Initiatives to Protect Small Businesses
Pain management specialist Jordan Sudberg says that many small businesses are suffering from high selling prices and high overheads; this consequently leaves them with little to no money for marketing or advertising.
This can be rectified by two main initiatives: minimum pricing and selective distribution to improve customer experience. Minimum pricing will stop overcharging customers for the same service or product, while selective distribution will make it easier for small businesses to market themselves and build an image despite their lack of advertising budget.
Sudberg says that the problem with minimum pricing is that it can be difficult to apply in a number of industries. Many will not be able to implement such a policy, as this may force them to shut down and this is not what any business wants. For a firm to include minimum prices for their product would also make it more expensive than its competitors.
One solution could be for the government to impose a minimum price which all service providers have to adhere to, in order that they are not overcharging customers.
Selective distribution is the process of choosing a few specialist distributors to distribute products over a large geographical area, rather than selling directly to multiple customers. Sudberg says that this option is only suitable for firms with a certain level of capital, as they will have to find one or more distributors willing to sell their product and pay them an agreed upon fee per sale.
Jordan Sudberg knows that if a business was able to pay this fee then it would be able to reduce its overheads, leaving more money for advertising or providing better customer service. In some cases, a firm may even make enough profit to pay the distributor’s fee and still be in profit.
This method is effective but hard to implement because the choice of a distributor depends on the experience that they have and their willingness to help smaller businesses get off the ground by offering them their services at a reduced rate.
This is because distributors usually work on a partnership basis with large businesses, which means they have to spend money on marketing and advertising their goods or service before they can start selling it. This means that small businesses that do not have the resources to invest in this may be forced out of the market by those who do.
In summary, both initiatives have potential but need to be implemented carefully, as there are many factors that can affect a business’s success and if one of these fails then it could put a firm out of business.
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