Here Comes a New Competitor – what can I do?
For many business owners there is a fear that their patch will be invaded by a larger, more aggressive player. Most larger retailers are owned by shareholders, this puts pressure on the company to expand their sales year on year. The result is their expansion into smaller and smaller markets with more customized stores or outlets. So as a small business what can you do if one of the big boys decides to enter your territory?
10 Thoughts on Competition
- Being the local firm gives you a distinct edge over a new competitor coming in from outside the area. Ensure your strategy focuses around your unique knowledge and services developed specifically for locals.
- Look to set the bar high for your new competitor. New competitors will be looking to be innovative in pulling your customers away. Get on the front foot and ensure you already offer the products and services your customers really need. If you’re not sure what they want, survey your customers immediately.
- Protect your top customers. The 80/20 rule suggests that 80% of your revenue comes from 20% of your customers. It is imperative that you know who these customers are and that your plans involving preventing these customers from defecting to the new competitor.
- In all your promotional material hammer home the fact that you are the local source. This can be aided by some glowing testimonials from well known local personalities or mentioning any local sponsorship you provide.
- If you are not currently marketing your business then get out and do it. If your budget doesn’t extend to radio & newspaper advertisements then look at free or low cost ways you can promote yourself. Join a sports or community club, sponsor a community event, do a mail drop, create an online presence, email your customer base etc.
- Create a compelling reason for your customers to return. Many businesses provide customer loyalty programs. Hint: Before implementing such a program do your homework as once implemented they are hard to change without upsetting the customers you were trying to reward. For many businesses outstanding customer service is enough to create customer loyalty.
- When was the last time you reviewed your systems and technology. Any productivity gains you can achieve through leveraging these will help the bottom line and improve customer service.
- Get lean. With a lack of competition many firms neglect to watch their costs, a review of your financial costs could assist in offsetting any negative effect on sales from a new competitor.
- Monitor your performance closely. Knowing your breakeven and cash flow levels will assist in establishing what is working and what isn’t. It will also help you establish realistic financial milestones for making the hard decisions that may need to be made.
- Take a positive stance. If you start telling people you are deeply concerned about your new competitor that negativity may destroy staff morale and customer confidence. Make it clear that you welcome the competition and that it represents a great opportunity for the community and for your team to excel.
At the end of the day you need to avoid a price war. These are short sighted strategies that take a long time for businesses to recover from (if ever). If you need assistance planning for new competition see a business consultant from Watts Price Accountants.
Richard Kemp – Watts Price Accountants
The advice provided on this Article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.