Survival of Small Businesses

The advantages enjoyed by small- scale business enable it to compete successfully against big business. There are, besides, other circumstances which help a small business and in which large-scale production is not economical. When, for instance, the demand for a commodity is small and fitful, expansion of business is inadvisable. There arc several factors which help the small producers to survive.

And, where markets and sources of supply overlap and the producers and consumers are in close contact with one another, e.g., in milk supply, smaller trims are found to be more economical. Thus, a small firm is sheltered by distance. Expansion of firms is checked by market resistance, especially if transport costs are high

Psychological Factors. The small producer is also helped by psychological factors. Consumers have their own preferences based on superiority. real or imaginary, of the goods they use. Thus, it is not only the distance which breaks a market but also prejudices, tastes and habits of the consumers.This gives each a protected clientele. To overcome this resistance very expensive publicity may be necessary.

The geographical obstacles can be overcome by setting up branches and the psychological obstacles by widening the range of production. But these devices are often neither feasible nor economical, because they ‘bump up’ against the managerial obstacle to expansion.

Entrepreneur’s Attitude, The entrepreneur’s own inclination, too. is responsible for the existence of small firms. “From a mixture of motives-from a love of independence and uncertainty. from pride or ambition, or the urge to create .Rene may prefer to run a small busyness of their own rather than act as subordinates at a higher rate of pay.

Conclusion. These are some of the reasons why a small-scale producer is able to hold his against a big producer. Atria also explains why small-scale businesses exist side by side. with the large-scale business.