing up in the online groups, trade shows, and communities where your people already hang out.
Trusting Local
People are backing this up with how they spend their money. Trust in big companies has been dropping for years. You can see it everywhere. Writers are leaving major publications for Substack. Small online stores on Shopify are pulling customers away from Amazon. Tight-knit online communities are replacing giant, generic forums. Over and over, people are picking smaller and more focused over bigger and more convenient.
It makes sense. If you’re a physical therapist looking for software to run your practice, who do you want to call for help? A support team that handles questions from thirty different industries? Or someone who actually understands how insurance billing works for outpatient rehab?
The problem has always been that small, specialized teams couldn’t keep up. But AI changes that. A two-person team can now handle customer emails, create content, and crunch data at a level that used to take five or six people. That means the costs finally work for a business with a smaller, more focused customer base.
What This Means for You
Lower costs and shifting trust are pushing the market away from a handful of giants controlling everything. The “winner-take-all” era that defined the last few decades is losing its grip.
If you know a specific industry well — plumbing, physical therapy, restaurant management, commercial real estate — you can now build tools and services that used to be too expensive to even try. The thing holding you back isn’t money anymore. It’s whether you can spot a real problem and build something clearly better than what’s already out there.
So here’s what I’d actually tell you to do: think about the one thing in your industry’s current tools that drives everyone nuts. The clunky workaround that people just live with because “that’s how the software works.” That frustration is your opening. The technology to fix it is cheaper than it’s ever been. The people who need it are already out there looking. The only question is whether you’re going to build it, or wait for someone else to.