- Small businesses in the U.S. contribute over 44% of the country’s total revenue.
- Small businesses struggle against the online presence of giant corporations and changing consumer habits.
- Large companies enjoy economies of scale and can offer lower prices, putting pressure on small businesses.
- The rise of subscription services threatens small businesses serving the same market.
- Communities can promote healthy competition through legal support, collaboration, and awareness campaigns.
Small businesses are the backbone of local communities. For years, small business owners fulfilled the needs of the people in their areas, and people trusted them with their business. However, in recent times, small businesses have faced significant competition, which hovers over their existence daily.
Small Businesses in the U.S.
There are millions of small businesses in the U.S. That’s why it’s estimated that they are responsible for about 44% of the country’s overall revenue. However, these businesses may struggle due to growing competition in communities. Here are some reasons behind that:
Online Presence of Big Corporations
The sudden increase of large corporations in small towns which share the same products or services as local businesses is a significant challenge many small businesses are now facing. The online presence of these companies, mainly through social media, gives them more exposure to the target market, which puts smaller businesses at a disadvantage. To keep up with the competition, local businesses must be proactive in marketing, particularly building their online presence.
Millennials and Their Shopping Habits
Millennials, outnumbering Baby Boomers, have enormous purchasing power in today’s market. One of the everyday shopping habits of the young generation is purchasing from e-commerce sites like Amazon, Wayfair, and Alibaba.
These virtual shelves are a significant threat to small businesses that rely primarily on foot traffic. To survive these changing times, local businesses must adjust their operations to attract the younger generation. This includes creating online stores and delivery services, modernizing their store design, and incorporating technology into their operations.
Increased Cost of Goods
Larger companies enjoy economies of scale, which allows them to buy products at lower costs than smaller companies, hence selling them at a lower price. This can be a big issue for small businesses that cannot match these prices while maintaining the quality of their products.
The competition to drop prices can force small businesses to take a hit in their profit margins or even close down their businesses. If left unchecked, this will have a significant negative impact on the community’s economy. To tackle this situation, local businesses must find creative ways to reduce overhead, including leasing or sharing space, managing inventory, and cost-cutting measures.
Rise of Subscription Services
Subscription services such as meal-prep delivery boxes and shaving products may seem like they serve a niche market, but they threaten small businesses catering to the same market. Subscription services provide consumers with convenience and sometimes better pricing.
Having access to these products through these platforms puts local companies in danger of losing customers, particularly repeat customers. To overcome this challenge, small businesses should consider innovating to offer something customers cannot find from subscription services or creating their subscription services to compete.
How Can Communities Promote Healthy Competition?
Getting rid of competition is never a problem for small businesses, as competition is a healthy business element. However, too much competition can be detrimental to the local economy. Here’s how to promote healthy competition in communities:
Help Deal With Legal Issues
Specific laws are in place to ensure that small businesses can compete healthily. For example, monopoly is illegal in the U.S., and it’s essential to ensure big corporations do not abuse their power by controlling prices or limiting access to resources.
Communities should provide legal help to small businesses to protect them from anti-competitive practices. This includes having experienced business litigation lawyers to represent businesses. These lawyers can help small businesses bring legal action against large corporations for unfair practices and receive compensation if applicable.
Small business owners may find themselves in a competitive situation, but collaboration can help them work together to reach common goals. Communities should invest in local resources and create events to foster collaboration among local businesses. These events can be an excellent way for business owners to build meaningful relationships and potentially increase their customer base by working with each other.
People may not be aware of the advantages of shopping at smaller stores, such as personalized service and attention to detail. People are more likely to support local businesses if they understand their value in the community. Communities must create awareness of the importance of local businesses by launching campaigns, organizing events, and introducing incentives for customers to shop at small businesses.
There are various reasons why small businesses may face competition in the modern age. However, with the proper support and resources, communities can work together to promote healthy competition and ensure that small businesses remain relevant and successful in their respective areas.