SAN ANTONIO — Few small- to mid-sized distributors need to be told that the cheaper workforce and lower costs overseas have impacted their business. However, these distributors have some unique characteristics that can see them through the tough times, according to a new report by consulting firm Frost & Sullivan.

"[Smaller companies] tend to have closer relationships with their own local customers," said Frost & Sullivan analyst Liliya Santalova. "That's an advantage for them. They'll have a better understanding of their customers' needs."

Santalova's research is detailed in the Frost & Sullivan report, titled North American Motion Control, Feedback Elements, and Controllers Markets.

However, since many of these small- and mid-sized distributors usually focus on niche markets, Santalova says it's essential that they take nothing for granted. Knowledge of their respective markets is essential, she said, in order to see potential problems and react to them in time.

"Know the overall market, not just your own niche market," she advised. "Since the smaller companies are so focused on their niche, they sometimes fail to see what's going on around them — whereas larger companies may be looking to expand or to differentiate their products."

This is where small niche market companies can be blindsided if they do not remain alert, she said.

"If they keep track of their overall market, they'll see what's coming and develop their own individual strategy," she said. "But if the small companies don't see the potential problems facing them, they can be swallowed up by a larger company or go out of business."

Santalova also urges small- to mid-sized companies to listen closely to their customers — and not just when discussing prices. What their customers are talking about often can provide a clue as to what's around the bend, business-wise, she suggests.