What to do when Competition Moves In

Video Transcription:

As much as we would love to maintain a solo marketplace, and be the only provider in our market, sometimes it’s just not realistic. If you have a thriving business, others may at some point want to copy that. They may approach you, and ask you for some advice about opening their own studio. Many people don’t stop to think that they might be asking their competition for advice, and there’s a little conflict of interest there. You want to work this to your advantage.

I wouldn’t suggest that you tell them in an angry fashion that you would not like to help them, although that’s probably what your gut says. What I’d suggest instead, is to offer a little proactive advice, just like we do here in our firm, and suggest to them that you would be willing to help them on a consulting level.

Obviously, don’t give the store away. You want to make sure that you will tell them you’ll help them, but you will charge them for that, okay? Depending on how far away they are from you, or if it’s someone maybe in another state, this could work out to your benefit. Offer some consulting services, and charge a hefty penny for it. Make sure that it’s worth your while.

Perhaps they need information about suppliers, about pricing. I would also first recommend that they talk to CCSA. Send them in that direction if you don’t feel that you want to help in any way, shape, or form. That’s the best advice. Send them to CCSA. They will be able to get some information in general about what it takes. This may deter some of them, once they realize what all is involved in opening a studio.

If not, the worst case scenario is that you’re at least creating an ally instead of an enemy in your town. You really don’t want to be enemies with the competition. There may be some point in the future where they could be very helpful to you. We’ll talk about that in a moment.

Secondly, make sure that if someone does open a studio in your area, don’t try to compete on price. That’s the fastest way to go out of business. The Walmart pricing game will not work in a small space like studios, so do not compete, do not lower your prices, because a competitor moves in and does the same. Allow them to lower their price all the way to the price point at the ground if they want to. That will force them out of business.

Go by the guidelines of what you need to price things for to make a profit, and stay there. Do not feel pressured to lower your prices. If you want to feel pressured, increase the value of your experience to your guests. Make sure that you have a top-notch experience, with great customer service, and you’ll do just fine.

Believe it or not, there can be areas where there’s another studio that’s about two miles from a competitor. They’ve co-existed in the marketplace for many years now. I don’t even know how many, but probably at least 10 years, and there’s not a problem. Their customer bases actually don’t cross paths, because of traffic patterns in the city.

Don’t underestimate, and don’t overthink this with competition. Competition is natural and normal in a marketplace. If you’ve been in a situation where you haven’t had any, consider yourself lucky. Take a little bit of advice here. Talk to that person. Get a little insight. It never can hurt to learn what they’re planning.

It’s just like walking into the studio and taking a peek. If you choose not to help them in any way, shape, or form, or you want to ignore them, keep in mind, they’re going to send somebody into your studio to spy on you a little bit anyhow. Keep it friendly. It’s natural. Use it to your advantage if you can, and charge them for some consulting if you can. You’ll still at least get some insight there.

Also, keep in mind the biggest factor with competition, you do want to be on a friendly basis for them, because at some point, if they go out of business, guess what? You might get some great deals on some kilns, some furniture, some inventory. You might be their saving grace one day.

I hope that helps put this in perspective. Don’t run and hide in the corner, it’s never fun, but use it to your advantage. That’s competition, and that’s what our marketplace is built on. If you have further questions, please don’t hesitate to let me know. Thanks. Have a great day.

At PYOP Accounting, we specialize in working with PYOP and Ceramic Arts Studio Owners throughout the USA.  Our industry knowledge is focused on taking the headaches out of accounting and helping you grow your studio’s value using specific metrics for the PYOP industry.  Don’t you owe it to yourself to see how we can help you?  Schedule a complimentary chat with us today at www.pyopaccounting.com/meet.