Running a small business is challenging enough without the added complication of having a direct competitor just a few doors down. Recently, on-air with Tony Moclair, Bill Lang, Executive Director of Small Business Australia, shared his insights into this situation — and why competition isn’t always as straightforward as it seems.
The Challenges of Close Competition
For many small businesses, disputes can arise when two providers of the same service set up shop right next to each other. Bill pointed out that while this can increase options for customers, it can also cause stress for business owners. Legal disputes, in particular, can drain time, money, and emotional energy — resources better spent serving customers.
When Location Works in Your Favour
Not all proximity is bad. In fact, some industries thrive on being clustered together. Bill highlighted examples like:
- Lygon Street for Italian restaurants
- Smith Street, Collingwood for outlet sportswear
- Shopping centres and DFOs where multiple brands draw larger crowds
Here, co-location actually benefits both businesses and consumers by making the area a “destination” for a particular type of product or service.
The Customer’s Perspective
Price competition is one advantage of businesses being side-by-side, but Bill reminded us that consumers also weigh up convenience, service quality, parking, and availability when making choices. For some, the decision is as simple as whichever barber has a free chair at the time.
What About Franchises?
Tony raised the example of McDonald’s and whether franchisees are protected from competition within the same brand. Bill explained that most franchises include geographic exclusivity clauses, but it’s critical for potential franchisees to carefully read agreements before signing. Safeguards vary, and new or untested franchises may not offer the same protections as established brands.
Advice for Small Business Owners
While two similar businesses in the same street may sometimes find ways to “carve up” a market, Bill cautioned against any practices that might resemble price collusion, which can breach federal and state laws. Instead, he stressed a simple but powerful strategy:
– Focus on delivering great service.
Customers will often overlook noise on social media or disputes between businesses if they feel valued and well-served.
Final Takeaway
Competition can be stressful, but it also drives innovation, customer choice, and better service. For small businesses, the key is to stay focused on what you can control — your offering, your customer experience, and your reputation.
