All posts tagged 'Mittelstand SME SMB'

Mittelstand and the Long Tail

The Sovereign Economic Model strongly supports the Mittelstand , i.e. the small and medium business (SMB, SME) in the manufacturing sector.

Having a large number of SMEs-SMBs allows to fill in all niches of products, for which there are not millions of customers but a small number of loyal, repeat business customers which may want or need a very specific item.
An example could be specific sportswear for dancing, figure skating, weight-lifting, food products from a special fruit or a special musical instrument or accessory.
A niche might be worth a few tens of millions globally, but occupying that niche might be very profitable for a small-ish company. In such niches there is usually not much competition, as large corporations don't consider such small niches.

Such SMEs-SMBs can fill an enormous number of niches, have decent profit margins and even expand globally to cover customers needs. A high number of such SMEs-SMBs form the Long Tail of an economy, and in a medium to large economy it makes a difference.

Competitive Advantages of small medium businesses

In the Sovereign Economic Model emphasizes very strong support for Mittelstand - small and medium businesses. SME -SMB have a lot of potential competitive advantages for a sovereign economy:

Potential for large employment
Requirement of less capital
Contribution to industrial output
Contribution to exports
Earning foreign exchange
Equitable distribution
Decentralization - regional development
Use of domestic resources
Opportunities for entrepreneurship
Cost efficiency
Suitable for non-standardized products
Flexibility in operation
Quick decisions
Adaptability to change
Small market size
Low social costs
Opportunity for talent
Lesser industrial disputes/unions
Personal contact with employees
Personal contact with customers
Self interest
Market niche saturation
Quick Investment and Production
Preservation of Inherited Skill
Easy flat Management
Community Involvement
More risk taking
More innovation
More efficiency/teamwork

In order to support small and medium business the Sovereign Economic Model proposes a de-taxation policy with 0% tax range for all manufacturing businesses.