Monday, July 11, 2016

Small Businesses Leverage Their Size

From AIER:
Small businesses are an important part of our economy and communities, but often we incorrectly assume that their small size is necessarily a competitive disadvantage. Numerous articles have proclaimed the end of Main Street, arguing that “mom and pop” shops cannot compete with the low prices and one-stop shopping of big-box chains. Others have touted the benefits of small business to local economies, emphasizing our duty to support small firms in our communities. In both lines of discussion, small businesses are seen as passive entities, handicapped by their size in our large and increasingly global economy.

This brief takes a different view, showing that the most successful small businesses prosper because of rather than in spite of their size. These businesses often combine niche product offerings, superior customer service, a detailed understanding of local markets, and other attributes that larger firms are less able to capitalize on. After looking at some of the basic economics behind the advantages of smaller firms, this brief reports the results of in-depth interviews with small business owners and managers in New England, Philadelphia, and New York City and provides many examples that other small businesses can use when facing larger competition.

How small businesses prosper
At its core, a firm must gather information about its customers and market and make decisions based on that knowledge.

See also: Why Bigger is Not Always Better in Business

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