Cannot compete due to resources ?

[Dolby]

What services or areas do smaller companies lack in, and are unable to compete with a larger concern due to available resources?

I'm thinking something like marketing may be something that a small company may not be able to compete? Bulk buying as well they cannot compete?

I'm aware different industries will have different challenges - but curious as to all

 

[DJ...]

Wow, where to start?

Access to finance is the biggest one. Buying and board-room negotiating power. Cross subsidisation across multiple product lines. Marketing prowess. Skills development.

Okay the list is endless, and as you say, dependent on the industry, and more importantly, the company and competitive landscape...

 

[Hendrix]

On the flip side, small companies have many advantages.
They will have less red tape with regards to internal processes, they will be more willing to "make a plan"
Things get done quicker in small companies, large ones can take forever to get anything done.
Large companies also tend to have more "dead wood", this is seldom tolerated in small companies.

 

[Arthur]

Forgive me, but your question makes me, er, nervous. Unless this is for a junior high school economics class, it seems to me there's an agenda behind the question...

It's very obvious that the answer lies in just about any resource or area in which you can apply your already-chosen comparative of size, ie large vs small. This extends to every lever available to any reach, assuming a level playing field legislatively speaking: access to capital, operational funding, skills (incl management depth across a range of specialist areas), market reach, technological leverage, purchasing power (ie volume discounts), inventory depth, scalability, gearing, and so on. It's called economies of scale.

That's exactly as it should be.

Small business must leverage the one thing it does have: smaller size. This allows it to be nimbler, more responsive, able to offer a more personalised or customised set of goods or services, usually by leveraging the specialist skills, focus or commitment of the entrepreneur driving the small business. It can identify and operate in niches that big businesses just can't reach or service without losing its economies of scale.

The last thing we need is laws that interfere with market mechanisms.

 

[Dolby]

Thank you,

@ Arthur - you post comes across slightly condescending - not sure if was meant like that though, or I took it wrong? Some people simply questions and prefer not to give the entire thought process as the post may be too long to read or they're looking for fedback on a certain idea/issue only.

Anyway - I'm tying to see what - if any - challenges for a small business could be overcome in numbers to assist with the running. For example bulk buying - 5 liquor stores each order 50 bottles of Vodka. Would pricing be better at 250 ordered by 1?

Marketing is usually pretty pricey for a small company - could combining a few companies make it better?

As I don't have a business but many do, I'm looking real world challenges and struggles that I couldn't think of

 

[Greg C]

Thank you,

@ Arthur - you post comes across slightly condescending - not sure if was meant like that though, or I took it wrong? Some people simply questions and prefer not to give the entire thought process as the post may be too long to read or they're looking for fedback on a certain idea/issue only.

Anyway - I'm tying to see what - if any - challenges for a small business could be overcome in numbers to assist with the running. For example bulk buying - 5 liquor stores each order 50 bottles of Vodka. Would pricing be better at 250 ordered by 1?

Marketing is usually pretty pricey for a small company - could combining a few companies make it better?

As I don't have a business but many do, I'm looking real world challenges and struggles that I couldn't think of

I am sure that Arthus did not mean to sound condescending but his post still remains mostly valid to some degree. If we answer your first question, I believe as an enterprise banker dealing with small and medium enterprise that it most certainly is cheaper if assuming you have zero relationship with the supplier. As I am sure you already know relationships also tend to drive the price down abit as you are a repeat customer, if its still in the building phase bulk buying through 1 will bring your costs down and reduce your logistical issues to some degree.

I would like to point out a very strong problem for small business. Realistically in our market unless the small business has two main drivers that make it better than a bigger competitor being the price they charge, and the ability to show its resource ability to succeed,the bigger companies tend to crush you on this. It is imperative that what you are offering is somewhat different to a competitor as it sets a need that they can only get from you. If you enter a financial services industry for instance selling insurance you need an edge in the product platform or a customer that is already bought into it.

Real day issues include tendering and supplier applications, not being able to get the job done due to resource abilities, whilst you are more nimbler you are put to the test far more than a bigger competitor due to size. I would trust ABI more than another competitor whos just brought in a fizzy drink.

Keep your price margins as low as possible whilst you grow, ensure that you do not over promise under deliver and make sure you do have a marketing strategy going into everything. Your company needs to build a reputation

 

[Paul Hjul]

Small businesses forming co-operatives for purchasing and finance is a fairly important component of any capitalist society as is mutual banking (which has been a particular victim of big government thinking for the last 50 years). Commercial agriculture is not possible without the co-op (many co-ops have since moved towards other ownership structures). If a group of bottle stores can find value in forming a purchases group and all chipping in advance towards purchasing from a distillery on bulk order then they should look at doing so and compare it to the other options available to them - namely the existing purchasing low volumes through a wholesaler or distributor who is making a profit and raising their barrier to compete. The middle man here though is not usually an idle thing, in fact the middle man shoulders risk and puts capital out on return - buying from the distillery in advance and not having a guarantee on sale.
Where problems creep in is if the middle man has an exclusive agreement backed by more than the simple law of contract which usually entails a regulated industry or having a cartel with men with guns or a propensity towards perjury.

One of the real problems with business development in most economies is a misunderstanding of the profit motive - and unfortunately this misunderstanding is located across the spectrum and really is a major cause of otherwise reasonably intelligent people saying very stupid things: it is a misunderstanding that causes some to glorify greed/gluttony and shortsightedness and others to assume that engaging in business is somehow an evil for which some sort of absolution must be paid.

Small businesses need to have the mechanisms in place to freely contract and associate in their interests and with a profit motive, if they can do that they build their own ladders.

Thank you,

@ Arthur - you post comes across slightly condescending - not sure if was meant like that though, or I took it wrong? Some people simply questions and prefer not to give the entire thought process as the post may be too long to read or they're looking for fedback on a certain idea/issue only.

Anyway - I'm tying to see what - if any - challenges for a small business could be overcome in numbers to assist with the running. For example bulk buying - 5 liquor stores each order 50 bottles of Vodka. Would pricing be better at 250 ordered by 1?

Marketing is usually pretty pricey for a small company - could combining a few companies make it better?

As I don't have a business but many do, I'm looking real world challenges and struggles that I couldn't think of