Small Businesses Earn More Profit

Most people who have been in the business world for sometime have heard business owners say "if I was big I would be a millionaire". Even though through the economy of scale this may be true most small businesses are growing faster than and learning a higher percentage of profits than larger businesses. Thus small businesses can compete against the much larger conglomerates.

Manufacturing has been a major benchmark of economic data. According to Plimsoll Publishing lean, fit and small manufacturing plants have grown in sales and profits when compared to larger manufacturing plants. These small manufacturing plants are increasing sales at three times the rate of their larger counterparts, delivering 4 times the profit and give a return on investment of 5 times.

The advantage small businesses have is that they can better utilize their resources with small cost of start-up. So a large business costs much more to implement than a smaller business. In addition large investments require many years before a profit can be made. A small business is reliably cheap to implement and may start producing profits in less than a year. These small businesses can move into the growth stage much more quickly.

A large percentage of big companies are not even making a profit. The have a lot of cash flow but little profit. The larger the company is that more it acts like a shipping vessel slowly pushing itself through the water. Small businesses are like race boats that have the opportunity to out maneuver their larger competitors.

Maneuverability is important in the global economy. The environment changes from day to day and from year to year. If the market changes a large business may take a few years to successfully make a transition while a small business may only take a few months. They can then capitalize on the change and earn more profits than a large business.

It may also be said that the owners of a small business are much more involved in the operations and can ensure that everything is working towards the same final end. In a large business the bureaucracy begins to take a toll when workers do not maintain productivity and when people get lost in their cubicles for hours on end. Thus small businesses are more efficient.

Small business owners can capitalize on their strength in order to compete against larger players. They must understand that they are more mobile, more able to give good customer service, can change operations to reflect the market, and can run more efficiently than a larger company. Small businesses do have the ability to produce good income for those who know how to run them.

We will be happy to hear your thoughts

Leave a reply