The great thing about the internet is that it is possible for smaller businesses to compete with larger businesses. I am not saying it is easy or that every small business is capable of this. With a good mix of passion and creativity, it is possible for your small website to outperform even the biggest companies.
Find Your Niche
Since you have limited resources don't try to cover the entire industry. For example a huge car manufacturer website has enough writers to cover the entire automotive industry. It would be smarter for you to just pick one specialty niche like 4x4 off road trucks or motorcycles with sidecars. Now you can be the master of your niche and do a great job on it.
The large corporate websites have huge teams and countless meetings for all of these teams to talk to each other. You don't need to waste time on this, so you can move faster and respond to the changing public demand before the corporations even schedule their conference calls. You need the courage to make fast decisions. If you waste time being indecisive, the large corporate competition will catch up to you.
Steal Their Research
I am not talking about breaking into their offices but their are many ways you can take advantage of the research the competition does. When you are at a search conference, look at the name tags and you might come across a loose lipped competitor. At one conference, one of my competitors bragged how great he was and exposed their entire strategy to show-off without even realizing who I was. Pay attention to press releases and industry interviews. Larger companies often give sneak peaks of what they are working on. Also set-up Google alerts for your larger competitors. This will help to notify you of whenever they make changes which you should be able to quickly recreate for your own site.
Develop Brand Advocates
If you do a great job, you can develop of strong following of advocates that will virally spread your brand. This will lead to more direct traffic, type-in searches and other strong usage signals. Make it easy for your fanatic fans to spread the word about you. Keep your urls short & easy to retype into twitter or email. Send out interesting emails that have a stronger chance of being forwarded. Don't be scared about offending someone and avoid being plain vanilla. Develop a personality for your brand to make you unique from the large faceless corporate companies.
What other ways would you use for a smaller site to beat larger sites?