Competitive Advantage of Small Businesses Over Big Brands


Anything that helps a company to attain an edge over its competitors and attract more customers to spread its market space is termed as competitive advantage. There is a general misconception that only big business houses and global brands enjoy competitive advantage.

In reality, small businesses have its own competitive advantages in the market. Small businesses are practically more agile than big businesses. They adapt quickly to volatile markets and customer preferences. Small business operates closer to its customers and hence enjoys the advantage of observing changing preferences of customers and acquiring real time customer feedbacks. This article discusses on the factors that help small businesses leverage competitive advantage when compared to large scale businesses.

Factors Aiding Competitive Advantages to Small Businesses

Small and local businesses have the challenge to compete with giant brands and bigger business houses. It may seem easier for the big companies to overshadow local business physically and in the digital world. However, there are enough and more advantages that small businesses can reap over the larger ones.

Faster Decision-Making Process

Small businesses have the liberty of rapid turnaround for faster decision making. Small size and minimum employees of the business helps facilitating quick decisions enables speedy product and process innovation. It helps the business to keep abreast with the advances and adapt to changes in the market. Thus, small businesses leverage agility. Such easy and quick turnaround does not happen in larger companies where the process flow is more complex and has to go through many rounds of red tapes and judgmental opinions.

Involvement with the local community

One of the biggest supremacy any local business has over a larger brand is the fact that they operate locally. It is the personal connection with the community that churns into business. Small business operators get involved with the community more than the business boundaries. They donate products or services to a nearby school or team up for a voluntary charity and welfare activity. This gains the trust and improves the dependence of customers on the local business. Since they work so closely with the people around, they are in a better position to understand the actual needs and preferences of the customers.

Effective cost management

Small businesses require fewer funds to invest, market, and innovate. They are able to arrange and pool in funds easily locally than waiting for sanctions and approvals as they operate in a small budget. All these help small business to function cost effectively. They tend to stay and manage finances with short term settlements rather than going for long and huge funds.

Establish digital presence

Digitalization and advanced technology has taken the world at large. Small business whether proprietary or small family run business have digital presence today for better reach. Enjoying visibility and online presence of small businesses is much cheaper when compared to large businesses where they need an independent investment for maintaining digital presence.

Team building and development

A strong team of employees makes all the difference in business operations. Smaller teams get more individualized attention where they get room for continuous improvement. This is a huge advantage small business enjoy over big companies with hundreds or thousands of employees. Employees always feel heard and acknowledged as they are directly involved in the end to end operations of smaller businesses. Employees of such business also get their concerns and questions addressed fully.

Furthermore, 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.


Small businesses enjoy high levels of adaptability. They are always first to provide innovative products and services to meet the specific requirements of their customers. Small businesses are always hyper responsive to the unpredictable customer preferences. In situations of adversity, it is much easy for small businesses to turn available opportunities into business when compared to large companies.

Personalised customer service

Small businesses have the choice to listen to what each of their customers has to say and customize the services accordingly. In today’s world customer is the king and products are made available based on the customer demand. Local businesses get to know their customers’ specific wants and purposes and fulfil their demand with personalised products. This leads to more customer retention and higher customer satisfaction. Small businesses use this ability to generate constant revenue.

Smooth Communication channels

Another competitive advantage that a small business has over a big company is better communication between employees and those running the small business. There is no formal hierarchy or rigid structures in place for communication. Employees can communicate directly with the owners or leaders of the business. They in turn are more likely able to address the day-to-day issues, which makes it easier to resolve any critical matters.

Reach faster break-even

One of the best things about a small business environment is the faster establishment of the market segment. In a large corporate environment, there are many complex processes and financial procedures in place with the management of huge financials. It usually takes years of continuous effort for such a big company to break-even. However, within a small business environment, all the business process and financial boundaries pave way to faster break-even and success of the business.

Building business reputation

Leveraging efficient and trending marketing strategy helps small business to grow rapidly and build its own business reputation. With the small organization structure and less process in place, small businesses can be more agile with their marketing strategy. New trends can be tested easily or even modified to suit their desired outcomes. This quick iteration helps in gaining more online presence and developing business reputation though it operates locally.

Continuous improvement

It is comparatively very much easier for small business houses to make improvements in their products or services. Easy access to their customers helps them collect their honest feedbacks and suggestions that help them improve on a regular basis. It is easy to implement procedures and processes to improve the business ensuring customer satisfaction. Personalised attention to the customers and welcoming feedback and suggestions keep the business on track and place it always in tune with the market demands. All these factors discussed above helps to aid competitive advantage to the small businesses over large companies.


To conclude, it can be observed that small businesses definitely have their competitive advantage over the larger businesses. They respond quickly and are flexible to market needs, changes and trends. Small businesses give personalised attention to their services and offer specialised and creative products based on the needs of the customers. Small businesses reach and develop relationships more authentically with local influencers who promote their businesses by word of mouth and create a deeper and loyal clientele. They do not have the issue of tackling heavy financial burdens for marketing and innovation, nor does it get delayed due to delayed sanctioning procedures or red tapes. Small business has plenty of room to grow and generate greater profit margins. Its growth will depend on how well the businesses utilize these advantages.

Updated on: 18-Apr-2023


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