Starting any small business is a real challenge, but it can be even more challenging if you’re competing with larger businesses
It’s no secret that keeping a small business running is difficult, but it’s especially challenging for small businesses that are forced to compete with large corporations in their same industry. For these businesses, sometimes the smallest adjustments can be deal-breakers; a tiny adjustment in prices can mean the end of a company if an industry giant is able to beat them out.
If this sounds familiar and you’re struggling to maintain a small business, here are a few strategies you can use to avoid being crowded out by larger competition.
Know Your Market
If you’re just starting your small business, take some time to do extra research on what sells best in your market. Large companies might have the experience to know what sells better, as well as the budget to afford mistakes when they happen. However, if money is tight, it’s best to have concrete data at the start.
For example, if you’re looking to get into the retail or clothing industry, aim to start with women’s apparel and expand from there. As of August 2017, women’s apparel was the number one top-selling item on the internet, meaning there’s definitely a market for it and you’re likely to see some success with that as your starting point.
Buy In Bulk
One of the advantages that larger companies and corporations have over smaller businesses is the prices they pay for base materials that are used to make their products. Because they’re able to buy larger amounts, they usually receive discounts based on bulk purchases.
For example, more than 200 billion fasteners are used each year in the U.S. If a large company needs to stock up on fasteners, they’re more likely to buy in bulk rather than purchase fasteners as they need them. This helps them save money on an expense that may be trivial to them, but essential to you. Whenever possible, try to buy necessary items in bulk to shrink your costs. Of course, only use this strategy for items without expiration dates, so you won’t be wasting money on items that don’t get used quickly enough.
Start From The Ground Up
Maybe you’re looking to start a business, but will need a very specific type of building to get the job done. After all, without the right facilities, you’re not going to get very far in competition with a larger company.
When possible, look for storefronts and buildings that are already existing, but if that doesn’t work, consider using modular construction for your workplace. A report by the Building Industry Association of Philadelphia estimates that going modular can reduce construction cost by 9% to 20%. Every penny you can save at the beginning of setting up your business will be valuable later on, especially when in heated competition.
Find Financial Fixes
Finally, remember that not every week or month or even year is going to be easy for your business financially. There may be periods of time where finances aren’t what they should be, partially thanks to your larger competitor.
In these situations, be sure you have a backup plan to keep the bills paid. For example, consider invoice factoring; this strategy can help you cover costs if a customer isn’t paying on time and leaves you short on paying your expenses. According to the Wall Street Journal, the factor advances most of the invoice amount – usually 70% to 90% – after checking out the credit-worthiness of the billed customer. When the bill is paid, the factor remits the balance, minus a transaction fee. While you’ll want to avoid relying on systems like this regularly, they can be useful when you’re in a rough financial spot and keep you from going out of business.
Starting any small business is a real challenge for even the most skilled entrepreneurs, but it can be even more challenging if you’re competing with larger businesses who have been operating for longer. With these financial tips, however, you’ll be able to keep your doors open and grow your small business despite the competition.
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