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Almost every small business owner has to deal with competition, no matter what industry you’re in. Of course, like all things, there is a right way and a wrong way to deal with it, though. Knowing how to handle competition is vital to the small business owner, especially when a new kid comes to the block.

When you first started your business, you probably took a look at your competition. You looked at what they were doing, which customers they were targeting, and how they differentiated themselves. But what do you do about a new competitor who enters and disrupts your market? The new competitor is not only trying to draw in brand new customers to the market; they are also looking at some of your competitors’ customers—and yours, too. They might even draw some of your employees.

The new entrant to the marketplace forces you to react—but you don’t want to make a mistake. Here are some ways you shouldn’t handle this new competition, along with some ways you should:


  • Panic
  • Reduce prices
  • Slack on customer service
  • Kick off a new marketing campaign
  • Badmouth the new competitor

Many customers in your market will probably want to at least check out the new business, so don’t overreact as people take a look at the new entrant to your market.


  • Study the strengths and weaknesses of the new competitor
  • Improve your quality and customer service
  • Monitor your business closely
  • Ensure key employees are happy
  • Ask customers about the new business

This may seem obvious, but it’s worth saying: treat the new competitor like a competitor. Find out what they do well and what they don’t do well, and how their business is likely to impact your own. Find out what people think about the new business, and keep a close eye on your sales numbers and other major metrics. And above all, operate at your best, to give customers and employees a reason to choose you.

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Don M. Reid – DMRNET Business Solutions