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3.2.4 Reasons for staying small

A) Small businesses survival in competitive markets:

  • Product differentiation and USP’s – Smaller businesses may be able to offer a more personal service than bigger business and therefore create brand loyalty. Furthermore, the products that they sell may be unique. This is especially the case in niche markets.
  • Flexibility in responding to customer needs – As the business is smaller it is able to respond to changes in customer tastes and fashions. This is in contrast to bigger businesses where poor co-ordination and communication can make it longer for them to react to changes in customer needs and wants.
  • Customer service – Smaller businesses are able to offer a more personal service than bigger businesses. This is likely to attract customers to smaller stores rather than larger ones.
  • E-commerce – The growth of businesses selling on the internet has resulted in a number of stores closing. This is a big threat to small businesses as the increasing accessibility of the internet and e-commerce has resulted in an increasing amount of people buying online rather than in stores.
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