How to Deal with Competition As a Small Business

Co-authored by Patricia Chukerman and Eric McClure

Last Updated: February 17, 2022 References

Competition is healthy. It forces you to innovate, keeps you on your toes so that you don’t get complacent, and encourages you to provide the best you possibly can for your customers. With that said, it can be frustrating to feel like you’re losing out on precious revenue if you’re a small fish in a big pond trying to get your business ahead. If you’re looking to grow your market share and turn your small business into a big business, read on to figure out how you can get a leg up on your competition!

1

Solicit customer opinions to find your strengths.

People come to you for a reason, so figure out what that reason is. You could ask customers to complete surveys or questionnaires, or put a focus group together to get a sense of what people like about your business. In addition, take a look at your books to see what your top-selling products or services are. Identifying what people like about your business will help you get ahead.^{[1]
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Trustworthy Source
U.S. Small Business Administration
U.S. government agency focused on supporting small businesses
Go to source}
- Knowing what makes your business special shows you what you should focus on, and what you should forget about. If your customers don’t care about your warranties, for example, you don’t need to put any energy into selling them. If your customers love one particular product, you can focus on a marketing campaign to push it even further!^{[2]
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  Research source}
- You should show up consistently.^{[3]
  X
  Expert Source
  
  Patricia Chukerman
  Image Consultant & Marketing Specialist
  Expert Interview. 8 February 2022.}
- Do things that can make people trust you.^{[4]
  X
  Expert Source
  
  Patricia Chukerman
  Image Consultant & Marketing Specialist
  Expert Interview. 8 February 2022.}
- Try to establish a relationship with your customers.^{[5]
  X
  Expert Source
  
  Patricia Chukerman
  Image Consultant & Marketing Specialist
  Expert Interview. 8 February 2022.}

2

Run a competitor analysis to find an edge.

Ask yourself, “Why would someone go to them instead of me?” Compare the products and services that you offer to your competition’s. If there’s something they have that you don’t, look into it to see if you can match what they offer. Compare your prices as well. If there’s somewhere you can cut costs to edge them out, see if you can pull it off. Take a look at their advertising as well to see what people are identifying with.^{[6]
X
Research source} Note how frequently they advertise and through which channels.^{[7]
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Expert Source

Christine Michel Carter
Global Marketing Expert
Expert Interview. 30 September 2020.}
- When it comes to advertising, you may want to borrow elements of your competitor’s style, but you typically don’t want your materials to look so similar that your customers mix you up.
- Look at their online reviews and then compare them to your online reviews. If you notice that your competitor’s reviews all mention great service and there’s nothing in your reviews about kind employees, maybe it’s time to re-train your employees!
- Sometimes, you won’t have any control over what makes your competition attractive to others. If they have a storefront in a great downtown location and you don’t, you’ll just need to edge them out elsewhere.

3

Build your company’s moat.

If you have something your competition can’t replicate, lean into it. Your moat is whatever your business does that the competition simply can’t replicate. If you have one, consider spending some of your leftover revenue on making that moat even wider. This will keep your competition from catching up!^{[8]
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- Amazon’s moat is their inventory. Where else can you buy books, bikes, and gardening tools online? Microsoft’s moat is their compatibility—if you buy a Windows PC, you can do anything. Apple’s moat is its technology and branding.
- If there is one thing you do that your competition can’t (or won’t), then that’s your moat. It can be as simple as stellar service, or as unique as a special product only you can offer.
- Not every business is going to have a moat, but that’s okay. There are still plenty of ways you can build a competitive advantage.

4

Fill any gaps in your products/services.

There may be something obvious holding you back, so look at the big picture. If the competition offers free consultations and you don’t, offering a service like that will give potential customers a big reason to consider you. If they’re open three hours later than you, that might be a ton of revenue you’re missing out on. Compare your business’s offerings to the competition’s to see if there are any missing services or products.^{[9]
X
Trustworthy Source
U.S. Small Business Administration
U.S. government agency focused on supporting small businesses
Go to source}
- If you offer basically the same products or services as your competitors, figure out if there’s something you could add to gain a competitive edge. Even if it’s just opening the store earlier or giving a free drink with every purchase worth $20 or more, you’ll come out ahead in the long run if you have more to offer.

