3.2.4 Reasons For Staying Small Flashcards
Reasons for staying small?
- Personal service
- owners preference
- flexibility and efficiency
- lower costs
- low barriers to entry.
- small firms can be monopolists
Personal service
As firms expand it becomes increasingly difficult to deal with individuals rather than department automated Sims. Many people prefer to do business with the owner of the company directly and are prepared to pay a higher price for the privilege.
Owner’s preference
Some entrepreneurs may be content with the current level of profits, for instance remaining below the VAT threshold to avoid administrative burden of increasing corresponding with HMRC.
Flexibility and efficiency
Small firms are often flexible attitude. They may be able to react more quickly to changes in the market conditions or technology.
Lower costs
In some cases, small firms might have lower costs than larger producers in the same market
Low barriers to entry
In some types of business activity such as grocery, gardening services , window cleaning and many online businesses, the set up costs are relatively low. There is little to stop competitors setting in business
Small firms can be monopolists
Many small firms survive because they supply a service to members of the local community, but no other business does. People often use their local shops for instance, because it provides a convenient nearby service saving them the trouble of travelling.
How can customer flexibility help small companies survive?
- Small firms can survive alongside larger ones by offering customers flexibility. Small and nimble businesses are often quick in identifying new opportunities and meeting the changing needs of customers. Large corporations are often hampered by a complex organisational structure where they wait for approval for business decisions.
Why is Flexibility in responding to customer needs a reason for staying small?
Flexibility in Responding to Customer Needs: Small businesses are often more nimble and agile than large corporations, allowing them to quickly respond to changes in customer needs and preferences. Small businesses can adapt to these changes more easily, as they do not have the same bureaucratic structures and procedures as larger organizations.
Why is customer service a reason for staying small?
Customer Service: Small businesses can offer a personalized customer service experience that is often difficult for larger organizations to replicate. Small business owners are often able to build strong relationships with their customers, which can lead to repeat business and customer loyalty.
Advantages and disadvantages for a business to stay small?
By staying small, businesses can maintain these advantages, allowing them to differentiate themselves from larger competitors and build a loyal customer base. Additionally, staying small can help businesses maintain a strong sense of purpose and identity, as they are often more closely aligned with the values and goals of their founders.
However, it’s worth noting that there are also disadvantages to staying small, such as limited resources, scalability challenges, and difficulty competing on price. Ultimately, the decision to stay small or grow larger should be based on a careful assessment of the business’s goals, resources, and competitive landscape.
Why are E-commerce a reason for staying small?
- online shopping
- social media consultants
- information and advice sites
- tutoring , training or mentoring
Why is online shopping a reason for staying small?
Online Shopping: E-commerce has revolutionized the way consumers shop, making it easier than ever for small businesses to reach customers outside of their local area. Small businesses can set up an online store and sell their products to customers around the world, without the need for a physical storefront.
Why is social media consultants a reason for staying small?
Social Media Consultants: Social media platforms have become an integral part of many small businesses’ marketing strategies. Small businesses can hire social media consultants or agencies to help them develop and implement social media marketing campaigns, which can be more cost-effective than traditional advertising methods.
Why is information and advice sites a reason for staying small?
Information and Advice Sites: Many small businesses can benefit from the advice and guidance provided by information and advice sites. These sites can provide small business owners with valuable information on a range of topics, from marketing and sales to finance and operations.
