As a small business, you have many disadvantages over bigger players. You have less money to play around with, perhaps less in house skills, and you won t have as much power when it comes to negotiation either. Although there are certainly disadvantages to being a small business, there are also benefits too. In this article let us take a look at what factors may be working in your favour, and how you can leverage them.
Know Your Customers
When you re a small business, you can get to know your customers intimately. This is something that simply isn t possible for a larger business, and is therefore something you can use to your advantage. Try to get to know your customers, what makes them tick, and what they like about the service you provide. When they get in touch, and someone who knows them always answers the phone, you have a major advantage over larger companies. To make sure you re taking full advantage of this, make sure you talk to your customers and demonstrate that you understand and remember their needs.
Tailored Service
When a bigger business is asked for a service by a customer, and they don t provide it, it probably won t be worth the effort of tailoring a product or service to suit their needs. However, when you re a small business this can be perfectly feasible. To give an example, as a t shirt design company you might not make football shirts. And when you re a large business, it might not be worth diverging from your core focus to help someone with this need. However, as a small business, you could divert a small amount of your time to do this for the customer. Not only might it give you a future revenue stream, but it also provides a method for you to further enhance your relationship through catering to your customers needs. The ability to act fast is a great benefit of being a small business. Are you taking advantage of it?
Charge Less in the Services Industry
As a small business in retail and manufacturing, the cost of buying products and raw materials will usually outstrip labour costs. And, for that reason, a larger business will usually be able to benefit from having economies of scale. But, in certain industries, the opposite happens smaller businesses have higher margins than their competitors.
For example, a small design agency with two partners only needs to make enough money to cover the partners wages. With a larger design agency, they ll have management costs, receptionists, sales staff, marketing costs, and lots more. Therefore, as a small business in the services industry, it is still possible to compete on price.
While it can be good to compete on price, especially as you try to build a customer base, it s also important that your business is able to grow in the future. This means if you charge too little now, your customers might not be willing to pay more in the future when / if your overheads rise.
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