5

Create an incentive for return customers.

Loyalty programs are a great way to get customers to come back. Set up a loyalty program where customers can get discounts or free upgrades if they shop with you regularly. Punch cards with a “buy 10 and get 1 free” deal can be a solid way to encourage customers to come back as well. On top of that, encourage your employees to build rapport with new customers and recognize regulars. The more goodwill you can build with your market, the more likely folks will be to come back.^{[10]
X
Trustworthy Source
Harvard Business Review
Online and print journal covering topics related to business management practices
Go to source}
- If you’re competing with bigger businesses, this is where you’ll get the upper hand. Very few customers feel personally appreciated when they go to a big box store, so if you can make them feel genuinely valued and appreciated, they’ll come to you instead!
- Customer loyalty sales and specials are another great way to build your presence in a community.

6

Minimize turnover and grow your team.

If you have employees, do your best to cultivate their skills. If customers see new staff every time they come in, they may not build any personal relationship with your business so retaining staff is key. Train your employees to be kind and respectful to customers, and reward them for performing well. Do your best to cultivate a caring, professional culture.^{[11]
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- It may cost less to hire brand new employees, but it’s always best to pay for quality employees. If you can, pay your workers a competitive, reasonable wage. If you don’t, they may end up working for your competition!
- If you can retain staff and your competition can’t, you’re going to eke out a competitive advantage over time.

7

Expand your social media presence.

See how people engage with your competitors compared to you. Your social media is a big part of how your customers find and interact with you these days. If you aren’t on Facebook, Instagram, Twitter, or Yelp, now is the time.^{[12]
X
Expert Source

Christine Michel Carter
Global Marketing Expert
Expert Interview. 30 September 2020.} Set up business accounts and encourage customers to like your page or post reviews. Engage with potential customers in online neighborhood groups, and post special offers to get new customers in the door.^{[13]
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Research source}
- If you run a restaurant, post photos of your delicious food. If you run a clothing store, take fun flicks of new outfits as they arrive.
- Take a look at how your competition uses social media if you’re brand new to it.
- The more engagement you can cultivate online, the better. Always reply to people who comment on your posts!

8

Give your branding a makeover.

Your competition may be digging into your market because they “look” newer. If your signage is super dated and your building’s color scheme could use some love, there’s no time like now for a makeover. Consider hiring a business consultant and a graphic designer to totally overhaul your logo and signage if you have some money leftover in your budget. Keep your storefront clean to create a warm, welcoming environment for your customers.^{[14]
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Research source}
- If your competitors have a cool “young and hip” style going, you may want to aim for a more mature look and vice versa.
- A business consultant should run a few thousand dollars, but you can definitely find some smaller consultants out there for $100-400.^{[15]
  X
  Research source} You may not need one though if you’re really confident in your branding and messaging!
- A graphic designer shouldn’t run you more than a few hundred bucks. You can always find a freelancer on sites like Fiverr or Upwork if you really want a deal!

9

Update your website for e-commerce.

If you have an online business, your website is everything. If your website looks like it was made in the 90s and you made your logo years ago in Microsoft Word, hiring a web designer to give your brand an update can really help. A decent web designer will run you $500-10,000 depending on whether you want minor updates or a major overhaul. A good website is key when it comes to attracting customers and maintaining your online presence.^{[16]
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- You can always use a template tool or website builder, like Squarespace, to craft a brand-new website yourself. If you’re visually adept and you aren’t super particular when it comes to customizable features.

10

Start a new marketing campaign.

If business is slow, a new marketing campaign can generate business. Either your competition has advertisements everywhere and you should be competing with them, or they aren’t advertising and you can get a leg up by taking the initiative. If possible, hire a marketing firm to put a tight, cohesive campaign together for you. Join your local business associations and consider sponsoring a local team to build brand awareness in the area.^{[17]
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Research source}
- Guerilla marketing is great if you have a really small business. Go around the neighborhood and put posters up in local coffee shops to get the word out!
- Newspaper and radio ads are great if you want to target an older demographic in your area.
- Billboards are a great way to make a statement if you want to attract drivers in the area.
- Online ads are ideal if you run an online shop. You can even advertise for free just by posting on social media!
- A marketing firm should charge $2,000-4,000 depending on how big you want to go.^{[18]
  X
  Research source} However, you can always hire an independent marketing consultant or simply do it yourself to save some cash.
- Keep in mind that innovative products and services require more marketing support, as there is a higher need for education and awareness compared to common goods and services.^{[19]
  X
  Expert Source
  
  Christine Michel Carter
  Global Marketing Expert
  Expert Interview. 30 September 2020.}

11

Work together with the competition.

