Small businesses survive against big super market retail

Introduction:

Nowadays small businesses are vastly affected by opening of supermarket which aim is afford to sell product to customer at much lower costs. This research would throw some light on the less explored area about the effect of super market on small business. The topic appeals more to me as I have been trying to answer this questions on a personal level as well. My family business has been affected due to recent events of opening of supermarkets besides my own store which has radically increased the competition in the market where we operate. By undertaking this research I hope to get better understanding of this problem which will help me to be better equipped to face the competition and increase my chances of success.

Research question:

What kind of steps can small business owners takes to survive against big supermarkets and avoid possible threats of liquidation?

Aim:

This research aim is to survive small businesses against big super markets in competitive environment.

Objectives:

Objectives are very important for any research for this research objectives are;

To analyse and evaluate largely prominent supermarket trend of modern century.

To evaluate the impact of the stakeholder management of the small businesses and big supermarkets.

To critically analyse the strategies that small business can adopt to survive in the industry.

To analyse and evaluate and compare customer behavior while transacting with supermarket and small business.

Beneficiary:

The primary benefit to me from this research is the improvement of my management skills. This research is also helpful to small businesses owners to survive against big players of industry. This research would be beneficial to business owners to help understand likes, dislikes and choices that a customer makes while purchasing products or a service. This research is also helpful for students for their further study.

Scope of the project:

This study is the modest attempt to find out whether certain step can be taken to help small business which competes against big supermarkets for survival the study comprise about analysis of customer behavior preference and choice they make while buying products it throws light on the need for improvement in the retail sector in order to maintain free and fair competition which is the only alternative for providing best possible service to the customer who otherwise would suffer due to monopolistic practices of big retailers.

Literature review:

In the literature review of the research of small business like Lidl how they can survive against big supermarket in retail industry for that I have used SWOT analysis of small businesses like lidl. I also point out with the literature review what are the reasons why small businesses like lidl going to fail against big supermarket and I also mention the possible solution for that in literature review and also in the literature review I also making the planning for small business to move ahead and compete or survive against big super market.

SWOT analysis:

With the help of the SWOT analysis organization can identify their internal strength and weaknesses and also identify their external opportunities and threats from the market.

Strength:

Clear business focus:

The strength of the small businesses like lidl, the focus of business is clear and the aims and objectives for short term and long term are clear and because of clear aim and objectives business can focus on the direction and planning for achieving their objectives.

Efficient operation:

For the small businesses like lidl operation department is small and efficient that’s why it control easily and easily draw to them for achieving their objectives.

Good staff:

The strength of small businesses like lidl is their good staff. In the small businesses staff is limited and also they are well trained and because of limited staff control on them it’s also easy.

Quality product:

The other strength of small business is quality product small businesses sell branded and quality products in market so customers also happy to buying quality products

Reliable service:

Service is very important part for any business for marketing and development small business provide good and reliable services to their customers so they can attract more customers.

Satisfied customer base:

In the small business staff gives more attention on customers so customers also satisfied with their services and also like shopping from small business.

Good supplier relation:

For small business like lidl all the goods they buy from the supplier and they order limited stock for business and they turnover that stock very early and pay their bills to supplier early as well and the relationship with supplier and business is good so it’s also be a strength for small business

Weaknesses:

Static product range:

The big weakness of small businesses is static product range. In the small businesses like lidl the product range are limited and it affect their business. Due to limited product range customers go to buy from big superstores where they can get everything from same place.

Poor market awareness:

The second weakness of small business is poor market awareness. Small businesses have limited resources and also they have limited knowledge of market.

Lack of competitive information:

The third weakness of small business is lack of competitive information. Small businesses not have enough information of their competitors so they cannot get any competitive advantage.

Inadequate marketing program:

Small business weakness is poor marketing program. Small business has limited resources that’s why they have not enough knowledge about the market and because of limited knowledge of market the marketing program is poor

Poor financial advice:

The weakness of small business is poor financial advice. Small businesses have no good financial background that’s why they cannot develop their business.

Low margin:

Small business sells their product to customers at reasonable price and also they sell branded and quality product so the profit margin on sell is low.

Opportunities:

Build on a good customer base:

For small business like lidl there are some opportunities to develop their business small businesses have build on a good customer base means small business have their own regular customer so the relationship between customer and business is good and small business have an opportunity to make that relationship strong by providing good customer services.

Develop potential of base through good marketing:

Small business has opportunities to develop their business with the help of good marketing for developing their business they have to do a good marketing for their business.

Use current base to target new customers:

Small business has an opportunity that they can use current customers to attract new customers.

