Why small businesses are finding it hard to compete

in Managing by The Business Room
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small business hardship

If you’re a small business owner, chances are you’re a multitasking champion. There are accounts to complete, marketing materials to write and public relations to master along with the endless administrative tasks and customer enquiries to take care of.

Then there’s the competition. Retail heavyweights – namely the dominating big chains and mega stores – lure consumers into their centres with their bulk discounts and convenient all-in-one offers. It’s no wonder a recent study reveals that over half of Australian small businesses are finding it hard to compete these days.1

Lack of a united front

A recent Galaxy Research study commissioned by American Express showed a good portion of Australian businesses feel that camaraderie among local business is alive and well. Thirty six per cent, however, believe that business unity is a thing of the past.1

Yet a h3 connection within the business community is vital to local success, and small business owners have a lot to gain in networking with their colleagues. Not only is there the opportunity to skill share and trade on expertise, but banding together also gives small businesses a h3er community presence.

The same study showed 76 per cent of younger business owners are more likely to experience difficulty competing in the current market environment.1 The research here suggests that younger and new business owners have the most to gain from developing local contacts.

Over-dependency on customers

When it comes to running a small business, every customer counts. Each individual that walks through the doors plays a vital role in keeping that business alive and viable.

Statistics show that when a regular customer is lost, one in three businesses are concerned about the loss of potential income and can get quite emotional over the impact.1 It’s no surprise then that the thought of losing a customer, even just one, is a frightening thought for any small business owner.

Small businesses need to proactively recognise and reward their loyal customers. These high-value customers are the ones who will stick around through the good and hard times, and are most likely to refer you to potential new customers.

A need for community support

Almost a quarter of small businesses do not feel the local connection, which makes them vulnerable and likely to feel the pinch even more.1 Thankfully, the majority of small businesses feel connected to the local community.

This is simply another good reason why it’s important to network and connect with others as a small business. Being an active and supportive member of a community can be a determining factor in your success as a local business.

Competing with the big guys

A recent study revealed the one key issue that needs to be addressed by small business owners is the perception that it costs more to shop locally. As many as 82 per cent of consumers say they would go back to using a local business if it didn’t cost any more to shop there.2

Even though the majority of Australians admit they buy from a big store or shopping centre, because they forget to buy local, they show a genuine willingness to Shop Small.2 So, what’s the solution to competing with the big retailers on price?

Consumers indicated they would be drawn back to local businesses if they were offered unique products and friendly service, as shopping small would enhance their sense of belonging to the local community.2 So, small businesses should focus on these two factors, rather than trying to compete with their bigger retail counterparts on price.

Small business owners say ‘no regrets’

Despite the difficulties faced by small businesses around Australia, there is some comfort in knowing that 60 per cent of small business owners would still recommend the experience to others.1

It shows both commitment and passion and proves that regardless of the challenges, there is the promise of a rewarding journey for the resilient and hardworking small business owner.

To learn more about the Shop Small movement, visit Shop Small Australia.


1 Galaxy Research, October 2013 – Conducted online among a representative sample of 301 Australian businesses that mainly deal direct with consumers.

2 Galaxy Research, October 2013 – Conducted online among a representative sample of 1,003 residents

This article represents the views of the author only and not those of American Express.

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