Big Fish vs. Little Fish: How to Avoid Being Devoured by Giant Corporations

Big Fish vs Little Fish

If you read the news with the frequency that I do, then perhaps you have been feeling discouraged lately if you are a small business owner. Article after article covers small businesses fighting for survival against big box stores, franchise restaurants, giant corporations, and now a whole new wave of pressures that would have seemed almost unimaginable just a few years ago.

For small retail stores and independent restaurants and coffee shops, it has become increasingly difficult to compete against the huge, well-known chains with familiar menus at every location that seem to pop up at every street corner. And if you add other external factors like tariffs, geopolitical unrest, technology changes and more, it’s hard to keep up as a small business owner!

The combination of AI, supply chain flexibility, and access to seemingly unending capital available to Big Business makes it harder and harder to find a niche that doesn’t get taken over by larger firms. And maybe, if you're lucky, Big Business (or Private Equity) will "absorb" your small business, adding it to the growing list of M&A activity that lets Big Business get even bigger. Otherwise, you may see your business slowly fading as price and time sensitive customers decide to compromise on quality and personal relationships or fail to see the value of your small business.

Entrepreneurs are the backbone of this country. We all love hearing the stories of poor yet determined innovators starting a small business in their garage, only to make it big. And we all like to think that we might be the next one to do it. Or at least big enough to have a comfortable living, create some jobs, and offer something sustainable over time. After all, that is the American Way.

Little Fish in Little Ponds

If you want to get me all choked up with patriotism, point me to small towns full of small businesses and no chains, like my favorite little place, Bayfield, WI. Plenty of coffee shops and restaurants in the cute little downtown, not a chain to be found.

Or introduce me to someone who has a great business idea and is brimming with enthusiasm, thinking about getting her product or service to market. I am a patriotic helper of aspiring and growing entrepreneurs! I want to see individuals take on the risk, embrace their passion, put themselves out there, and then continue to push themselves to grow. Enthusiasm! Optimism! Innovation! Creativity! That's what American entrepreneurship is made of. How can you not get all excited about that?

But the sobering news is that the share of U.S. employment at small businesses continues to shrink. According to Intuit QuickBooks' annual Small Business Index, small business employment experienced its largest year-over-year decline since 2015 in 2024, with overall jobs shifting from small businesses to larger ones. Meanwhile, changes at the SBA are making it harder, not easier, for small businesses to get a loan.

As was true before, reducing the number of small businesses lowers competition for the big firms, which lowers their need to innovate or to offer higher pay to employees. None of this helps the country grow. For that, we need to continue to encourage our fellow entrepreneurs to keep at it and find new ways to stand up for small businesses across the country.

So as a small business owner, what can you do to avoid being devoured? Based on my research and experience teaching and consulting with entrepreneurs over the past 20-ish years, here are my top suggestions:

1. Don't Play the Price Game

If you own a small hardware store, don't try to compete on price with the Big Box DIY stores. If you own a technology company, don't go after clients by promoting yourself as the low price option. If you are developing a cool new app, don't let your pitch be "it's just like [insert popular paid app], only cheaper." If you are selling components in a supply chain and competing against a Fortune 500 firm, don’t push your price as your competitive advantage.

Why not? You will never win the price game. If you lower your prices, competitors may respond in kind, driving everyone toward margins that don't support a profit. And as a small business owner, you likely don't have the infrastructure in employees, supply chains, preferred pricing, or data capabilities, etc. that your largest competitors have. It’s far easier for them to shave a few pennies off a price, because their sales volume might be 100x or 1000x yours. Offering the lowest price is a losing strategy. Focus on value instead.

2. Focus on a Unique Niche Market

So how does a small business stand out and win business? By understanding its strengths and capabilities and matching them to a very specific audience. You don't want to be the machine shop that does work for anyone, you want to be the machine shop that specializes in underwater welding, or food manufacturing equipment repairs, or something equally specific. This helps ensure that you truly understand the ins and outs of your customers and can become more of a consultant than a vendor to them. In this way, you are adding value and your focus is on the relationship and not the price.

For a store or restaurant in a small town, truly knowing your customers and community means you can offer the right options at the right price point. The chains have very little flexibility in pricing, menu variety, clothing brands, window displays and so forth. Stand out with your specially curated approach to your unique, local customer base, not with your price.

3. Continually Research, Innovate, and Adapt

Even if you have established your niche and have loyal, long-term customers, things are constantly changing, and you need to be alert to shifts that affect you and your customers, like tariffs or AI automations (or literally dozens of other changes in the world around us).

What are some changes in technology (not just AI) that are coming down the pike in your industry? And where can you find information to keep you up to speed with how things are changing? Even if you’re not competing directly against the giant firms, if there are huge shifts in technology in your industry, you need to be prepared to make an investment (in time, money, or both) to make that shift.

As a matter of fact, it can be the small businesses that see the value of some new technology or process or service first, before the big firms. After all, small firms are much more agile and flexible than large firms and so able to pivot as needed? What’s that saying about turning a boat around? The big tanker ships have great size and force, but limited ability to change course?

The best way to stay on top of changes in your industry is to follow relevant news sources. Set up Google Alerts or use a tool like Feedly to wade through the volumes of content available online and search for keywords relative to your business. Subscribe to newsletters, blog posts, and social media groups that share information about industry trends – and then ask your favorite chatbot for a summary. The point is to be proactive not reactive.

4. Band Together

I firmly believe that small businesses need to stick together as much as possible. In our beautiful downtown Eau Claire, local shops, restaurants, and small businesses work together through a common organization to promote the whole region. After all, the competition isn't the small retail store or coffee shop a few doors down from you, it's the giant stores and chain restaurants right off the interstate, and the endless scroll of e-commerce options on every phone screen.

Band together to promote the whole community. Encourage folks to take a day to explore the whole downtown. And as a resident in your own town, seek out local stores and restaurants to support rather than the Big Box stores and giant online providers. Order takeout from your local restaurants rather than the franchises and chains.

But it goes beyond just the shops and restaurants. Small B2B business owners should seek out other small business owners when making purchases or seeking services. Consider collaborating to bid on larger projects together. Forming alliances with other small businesses can lead to shared resources and collective purchasing power, and businesses facing similar challenges can work together on bulk purchasing agreements or advocacy efforts.

Small businesses from every industry should also come together in CEO Peer Groups to learn from and support each other. Groups like this allow business owners to share challenging experiences and support each other in decision-making and accountability. Members typically feel more confident and experience higher revenue growth than those who go it alone.

And certainly, when it comes time to vote, be sure you know who is running for every office in your community and how they might support your small business. Some of the most pressing challenges facing small businesses today - trade policy, access to capital, regulatory burdens - are shaped by decisions made at the local, state, and federal level. Your voice matters.

A School of Fish

Basically, we small business owners need to operate like a school of fish. The fish stick together for reasons that make sense for small businesses as well:

• For support - no one understands your challenges better than a fellow small business owner
• To increase success in finding customers - a vibrant local business community draws more people in for everyone
• For protection - it's much harder for a big fish to pick off a single fish when it's swimming in a tight school

So let's continue to stick together, support our fellow small businesses, and keep moving and innovating to find new customers and make things harder for Big Business!

What are your thoughts on standing out from your giant competitors? Or the value of sticking together? Let me know what you think!