Threats:

Changing market trends:

There are some threats for all business the market trends for business going to change after some times the trend for business is different that why it’s a threats for business.

competition:

The big threats for business is the competition with their competitors today’s market trends is cutthroats competition trends so if small business want to survive against their competitors they have to gain a competitive advantage against their competitors.

Economic downturn:

The economy of business is in recession that is the big threats for small business to survive against big supermarkets.

Hence, above SWOT analysis shows that for small business like lidl there is some strength that they can survive their business and also there are some weaknesses they can bear in mind and there are some opportunities to develop their business and also there are some external factors like competition, economic downturn and changing market trends these are some threats to survive small businesses against big super markets.

Now I am going to discuss about some reasons why small businesses are going to fail. There are most ten reasons why small businesses fail.

Costs too high:

When running a small business they need money to development and also they need more money for invest in new project also they need more staff they also need big space for business when they are developing they also produce their own product which will eventually more profitable here eventually means long time process for that they need long time investment and that’s why costs is going to very high than expected and also small business facing difficulties to survive. To survive against this reason there are some reason suggested.

Management control: To overcome from this problem business have their management planning and control for future which is the main element of business to survive against this problem.

Ability to take calculated risk: Every successful business has major risk to take to make their business successful. So many risk that for business to achieve their objectives if business can handle it then they can move further.

Plan and evaluate: For managing a costs finance is the best element. Small business has their own planning and evaluation to overcome from the situation.

Getting and taking advice: For managing financial risk business have to take or get the financial advice from their financial advisor to manage their costs.

Flexibility in the business structure: When any business has going to develop they need more staff more space for business for that the structure of business is need to be flexible.

Running out of cash:

The main reason why small business is going to fail because of the running out of cash this problem causes are lack of financial understanding and lack of management control and also bad debts and market and economic problems this all external factors affect the businesses to survive in market. To survive against this reason there are some points suggested as follow,

A clear focus: A clear focus and financial control and management control is required to solve this problem.

Plan and evaluate: To survive from running out of cash business have evaluate their self and also they have to plan for costs cutting, selling a brand in a new market and also plan for managing finance.

A financial feel for the business: Survive the business against running out of cash business needs funds it happen from the reserves and it is also very helpful in critical conditions.

Good business relationships: When business going to running out of cash they have to take some action for survive for that they need money if their relationship with banks are good they can get easily loan or overdraft for survive

Getting the best from your people: Team work is also important element to cut costs and also kept team motivated during difficult time and also built flexibility in costs structure.

Lack of management control:

Management is the best element for any business and it shows how well managed business can change the development and how easy to take management granted. To avoid this threats there are some point to keep in mind.

Management controls/ to lead or mange the business:

There are different types of management control use like managing staff to get good and high quality productivity monitoring the price/ quality balance of staff output managing finance to keep the business profitable and cash positive managing debtors control to be used for lead the business.

A financial feel for business:

This is useful tip for many small business to acquire they could do it on a weekly or monthly basis.

Market plan and evaluate:

For the business developing first they have reviewed the market on which way it going and then they examined different option competition in the market and then make a market plan for future.

Getting and taking advice;

Business needs market advisor for what is the mistakes business did and how they can manage the business and how they control the management and make a management plan for future.

Funding problem:

Funding is the most important part for any business and the process of obtaining and managing that fund is also a big challenge for the business. This is the main issue for any business from where they can get the fund and where are they going to invest.

Getting and taking advice:

For small business fund they need a financial advisor to deal with the investor and with administration.

Flexibility in business structure:

If small business is reliable on funding it is very bad they need flexible and vulnerable structure for avoid this threats.

Plan and evaluate/funding time:

They have to make alternative funding plan like short term and long term plan for funding the business.

Good business relationship:

Good business network is help with no immediate expectation of a return and good business relation also help in funding problems.

Loss of focus:

There are so many external factors like competition, recession which can affect on the focus of business and their activities and there for they cannot survive and focus on market.

Plan and evaluate:

Business has to evaluate all the situation and future threats and then they have to make a plan to survive against future threats so they can focus on future.

A clear focus:

Business has clear focus for developing and growing their business this will help to survive against future changes.

Being proactive and preserving commitment to business success:

To commit against difficulties and being proactive and preserving is also good for success.

Sales too low:

When any business well established and developing that process take long time and also recognize their market that the sales is too low. To maintain sales business need to take serious action and managed their sales.

To lead or to manage the business:

To lead or to manage the business they need to maintain their sales and business.

A feel for the market:

Feel for the market is the key for the future success they have to study the market and then they have to make a marketing plan to increase their sales.

