New Research Brief Identifies Small Businesses’ Competitive Advantage

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It’s often been said that bigger is better when it comes to business. But in a new research brief from the American Institute for Economic Research, senior research fellow Max Gulker identifies methods small business owners use to beat their larger competitors. Based on interviews with owners and managers of 14 small businesses, including retail, professional services and manufacturing firms, he identifies the ways these businesses managed to find an advantage in a competitive marketplace.

The advantages included:

• Higher quality goods and services
• A unique variety of products, or catering to a niche large businesses don’t address
• Leveraging closer relationships with individual customers to provide better customer service
• Leveraging local knowledge into quicker delivery of goods and services
• Having the flexibility to make decisions and innovate, without red tape

“It’s important for people to realize the benefits small businesses bring to their communities, but campaigns to support them can only go so far,” Gulker said. “To achieve sustainable success, small business owners must offer something of special value to the market. Fortunately, there are many such opportunities for small businesses to do so, because of, rather than in spite of, their size.”

For instance, Whole Life Pet Products, of Pittsfield, Massachusetts, is a small manufacturer of pet food that succeeds in filling a lucrative market niche: all-natural pet products. While larger pet food manufacturers dabble in organic product offerings, consumers who demand these products are well informed and respond to Whole Life’s rigorous approach to quality, safety, and sourcing.

And J.C. Woodward, president of Benson Woodworking, Walpole, N.H., said if a piece is too large to ship in a regular truck, the employee in charge of shipping can simply ask the carpenter to refit or cut it. Larger competitors would separate building and shipping into their own separate and extensive operations. However, slower communication would result in delays to the customer.