Competitive advantage is mostly seen in sectors where it refers to an attribute that makes one company perform better than its rival. It may be in terms of produced goods in better quality or cheaper price, whatever it might be, it surely makes a great difference in overall growth in the market. In a stance, people might think that small businesses might fall backward when fighting for their place in the market, but that is not true in all cases. These are several competitive advantages that a small company has over a big company which at the end of the day create a huge difference. So let's look at those 6 benefits.
i) Targeting the Niche Market
The first and foremost advantage that a small business has and a big business might not, is the niche targeting. It is much easier to target the market depending on the niche for a small business than it is for a big business. Niche targeting is providing the right solution to the public demand which is easier with a small business as they can take the time out to do market research and find out the public requirements faster than a larger company.
ii) Empowering the Team
Small businesses often work with a lesser number of workforce which allows them to have a more intimate team. In business operations, sometimes companies have to face loss not because they did not have enough supply but because they did not have a strong internal team. Having a smaller team will help companies develop individualized attention and often the team has a say in the business operations and productions. Small businesses are better at empowering and developing their team members than large companies which proves to be a competitive advantage.
iii) Having a Direct Connection with the Leader
Only a manager doesn't need to make all the right decisions or the creative director might have the best idea. Sometimes with enough encouragement, employees from other departments can also have better inputs for the operations which often are left unsaid because they cannot directly access the leader. This happens less with small companies as there are fewer people on the team which leaves better interpersonal communication. This also means that when in trouble, the employee can directly go to the leader without any resistance, making a better workplace that is missing from most big companies.
iv) Pivoting Quickly with Visible Effects
It is easier for a small company to change and adapt to something new when the previous thing is not working. Small companies often do not get into big contracts that require them to stay partnered for a longer period of time, which certainly is not the case for big companies. So, when something goes wrong, a small company can easily pivot and change quickly while the big company will need to take a longer period. At the same time, the results of the changes are also quickly visible in the smaller companies than it is in the bigger companies.
v) Focusing on Specialization
Something that is usually seen in large companies is expansion where they are increasing in size to earn more revenue and become more profitable. This is much easier for them because they have bigger shares and bigger financial sources. However, in this process what usually happens is not capturing the market right or failing on specialization. For small companies, this gives them a competitive advantage as they can focus on specialization and give the customers a more individualized experience.
vi) Faster Innovation
The bureaucracy is much lighter on small companies than it is on big companies. This leaves enough space for creativity to breathe and grow while giving a competitive advantage to the smaller companies. With less workforce, these businesses tend to have l; ess decision makers, which means the decision-making process will be completed at a much faster rate.
So even if the small businesses are less in the workforce and overall financial aid, there are better chances for them to flourish.