Management controls:

For maintain business sales control on management is also very important they have to motivate the staff for increasing their sales.

Plan and evaluate:

Business have always evaluate their position in market and they have to check their sales in the market and they have to do a marketing to increase their sales

Quality of service:

When business built on a quality of personal service they need to provide good services to their customers but when they hire new staff they have no knowledge of services and they are not experienced as old staff this reason s also affect the business.

Plan and evaluate:

What our customer expect from us what type of staff we needed what type of services customers want from the business first evaluate these all issues and then plan for providing good services with the train the staff.

Finding time:

For providing a quality service to customers they need a good staff and for that they need time to find out and train their employees.

Market changes:

The market trend is always change time by time if business cannot track changes then they cannot survive against market changes.

Plan and evaluate:

For the small businesses market trend is always change to survive against this market change they have to evaluate the market position and what are the changes made in market and to survive against market changes organization have to make a plan.

A feel for the market:

To gain advantage and growth for business feel for the market also needed.

Bad debts:

Business needs money to run but not control on costs and bad debts are the major reason to fail or not to survive the business in today’s market. To overcome from this situation there are some points which needs to bear in mind.

Management control:

To overcome on bad debts situation business needs to tight the controls on managing costs and their bad debts.

Getting and taking advice:

When bad debts happened it is necessary to control or manage bad debts and for that business need to get or to take the advice from the professional on debts collection.

Flexibility in business structure:

In crisis with money business needs money to survive or mange their costs and for that they get the money from the bank or get credit from their supplier. Business needs to make a plan to get money from the different option.

Being proactive and preserving:

Business needs proactive system of credit control and it has it taken the initiative in its relationship with its banks this type of planning is control the situation of bad debts

External factors;

There are so many things which affect the business and its not in owners controls like economics collapse, recession, flood those types of external factors affect small businesses. To overcome from this situation business needs to plan and evaluate all the external factors.

Plan and evaluate:

When the business going to make a plan they needs to evaluate all the internal and external factor which can affect the business in future and mind all the unexpected factors as well and also make a plan for survive against this all factors.

Hence, if there are some reasons to fail the small business than there are some solutions to survive the business.

1. Finding time:

Time is the most important factor to survive the business. When you making time plan there are some questions to keep in mind, what is the most important? What is the urgent? This all works need more time to spend and how business spend their time to each activities of business is very important for business to survive in market.

2. To lead or manage the business:

For small business to lead or for manage the business they need leader or manger. To lead or mange the business leader or manger have to plan the markets, products or services, finance- profit and cash, staff and for supplier as well.

3. A financial feel for market:

Finance is the most important thing for any business to survive big super stores has enough finance to survive their business but small businesses have not enough finance to survive their business in recession. Developing a financial feel is the understanding which way business going financially and also about profit and loss. Business can survive against any changes and threats or any serious problem with the help of the financial feel.

Plan and evaluate:

Plan and evaluate is most important part of the business has to evaluate their market, change, business also evaluate their competitors and what are they doing? Business also needs to review their customers. Business also need to evaluate their staff and their contribution and also business has evaluate their supplier and how they performing. After evaluate this entire thing now business has to make a plan about their external funding, market, competition, customers and staff and also about their suppliers. Business also needs to make a plan about their strength and weaknesses and opportunities and threats as well.

External funding: For running the business, it needs funds and for planning the external fund some questions keep in mind; how much fund business need? What are the impacts of the external funding on the business? Does business need more fund?

Market: When planning for market business needs to think about some questions. How big is the market for business? Has the market is going to change? What is the current position of market? How can business increase the market share?

Competition: In competitive market business needs to think about some question. Who are their competitors? What are they doing? What are their competitive advantages? How can business gain competitive advantage?

Customers: When doing customer planning business need to bare some question in mind. Who are their customers? What are they purchasing? What they think about products or services and company? Do they want to improve anything?

Staff: When business making a plan it also needs internal evaluation as well about their staff. How is the staff doing? Do staff needs any training, information or any help to improve their performance? How can business motivate staff for more productive?

Suppliers: business also needs to knowledge about their suppliers. Do business got the best supplier? Do business has optional supplier? Do business got the best term and price from suppliers?

Strength and weaknesses: Small businesses also have to think about their strength and weaknesses to improve their performance. What are the business strengths? How can business move forward with the help of their strengths? What are the business weaknesses? How can control or manage their weaknesses

Opportunities and threats: Small businesses have to plan for the opportunities and threats as well. What are the business opportunities? How can business taking an advantage of those opportunities? What are the threats? How can business avoid or handle those threats?