Small to medium-sized businesses can get a significant competitive advantage by changing their buying policies to favour medium term savings over short-term affordability.
I always buy the highest quality tools to do my home projects because they will last me decades and always work when I need them. Unlike the cheapest tools that always break when you need them with the additional time lost to now buy another cheap tool to have it break when you want to use it again later.
In business this is even more important, if I have a long-term lease or own my property I want the cost of maintaining the infrastructure to be as predictable and as low as possible.
Large corporates have a quarterly, half-yearly or annual budget, cost of long-term maintenance is not connected to that budget but a different resort. Therefore corporate buyers only care about the initial cost not any ongoing cost, quality nor safety. Hence a large corporation has a significantly higher cost for maintenance, quality and safety per manufactured product than a small or medium-size business can have.
The smart small to medium-sized business can run longer term strategies that are more effective than a large corporation’s short-term strategy. Employ a policy of buying products that cost a little more at the outset but save big when it comes to keeping the infrastructure running.
Large corporates spend a significant part of their gross profits dealing with replacing bad but cheap infrastructure, adding to their cost and that is not likely to change anytime soon, leaving an opportunity for smaller companies to get ahead with medium and long-term strategies.
So why would you buy a $200 light fixture when you can buy a $20 light fixture from China? Well, to take a failed fixture down, arguing with the supplier over replacing the defective product, or not bother and just buy another $20 dollar fixture still costs ~$180 in time and effort not counting any lost production, quality or safety.
On average cheap light fixtures have a 15% failure rate and a life expectancy of 2..3 years when in permanent use, also their driver or power supplies often only last a year and perform badly in very cold or hot environments.
A good quality 10x more expensive fixture has a 10..15 year life expectancy and ~1% failure rate. This shows that even over 5 years the more expensive fixture will save money and improve availability of your infrastructure.
Other added benefits from buying higher quality products are that large corporations are in almost any business that can turn a profit including that of smaller and medium-sized businesses. Their business model is to provide products that have a short life time also known as planned obsolescence. So their business model requires them to make bad product to fulfill their shareholders’ short-term goals.
By not buying large corporations’ bad product any more some of the markets they were in will become less profitable and those markets will become available to small and medium size businesses.
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