The scenario may look familiar to many small business owners. You are doing a brisk business with loyal customer base. The sales are growing steadily. You are making decent profit. The same holds true for other competitors in the neighborhood. The existing customers in the town are divided between your and other businesses. In short, equilibrium has been established amongst existing businesses.
And then, a new competitor decides to get a piece of the action. Suddenly, everything changes. The new competitor tries to grab customers with lower price and increased marketing. The existing ones try to hold onto their customers. Employees will leave for bigger opportunities. It’s as if someone threw a stone in the calm waters causing ripples everywhere in the neighborhood.
The initial reaction for many existing business owners may be to counter the new competitor with force right away to ensure these ripples do not cause significant damage to your boat. However, this may be a mistake. The best strategy may be to watch and plan for the future before taking radical steps. In particular, it is important NOT to do the following right away.