10 Competitive Advantages Small Businesses Have Over Big Companies

What is one competitive advantage that a small business has over a big company? What’s your best tip for a small business to “lean in” to these competitive advantages?

To help business owners take full advantage of the benefits of small business strategies, we asked business professionals and leaders this question for their best advice. From having a hand in developing your team to pivoting quickly and effectively, there are several value-adds to operating as a small business that can help you grow.

Here are 10 competitive advantages that small businesses can utilize:

  • Faster Decision-Making Process
  • Targeting Niche Markets
  • Empower and develop your team
  • Personalize customer service
  • Access leaders directly
  • Prioritize your local community
  • Innovate faster
  • Make your mark
  • Focus on a specialization
  • Pivot quickly and effectively

Faster Decision-Making Process 

Being small isn’t a bad thing; it has its competitive advantages, one being the quick turnaround for decision making or product innovation. Yes, you may have fewer employees, but because of that you’re able to be quicker in process innovation. Keeping a business afloat and growing is about being able to adapt and change with the demands of the market and being an agile business. It’s harder to make those kinds of decisions when you have a lot of red tape or other voices that you have to consider.

Alex Belladorsi, Appliance Technician

Targeting Niche Markets  

Being a small business owner in a world packed with much larger businesses can feel overwhelming, but never forget your competitive advantage of being able to target your niche market. We have a focused strategy of highlighting fun destinations that are near our many rental locations around the country in our blog. These blogs position our company as an authority in the travel space and provide value to prospective customers looking to vacation within the U.S. They are great guides that tell you everything from the best RV parks in the area to the most ideal times of the year to visit. Targeting our customers in this way has helped us gain and retain a good market share.

Randall Smalley, Cruise America

Empower and develop your team

A strong internal team makes all the difference for business operations. Since smaller teams allow for more individualized attention, small businesses have an advantage over companies with hundreds or thousands of employees. To make the most of this, be sure that employees have a say in the direction of the company. Make sure leadership is accessible to employees so that their concerns and questions are addressed fully. Also, set aside time to discuss and track professional development goals with each member of the team. By implementing these intentional practices, a small business can create an environment where each employee feels valued.

Claire Routh, Markitors

Personalize customer service

It’s great to be listed as one of the top market players and have a huge customer base. But, when it comes to having a connection with the customers and having a custom approach, small businesses are the flag bearers. But enterprises adhere to the “one size fits all” approach and launch their services, keeping the requirements of the crowd in mind. Small businesses have the leverage to listen to what each of their customers has to say and customize the services accordingly. This leads to more customer retention and higher customer satisfaction. Small businesses must use this ability to have constant revenue.

Eden Cheng, WeInvoice

Access leaders directly

A small business can sometimes find it difficult to compete against a big business. However, a small business should never be quick to throw in the towel as it certainly has competitive advantages. One competitive advantage that a small business has over a big company is better communication between employees and those running the small business. Employees can communicate directly with top business leaders who are more likely able to address the day-to-day issues, which makes it easier to resolve any critical matters.

Steve O’Dell, Tenzo Tea

Prioritize your local community 

A small business’s competitive edge over larger companies is its connection to its local community. When your business supports local fundraisers and events or helps out in community projects, it shows your customers that you care about them and where you live. Being involved at the local level creates those authentic and long-lasting relationships with customers that the big guys can’t touch.

Shahzil Amin, WellBefore

Innovate faster 

Less bureaucracy is one major competitive advantage that small businesses have over large ones. Small businesses tend to have fewer decision-makers, which makes decision-making faster. Faster decision-making is often aligned with disruptive innovation, and this can help set the small business apart from its larger competitors.

Carol Tompkins, AccountsPortal

Make your mark

One of the great things about working within a small business environment is that you can really “make your mark” there, especially if you join during the early stages. In a large corporate environment, there are many more checks and balances in place, which makes complete sense but does mean things can move at a glacial pace in terms of project progression and making changes. Within a small business environment, you can get things in place much more quickly, get everyone on board more easily, and quickly see results!

Camille Brouard, Myhrtoolkit

Focus on a specialization 

Something that you’ll often see bigger businesses do as they scale is to expand on the areas of business that they cover in order to increase revenue. For smaller businesses, this is an opportunity to focus on niche topics and offer a more focused experience for consumers. To provide an example, our law firm puts our focus on personal injury law and similar topics such as accidents, etc. This has allowed us to target a specific audience and build a solid reputation in this niche practice area. Smaller businesses can capitalize on niche topics like we have, and use them to build a reliable client base.

Peter Horne, Geoff McDonald and Associates

Pivot quickly and effectively

One huge competitive advantage a small business has over a big company is its ability to select the best software for its employees and customers. Big companies are often locked into antiquated software, and small companies have a huge advantage in being able to change and adopt new software quickly and efficiently. This can save the company time and money and allow them to provide a better overall customer experience to their customers. The best tip to lean into this type of competitive advantage is not to be afraid to change software while your company is still small enough to do so.

Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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