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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

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Original poster

New competitor affecting my business

51 replies

futureworry · 06/11/2019 16:56

Three years ago I left my job to follow my passion and set up a business. I put a huge amount of work into it and have been very fortunate in that I'm the only person who does what I do in the local area - and business has been good to great since I started.

However, six months ago somebody else set up a very similar operation - with a very similar offering to what I do - near to where I'm based. Since that happened my takings have been down quite significantly, which I suspect is due in part to this new person opening up.

I know from conversations with my customers that many of them are now spending money with my competitor as well as me and they seem to be building a strong following. No doubt I've lost customers to them as well.

Of course other people are perfectly within their rights to set up a business wherever they want, and I know I've been extremely lucky not to have any close competitors for the past three years.

But the issue is, now that it's happened I can't stop worrying that my takings are down - and worst case scenario that I'll have to close and give up my passion.

Do any business owners out there have any tips on how to handle competition in business, stay focused, not panic and most importantly, stay positive?

OP posts:

Madvixen · 06/11/2019 16:59

Find a USP, what are you doing that they aren't? Engage with your customers and offer them something to keep their loyalty. Do you do a loyalty scheme? Are you active on social media?

c3pu · 06/11/2019 17:01

What can you offer that they can't?
How can you improve the things that they offer that may seem more attractive than yours?

CuriousaboutSamphire · 06/11/2019 17:07

I have exactly the same issue. You have to find your own angle, a USP.

Be sure that they have examined your marketplace presence quite carefully. Do the same in return. List all the things they do that you do not and vice versa. Monitor that monthly!

If you didn't keep tabs on your customers before do so now, sign them up for newsletters, offers, discounts, ANYTHING to differentiate you from your new competitor.

And remember they have just started, their cash flow will be tight. You may have an advantage not having to bear start up costs! You can keep them at bay of you work smartly.

Additionally work WITH them. I do that with someone who started up on 'my patch'. I used the fact that I have long term clients to send some of my new enquiries to her, to give her more business away from my main work. She knows I do this, she has thanked me for it and we have quite a good working relationship because of this.

Best of luck

malmi · 06/11/2019 17:09

You need to find out more about the competitor and what they're doing to attract customers. Also some background information, e.g. are they doing this to make money or is it just a hobby?

If it's a price-sensitive market and you can afford to seriously undercut them for the next 6 months, taking back all your customers, you may be able to kill them off once.

Aquamarine1029 · 06/11/2019 17:12

You need to figure out what they offer that you don't, and I would start with some of your customers who have also patronized your competitor. I would also enlist a friend to do some secret shopping with them and then report back with their experience. You may be worried, but the truth is competition makes you better, so embrace the opportunity to reevaluate how you run your business.

Flouncysinatra · 06/11/2019 17:12

I’m a small business that helps small businesses... and his happens a lot and it’s tough if you’re not prepared for it but it’s always bound to happen at some point.

Firstly - examine where your existing customers come from. You need to focus on two things - retaining your existing customers (can you offer loyalty schemes or similar, does your business lend itself to re-engagement through newsletters and the like etc). Then you also need to focus on growing new business - it’s easy to get complacent.

What sets you apart from your new competition? What are they doing that’s winning new business?

Feel free to pm me

Original poster

futureworry · 06/11/2019 17:21

Thanks for all the constructive advice - I will certainly be giving some thought to all your suggestions. I must admit that some of what they do is very good (better than my offering?) and I can see why customers are liking it. I'm just so worried that I won't be able to survive this - with a mortgage to pay it's more than a little scary.

OP posts:

cacklingmags · 06/11/2019 17:23

I have been running a business for 25 years and it has happened to me several times. One git actually stole my product to sell but I scared him off with a solicitor. I usually respond to competition by spending more on advertising. If you can get more customers this way in the short term it might make the competition give up or diversify.

CuriousaboutSamphire · 06/11/2019 17:25

So they are showing you how to improve your business? Use it...

LaurieFairyCake · 06/11/2019 17:25

If what they're doing is better than yours can you cut your prices slightly so that yours looks like a good deal?

Or get better? And charge more

Alicia9999 · 06/11/2019 17:26

Instead of what are you doing right (your USP), what are they doing really well? Do they have a strong social media presence when you don't? Is their website flashier and easier to use? Are their products and services genuinely better? What about prices?

If you can't see this yourself, then ask a couple of more neutral people to answer those questions, e.g. friends/family

MrGsFancyNewVagina · 06/11/2019 17:30

Oh that’s horrible, OP and as an independent business owner, I can really relate. You’ve said they can do something better than you, is that because they have better equipment, transport or skills. You might need to tighten your belt and invest in the business to get it up to the same standard. But ask keep in mind many of your customers will be attracted by the ‘newness’ of your competitor and if they get overwhelmed by the new customers they may not be able to cope, so your customers will drift back to you.

