Fixed Costs are a Liability

photo credit: Elsie esq.

Since the dawn of the industrial age, businesses have gotten larger because only the largest companies could afford the large investments required to build mass production facilities. If this economic downturn teaches us anything, let it be that a large infrastructure with high fixed costs are liabilities.

New technologies had reduced the costs of starting and operating a business. And outsourcing, partnering and business infrastructure service companies (UPS for logistics, contract manufacturers for production, Amazon on others for IT and web services, etc.) created the ability to start and operate businesses using a high degree of variable costs.

Variable cost business models are having a major impact on the small business sector by greatly increasing the number and viability of niche markets.

Stay small and flexible!

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