How to make money – Starting small.
Everyone wants to make money; it truly makes the modern world go round. Buying and selling has been the basis of businesses for thousands of years and continues to be one of the best places to start for new entrepreneurs in many developing nations.
Start small, look for a niche and use your size to your advantage
Unless you have found a new way to sell or market an existing product, it is likely there will already be larger businesses in the market space you wish to occupy. These established businesses will likely have a greater buying and marketing power along with longer established relationships with suppliers and customers, these factors are known as economies of scale; the advantages of being a larger company over a smaller one.
These barriers of entry to a market can be difficult to overcome, established businesses may spend more on marketing their products than a start-up has in total, so how can the little guy beat the big guy?
Dis-economies of scale – The advantages of being small vs being big
No all the consequences of being the little guy are negative; some actually give you an advantage over larger businesses. The ability to quickly react to a change in the demands of the market is one of the easiest to describe. Large companies hold larger quantities of products, when a change in market makes a product less desirable (and therefore worth less money) the larger company may be faced with a large amount of over-priced stock that will need to be written off. Worse still, it may take the large company many weeks or even months to realise the change. Smaller companies hold less stock and usually have a much shorter chain between the people selling the products and those buying them (they are the same person in many cases).
How this helps you
Use this advantage by always keeping your ear to the ground. Always listen to feedback from existing and prospective customers. Observe the larger players in the market and use this information along with customers feedback to identify the areas the large company may have missed.
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