I have done the same with one of my own customers that set up the same business. I’ve also given her advice on running her business and she has stepped in, by invitation, when I needed time off. I know she was nervous about telling me, but I congratulated her and told her I was delighted as we could support each other. Granted it was easier for me as I already knew my competitor. It has also had the unexpected side effect of my customers thinking even more highly of me when they realise we are working together.

dontgobaconmyheart · 06/11/2019 17:39

I think you are sensible to be concerned OP, but you need to fight back! What is it that you think they're doing better? If it's something creative can you improve your skills, learn new ones etc. Don't underestimate the reach of social media and SEO engagement, if you're lacking there you'll need to work on that skill set too and optimise your use of it.

You don't say whether you're an in situ business (a shop) or a service (cake making etc)so in some ways it's hard to advise specifically, increasing footfall, demographic and average basket spend is tricky to advise on without the specifics of the nature of your business but I'm sure there is plenty that could be done.

Your business needs to adapt, I would sit down and cover all bases to form a realistic business strategy and any costings involved for the year ahead. If it feels overwhelming a business minded friend or meet with a consultant. Whether it's worth it again depends on your profit margin and the kinds of amounts you're making. You must have a good idea that has demand if two businesses are profiting!

JoJoSM2 · 06/11/2019 17:40

As a customer, if so have a choice of 2 or 3 of something locally, I always go to the prettiest with the best customer service. Make sure your premises are fab and it’s an experience for your customers.

Original poster

futureworry · 06/11/2019 17:55

From what I've heard, I think my customer service is better but their offering is newer and "prettier" unfortunately. It's nerve wracking to invest more in the business when profits are down, but perhaps I will have to look at that.

OP posts:

CuriousaboutSamphire · 06/11/2019 17:59

Newer will wear off, prettier can be managed.

Is it the actual item or the packaging? Branding or pretty bows and paper?

Pretty bows and nice paper may seem to matter a lot! BUT if your opposition is all Pretty in Pink you may find a USP in Brown Paper Packages Tied Up With String!

Keep thinking it through.

TyrionsNextWife · 06/11/2019 18:04

Can you give us an idea of what your business is like, ie are you selling a service or a physical product, do you have your own premises etc?

People might be able to give some tailored suggestions based on how you operate

Screamqueenz · 06/11/2019 18:04

It's hard when competition moves in, but as has been said previously, focus on what you're good at, and find out what you're customers value about your offering.

Yes, invest, I know it feel scary but its important to stay ahead of the game.

Good luck!

scoobydoo1971 · 06/11/2019 18:16

Social media campaigns, targeted advertising, special offers, expand your business offers, move the business into a new area away from competition, offer free delivery (if applicable), ask your customers what would keep them loyal/ customer feedback surveys, online ordering (if applicable), reduce your pricing to reflect the competition fees, explore cutting your running costs so more turnover becomes profit. Do not be tempted to employ a business guru or coach to tell you the answer...no one knows your enterprise like you do.

MintyMabel · 06/11/2019 18:21

If the only way you can make a profit is by having a captive market, your business model is flawed.

My sister runs a business, which my dad ran before her. They have seen competitors come and go, cutting costs to beat them on price, but they never compete on service and 35 years on, they are still going strong. They have evolved, to meet changing customer needs, changes in technology, changes in legislation, and are still going strong.

Find out what they are doing better and beat them.

misspiggy19 · 06/11/2019 18:22

Undercut them. Guaranteed win win

VictoriaBun · 06/11/2019 18:27

Yes as others have said , you need to find out why they are choosing your competitors over you.
Look at their web page.
Compare prices.
Find out about their customer support / after sales.
I'm sorry to say people will always shop around and go for what suits them.
You will just have to accept you now have competition and will have to work harder to earn a living.

Screamqueenz · 06/11/2019 18:27

Most people have given great advice, Misspiggy not so much, competing on price is a race to the bottom, no-one wins.

MintyMabel · 06/11/2019 18:30

Undercut them. Guaranteed win win

Only if you are selling cut price tat on a market. If it's a service or quality product, price is only part of the picture

TwattingDog · 06/11/2019 18:31

What sort of business are you?
Are you using social media to it's full potential? Local pages - Gossip Girls, news channels etc often allow small businesses to advertise on set days. It's free and a local audience. Create special offers asking people to quote the page name to get the deal, so you know how it's working for you.
What it is that makes their business prettier? Design of adverts? Better decorated business premises? Slick website?

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