Small businesses have always faced limitations of finances, scale, and specialization that were all but definitional. Corporations and big businesses had the resources to invest in third-party systems or software, but SMBs weren’t often in a position to take advantage in the same way. In many cases, larger companies even had the budget and specialized talent to build specialized systems from scratch. Small businesses? Almost never.
That dynamic is changing in a hurry. The build-versus-buy debate used to be reserved for enterprise IT departments with specialized in-house talent and big budgets. But AI has changed that, giving small businesses the ability to spin up a working app, internal tool, or customer-facing feature in a weekend. Resource-strapped small business owners who never considered building their own software or who lacked the necessary technical skills are suddenly weighing it as an option.
That leveling of the playing field has been a boon for SMBs. But while AI has lowered the barrier to building, it hasn’t lowered the cost of ongoing maintenance and support, including security patches, uptime, and customer support. Although small businesses may find benefits from building their own software in certain instances, there are potential downsides that make the decision one that should be carefully considered. Here’s what you need to know:
Many SMBs Are Already Building Their Own Software With AI
Build-versus-buy isn’t a theoretical premise. Small businesses have already joined larger organizations in making foundational decisions about whether to DIY their tech operations, or at least aspects of them. AI has collapsed the time, money, and skill barrier to building software, bringing the build-versus-buy debate to small and medium-sized business owners who never had the option previously.
In March, a Goldman Sachs “10,000 Small Businesses Voices” survey found that 76% of SMBs say they are currently using AI, and 93% of those users report a positive business impact. And at that success rate, it’s no wonder small business owners and managers are adopting the build-your-own-software strategy.
At issue, however, isn’t just the capability, resources, and appetite a small business has for building its own software. It’s the ongoing development and vigilance required to ensure the software that’s been built continues to work with the tools already woven into daily operations, such as a CRM or email marketing platform. Because a build is connected to a larger ecosystem, it demands continual updates, specialized expertise, and regular monitoring and maintenance. Those demands can quickly add up and frequently outweigh the cost of paying a third-party provider.
Why DIY Software Builds Aren’t All They’re Cracked Up to Be for SMBs
Any sustainable operational approach that closes the access gap between the biggest companies and small businesses likely has merits. But sustainability is critical. Faster to build does not always mean cheaper to own, especially for anything customer-facing. The real cost of building software often shows up after launch, in the maintenance, security, and ongoing technical support.
After launch, software is used by real people. It requires dedicated resources for maintenance, uptime, security, bug fixes, integration capabilities, ongoing support, and refinement for user experience. AI can reduce the time, effort, and expenditures in getting a software build from A to B, but what happens after? Third-party software and applications, such as those that help a business share events and collect RSVP information, remove guesswork, account for differences in operating systems, and address future changes in the surrounding tech environment.
Security is another key hidden cost to maintaining software post-launch, and it’s arguably one of the most important. Even the best-performing AI coding models still introduce a known vulnerability in roughly one in four tasks, and across the board, 45% of AI-generated code failed security testing outright. Trust is paramount for small businesses. A poor user experience, security breach, or inaccessible app experience can damage a strong customer relationship, undoing much of the hard work a SMB owner or manager has put in over the years.
Tips for When an SMB Decides to Build Its Own Software
Let’s say that you ultimately decide an AI software build is right for your small business. Building software can make sense when the workflow is narrow, internal, and worth maintaining long term. Something a customer touches, on the other hand, such as booking, payments, or scheduling, is a higher risk to build and maintain without vendor-backed reliability. So how should your SMB approach its AI software build? Some guidelines:
- Start small. Build for low-stakes internal use, something with low consequence if something breaks.
- For customer-facing, revenue-critical functions, or anything requiring compliance or security guarantees, the investment in ensuring those standards are met is worth it.
- Continue to revisit the decision as your business scales or needs change. What works with five employees may not work with 50.
Remember that building your own software means inheriting all the responsibilities that come with it, including maintenance, uptime, security, bug fixes, integrations, support, and user experience. Does your small business have the IT staff or vendor partner prepared to address these issues? Do the above demands match the scale of your business?
Small business margins are thinner than those of the big companies, and burnout for SMB owners and managers is always a danger. An AI software build has undeniable initial benefits and may be a fit for some smaller and mid-size businesses. But it isn’t to be entered lightly. Weighing the importance of speed and flexibility against the long-term ownership and operational responsibility of an internal software build is mission-critical not only to efficiency and profitability but also to the sustainability of a small business.
Michael Nilsson is CEO and founder of AddEvent, a San Francisco-based software company that offers cutting-edge calendar, appointment, and event management solutions to enhance customers’ event and appointment engagement. As a software engineer by trade, Nilsson developed AddEvent’s primary “add-to-calendar” solution himself in 2012. Since then, he has scaled the company and its offerings to become one of the leading calendar solutions for over 400K+ customers, including Fortune 500 companies.
