Ineffectiveness of tradition-bound small business methods

Although traditionally effective, family businesses are very rapidly wiped out by new market trends, especially when they cling to comfortable, idiosyncratic patterns rather than adapting to the new needs. Such businesses need to meet the demands of diversified industry for new commodities and expeditious services in order to prosper. Most small business, however, is based on the provision of one or two goods or services. Unless they can discover viable means of competition in the ever-changing market place, their profits will stay minimal and economic growth will be negligible.

Typically, business activities in remote geographic locations have to deal with high freight and overhead costs; increases in such operating costs have caused decline in profits in, for example, the beef industry. Commercial development may be hampered as retail stores must obtain wholesale goods from outside the community and pay freight costs on these goods; expansion of fishing and agricultural industries may be hindered by limited marketing outlets whose fluctuating prices are controlled by other phases of food processing; local businesses tend to have a single product operation which does not utilize by-products and potential markets are largely undeveloped. In addition, most small village's shopping is done in other towns and cities because surfaced roads have made transportation convenient, so that potential customers for local businesses are only those residents who do not have access to transportation.

The recent trend toward siting commercial centres some distance from small towns has resulted in economic problems for such communities. Few, if any, industries and only very small commercial businesses provide income for the town: outside businesses are not attracted to such small communities. The result is that farmers, who once could procure agricultural supplies and services nearby, must now travel to other towns. Townspeople can purchase groceries at several local grocery stores, but each store offers the same limited variety at prices necessarily higher than those charged by large chain stores in regional cities. Until means are found of expanding the scope of business operations, finance desperately needed for development will continue to be drained away by outside commercial enterprises.