Why Small Businesses Have A Hard Time Surviving

why small businesses have hard time surviving close down against corporate competitors

Capital “B” big businesses make it harder for smaller businesses to survive. The most obvious reason for this is that they get more customers by virtue of their size and popularity. But there are so many other advantages that big businesses have over their smaller counterparts. 

They Can Charge Customers Less 

Big businesses can use competitive pricing to beat out smaller businesses. They can afford to sell items at incredibly low prices or put on massive product sales to entice customers. 

Smaller businesses can’t keep up with this model. They would never be able to pay for essentials like staff wages or their monthly rent. So, they are given the tough decision to alienate customers with their regular prices or to lower the prices and put their livelihood at risk. 

The retail giant Walmart is notorious for using this competitive pricing method. There is actually a term called the Walmart effect — this refers to the economic consequence of a Walmart opening around small retailers. The smaller retailers in the neighborhood tend to lose money, reduce employee wages and eventually shut down. 

They Get Funded 

Logically, it seems like smaller businesses would get approved for funding more often than big businesses. They’re the ones that need the most help to achieve growth and success. The truth is that small businesses are more likely to have their funding requests rejected by banks, and larger competitors are likely to be approved. 

If you’re a small business owner and you need financial support to get through a rough patch or to inspire some much-needed growth, you should consider a different venue than a bank. Go to First Down Funding to see how small to medium-sized businesses can get the essential funding they need without worrying about high rates of rejection. 

Many of the qualities that would get you turned away at the bank won’t stop you from getting approved there. Think of problems like poor personal credit scores or lack of collateral. Even with these drawbacks, you still have an opportunity to help your place. 

They Find Tax Loopholes 

Big businesses can avoid filing taxes by using certain loopholes. Smaller businesses don’t have enough power, influence or money to skirt the duty. All owners can do is hope that they’re in the best state for business taxes and try to leave enough room in their budget for the essential payments. 

Look at Amazon. It’s arguably one of the biggest companies in the world. The company made approximately $11 billion in earnings in 2018 alone — but they didn’t pay any corporate income tax. The company can accomplish this baffling statistic by using stock-based compensation for employees and taking advantage of tax credits for research and development and equipment investment. 

The harsh reality is that the bigger the business’s influence and budget, the more opportunities they have to succeed. It can seem like they are directly taking these enviable opportunities away from the hands of smaller competitors. It’s vastly tougher for the small business to survive.

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