Reach out to your main competitor and see if you can join forces. This won’t always work depending on the business you run and what your competitors do, but it’s always better to work with people than against them. If you can find a way to build a working relationship, either by sponsoring something together or referring customers for specific products or services, you can both flourish!^{[20]
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Research source}
- For example, if you run an automotive garage and you specialize in bodywork, reach out to your competition to see if they’ll refer people to you for restorations so long as you refer folks to them for minor detailing.
- If you run a high-end clothing boutique, reach out to the secondhand store across the street to see if you can work together to sponsor a fashion show.
- Working with the competition allows you to get some insight into their technology and skills. This can be exceptionally helpful if you aren’t sure why they’re so successful.^{[21]
  X
  Trustworthy Source
  Harvard Business Review
  Online and print journal covering topics related to business management practices
  Go to source}

Expert Q&A

Question

Why do innovative products and services need more marketing support?

Christine Michel Carter
Global Marketing Expert
Christine Michel Carter is a Global Marketing Expert, Best-Selling Author, and Strategy Consultant for Minority Woman Marketing, LLC. With over 13 years of experience, Christine specializes in strategic business and marketing consulting services including market analysis, organizational alignment, portfolio review, cultural accuracy, and brand and marketing review. She is also a speaker on millennial moms and black consumers. Christine holds a BS in Business Administration and Art History from Stevenson University. She is a leader in multicultural marketing strategy and has written over 100 articles views for several publications, including TIME and Forbes Women. Christine has worked with Fortune 500 clients such as Google, Walmart, and McDonald’s. She has been featured in The New York Times, BBC News, NBC, ABC, Fox, The Washington Post, Business Insider, and Today.

Christine Michel Carter

Global Marketing Expert

Expert Answer

Innovative products and services require more marketing support as there is a higher need for education and awareness. But common goods and services may not need much advertising.
Question

How do you use Facebook for advertising?

Christine Michel Carter
Global Marketing Expert
Christine Michel Carter is a Global Marketing Expert, Best-Selling Author, and Strategy Consultant for Minority Woman Marketing, LLC. With over 13 years of experience, Christine specializes in strategic business and marketing consulting services including market analysis, organizational alignment, portfolio review, cultural accuracy, and brand and marketing review. She is also a speaker on millennial moms and black consumers. Christine holds a BS in Business Administration and Art History from Stevenson University. She is a leader in multicultural marketing strategy and has written over 100 articles views for several publications, including TIME and Forbes Women. Christine has worked with Fortune 500 clients such as Google, Walmart, and McDonald’s. She has been featured in The New York Times, BBC News, NBC, ABC, Fox, The Washington Post, Business Insider, and Today.

Christine Michel Carter

Global Marketing Expert

Expert Answer

Facebook is a content marketing tool. It is an indirect way of advertising to the consumers. To use Facebook for business marketing, post interesting, quality, relevant content consistently.
Question

Can a small business survive in a competitive market?

Patricia Chukerman
Image Consultant & Marketing Specialist
Patricia Chukerman is an Image Consultant & Marketing Specialist and the Owner of Paperworks Image Consulting and Stoned on Rocks. With more than 36 years of experience, she specializes in helping companies decide how to market themselves. In addition to her work with businesses, she also has more than four years of acting experience and more than five years of crafting experience. Patricia earned her BA from The University of Illinois Chicago. Patricia is also the President of the Dania Beach Chamber of Commerce and the President of the Hollywood Florida Scholarship Foundation.

Patricia Chukerman

Image Consultant & Marketing Specialist

Expert Answer

Yes, it can! That said, remember that people have to trust you before they're going to give you their money. Try to get to know your public on a personal level, talking with your clients before discussing things on a business level.