Should I ask competitors before I start a business in a small town?

“I want to start up a new business in town which will compete with an existing one. I believe there are enough customers for both of us. Should I talk to the business owner about my intentions before I start?” That’s the real-world concern from a reader. In small towns, we think about things like […]

“I want to start up a new business in town which will compete with an existing one. I believe there are enough customers for both of us. Should I talk to the business owner about my intentions before I start?”

That’s the real-world concern from a reader. In small towns, we think about things like this. We don’t want to hurt anyone often because we know them, or we know their family.

I’ve never personally asked anyone when starting a potential competitive business or been asked by anyone (except my sister, but that’s a long story). While some people do get angry about it, I believe competition is a good thing, even in a small town. And I say that from personal experience in business.

I discussed this question with my colleague Deb Brown, a former chamber of commerce director and entrepreneur, to get additional ideas.

Generally, we don’t think it’s necessary to speak to them first. It’s also not out of the question, if you feel strongly about it because of the person involved, whether you know them, or the size of the town.

Test your idea first

The main advice Deb and I would offer is to do small tests first to gauge the market. That’s how you’ll know for sure if there is enough demand to support another business.

You can do this for a retail business through pop-ups, renting booths at festivals or events, or through tests selling a few items online or inside another business. For services, you can start offerings online, a mobile location like a trailer, or with a few temporary tests. Once you start those small steps, you’ll learn a lot about what people want to buy, what they’ll pay, and what they are hungry for.

You may find there isn’t demand, so you don’t have to go have that awkward conversation after all.

Look for opportunities to cooperate

Small businesses in small towns have more opportunity to cooperate. Even a direct competitor might cooperate with you. This makes for a much easier conversation than seeming to ask their permission to start. Instead, go to them with ideas for ways to work together.

Here’s an example advertisement from three retail businesses, two of which are direct competitors. All three were along the same block in a downtown.