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What to do when competition opens in your small town

By Becky McCray

Sign says, "Opening Soon"

Should you be worried when you find out competition is opening soon? Odds are, you’ll be more successful with that competition than without it. Photo by Becky McCray. 

Many small town businesses enjoy a kind of monopoly: they are the only source for their product in their location. If you are the only pizza place in town, you feel like you have an advantage. But what do you do when you find out competition is opening soon? Do you hate the new business, fight their opening, oppose their efforts? Or do you welcome them to town, even while you feel a little bitter about losing your advantage? Maybe you should be happy instead.

Your business will be more successful with competition than without it. I heard that from a successful entrepreneur from my hometown, and I’ve seen it in action.

A local restaurant owner was worrying over another local restaurant’s plans. He told her to quit worrying about the competition up the road. They aren’t wasting time worrying about you, he told her, and you both benefit from putting people in the habit of eating out more often.

Another time, a farm-implement manufacturer bragged about his monopoly status. He proudly said his company was the only source for the specialty implement he makes. My friend the successful entrepreneur told him to paint half of his product a different color, give them a new name, rent a separate booth at the ag show, and act like they hated each other.

Of course, the small manufacturer didn’t do that, but a couple of years later, a big national manufacturer introduced a competing product. What happened to the small manufacturer? His sales went up, not down. He sheepishly admitted that our friend was right. The competition had been good for his company. They benefited from the increased awareness that national manufacturer brought.

When a friend wanted to open a liquor store in the next town over, my mother helped her out, offered advice and answered lots of questions. People asked why she’d help her competitor. Mom said there was plenty of business. In fact, her sales went up even as the new store got established and built up their sales.

This only works if… 

…you are doing a good job for your customers. If you’re coasting along, relying on that small town monopoly, your days are numbered. That new competitor in town is a wake up call. Take it to heart.

If your business is doing a good job, don’t worry about the competition. Look for ways that you can benefit from the increased awareness in your pool of potential customers.

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  • About the Author
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About Becky McCray

Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.
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July 29, 2013 Filed Under: entrepreneurship, rural, Small Biz 100

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Comments

  1. Dena Renee says

    July 29, 2013 at 8:07 pm

    This is very timely for me. Right now, we are the only B&B located downtown. Rumor has it that a new B&B is trying to open nearby. We would welcome them with open arms and help them in any way we could, because we are all neighborly like that. But, there’s still concern. Thank you, I needed to hear this!

    • Becky McCray says

      July 29, 2013 at 9:33 pm

      Dena, I’m glad this came at the right time for you. Have some fun dreaming up ways you could cooperate with a new B&B.

  2. Jim Ellis says

    February 20, 2014 at 1:06 pm

    We are the definition of small town. Our population is less than 1400.
    Our “Main Street” is less than 3 blocks plus a couple of off-Main shops. Soon we will only have 1 bank and we have 1 gas station, a Casey’s. A few years ago our only grocery store closed its doors after several decades. Things aren’t all bad though!

    Construction will begin soon on a Dollar General on the edge of town. While maybe not the first-choice solution it will provide a place to buy some groceries and other items instead of going to Wal-Mart in the next town over.

    Plans are also underway for a locally owned drug store from another community to open a branch in our town.

    These should be seen as good things for the community, but in both cases there are shops who are worried they will lose business to the newcomers.

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