“But don’t we already have one of those?”

When a new business opens in a small community, the same questions tend to follow. Don’t we already have one of those? Can our community really support two? Isn’t that going to hurt the business that’s already here?

It’s an understandable reaction. In a small town, we know our business owners personally, and we want to see them succeed. But another business offering a similar product or service isn’t necessarily a bad thing. In fact, healthy competition can help grow the market for everyone.

What competition really means

Competition is when two or more businesses offer similar products or services and seek to attract the same customers. It can involve price, quality, customer service, convenience, selection, or overall experience. It doesn’t mean businesses have to be identical. A coffee shop and a café, two boutiques with different styles, or several restaurants downtown can all compete for some of the same customers while still offering different experiences.

Why clusters of similar businesses work

Research in retail economics has found that groups of similar businesses can attract more customers, because shoppers value choice and convenience. There’s a reason restaurants tend to locate near other restaurants, car dealerships cluster together, and shopping districts contain multiple clothing stores. Having options gives customers a reason to choose a community, or a shopping district, as their destination.

For rural communities, this matters even more. Our local businesses aren’t only competing with the business down the street. They’re competing with businesses in larger communities and with online retailers.

Local is often regional

In rural areas, “shopping local” doesn’t always mean shopping within your own city limits. Local is often regional. Supporting a locally owned business in a neighboring Mitchell County community, or elsewhere in north central Kansas, helps keep dollars, jobs, services, and opportunities within our broader rural economy.

A strong business in one community can benefit the entire region by giving people another reason to shop, eat, visit, and spend their money closer to home. If a customer can’t find what they need locally, they may leave the area to find it, and once they do, other purchases often leave with them. A community with a greater variety of restaurants, shops, and services gives people more reasons to stay local, and gives visitors more reasons to come.

Competition encourages differentiation

Competition also encourages businesses to set themselves apart. One restaurant may become known for lunch while another excels at dinner. Two boutiques may appeal to different styles or price points. Similar businesses can offer different products, experiences, and specialties while collectively making the community a stronger destination.

A note for entrepreneurs

Not every market can support an unlimited number of businesses. Entrepreneurs still need to research demand, understand their customers, and build a sustainable business model. But the fact that a business already exists should not automatically mean there isn’t room for another.

If you’re considering opening a business, or a friend shares an idea over coffee, resist the urge to immediately worry about whose toes might be stepped on. Instead:

• Ask questions. Who are the customers, and what do they need?
• Research the market. Find out whether there is real demand.
• Think about differentiation. What could you do differently or better?

Making room for new ideas

We shouldn’t let the fear of competition, or the fear of community backlash for competing with an existing business, stop someone from pursuing a great idea. Supporting our existing businesses and encouraging new entrepreneurs are not mutually exclusive. We can do both.

A healthy business community isn’t one without competition. It’s one where people feel supported enough to take a chance, bring new ideas to the table, and give customers more reasons to spend their dollars right here at home.

To learn more, check out our newsletter: https://mailchi.mp/discovermitchellcounty/3rdquarternewsletter

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