How Big Companies Squash Small Businesses

Small Business

Sometimes it’s tough to be an entrepreneur. You have to balance your time, organize everything you can, and deliver products to your customers. It’s an upward battle we all embark on with dreams and passions. You don’t become an entrepreneur without some serious bravery. Not everyone makes it.

But the deck’s stacked against the small business owner even more than they would already be. Something is not fair anymore—if it was fair to begin.

If you own a small business, then you understand overhead. You know that paying yourself can be hard because the equipment and the workforce to run the business in the first place all have real costs. If you intend to make a business succeed, then you must know the exact numbers for so many things or you will not have any money and your business will die. But just knowing those numbers doesn’t make pricing easy. Often, we don’t charge as much as what we do is worth because we feel like no one will buy it at that price. We might discover that it’s somehow actively bad for income to sell certain products.

But why is that? Why do we take that as gospel? Sure, the business world is unfair often—but you know how economics is supposed to go, right? If you produce something good that people want, then you should be able to sell it for more money than it cost you to make it. That’s all profit is for a business. Yet people buy the cheap and worse product, and maybe even complain about your cost to your face.

We can’t lay the blame on the customers, though. There’s someone else who benefits from this mindset. It’s a race, a race to the bottom, and you lose if you get there first. This game is played by large businesses to knock smaller ones into nothing. Because they have enough money to survive plays that actively lose money, they can starve out the competition. 

Food examples are always useful for illustrating a point, so let’s talk about the plight of a fictional small burger stand. Let’s say you run such a place. But then a chain appears nearby. Now, if that chain makes their hamburgers cheaper than it costs you to even buy the buns you use, then you’re in trouble. You do the calculations, and they must be losing money with a practice like that. But they can last longer than you—and they have more brand recognition than you. And once customers go to the cheaper one repeatedly and your business folds, they get to be the only guy in town. And then they can charge whatever they want. 

And in this example, we assume that at least the company is playing “fair.” There have been many examples of different companies across different industries using price fixing. “Price fixing” is, for those unaware, an illegal act of multiple groups (companies in this case) agreeing to keep things at a certain cost, regardless of the economic rules the item should’ve followed. They essentially circumvent supply and demand. This is bad for people who want to buy things at a reasonable cost, and it’s bad for entrepreneurs—because it means that the big boys get to make the rules. And the rules will not favor the little guys. The rules might not even allow little guys to start in the race. 

But this is a website for helping people. We don’t want to just leave this discussion on the doom and gloom of economic realities. If you get priced out of profitability, there’s something you can do. Something you can do to get around big businesses making certain products appear cheaper than they should be.

And it’s value. Big businesses are often not only in a race to the bottom for cost but also quality. They have to use cheaper items. That’s why fast food is so bad for you—to have a cost like that, they need to use the cheapest, least nutritious ingredients possible. You do get what you pay for. And that makes the reverse true. People can taste/sense higher quality items. There’s a reason “artisanal” things cost more. Or why hand-crafted items are more expensive. When you make your products more stylish, better quality, longer-lasting, more ethically produced, or simply unique, big companies cannot match you. They don’t have the business model for it. 

There’s always a way to get a cheap cup of coffee. But people will still buy the better stuff. Gas stations sell sandwiches, but that doesn’t mean people will only go there for them. 

That’s your edge. That’s where you have power. You can’t play the games of the big stores—they’ll win. Trying to be the next mega-corporation is not a successful strategy. You survive by being unique and producing good-quality items.

Never would I say that the situation will become fair. But we can’t simply lay down and die because it isn’t fair. The business world needs the passionate and the flexible and the innovative. And people need items they can be proud to own. 

So, welcome to the war. Get ready to fight. Be willing to trudge uphill and take a beating as you do. Be willing to survive to the top. 

That’s what it means to be an entrepreneur.