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How to compete with the big guys

How to compete with the big guys

Suppose you're in a market where there's a gorilla of a competitor. You're a small manufacturer competing with a Fortune 500 company that makes essentially the same product. "What is the one thing you can do that they can't?" asks financial consultant and finance professor Edward Fields. His answer: sell in small quantities. You can approach customers, perhaps other businesses, that the Fortune 500 company wouldn't even approach, figure out a way to add value, and--most importantly--make a profit on the small sale that the large company can't.

The reason? The large company has big fixed costs that you don't, so their break-even point requires a much higher level of production than yours, and it is not cost-effective for them to hold and manage a small client. You may be able to make a profit selling 5,000 units (or "units" of service) while the big company has to sell 100,000.

A lot of the time our mentality is that we have to, even as a small business, land large clients who'll buy lots from us and pay our way. But the above is a reason we might want to do business with other small businesses like us.