Fear often exists about building relationships with direct competitors. There is the thought that they may steal ideas, poach clients and much more. However, choosing to build relationships with other professionals in the same industry can be an opportunity rather than a threat.
Business owners want to outshine their competitors but the savvy ones know it is smart to create relationships with them. It is a win-win when they can figure out together how best to satisfy customers.
Different types of relationships with competitors
Competitors often coexist without interacting with each other at all. They know about each other but that is as far as the relationship goes. In other cases, there may be an intense rivalry between competitors. Another option is a cooperative relationship between competitors. This may be an informal relationship based on mutual respect or a more formal strategic alliance.
Sometimes competitors can help each other out by referring suppliers or buyers. In such a situation, it is possible for one or the other party to start feeling threatened by the other at some point or for one to encroach on the other’s territory.
A restrictive covenant is a type of contract that can restrict or prevent future competition. A restraint of trade contract, which can be found on the Netlaw Man website, can be drawn up to prevent someone in business from carrying out their trade in order to protect the legitimate commercial interests of the party restricting the other.
Cautions when relating to competitors
Competition keeps business owners on their toes, can open doors for them and teach them about the industry. However, there is obviously a line between information that should and shouldn’t be shared with competitors. There is a courteous way of deflecting certain questions without causing tension in the relationship.
In reality, it is important to develop some sort of relationship with competitors to be successful and it is possible for these relationships to be mutually beneficial. However, it is possible to be taken advantage of in such a situation. There are those who will play dirty and business owners need to be aware of this possibility.
In certain cases, where a relationship between competitors is more formal in nature, certain contracts need to be put in place. This can help to define boundaries and prevent problems from developing.
Benefits of relating to competitors
Building relationships with competitors may help business owners to find sides of the other business that overlap and complement theirs. It may offer an opportunity for collaboration or partnerships that hadn’t been considered before. Sometimes a business may find it appropriate to partner with a competitor to service a customer.
Understanding more about another competitive business can also help business owners to discover the strengths and weaknesses of their own business. It is impossible to know what differentiates a business without comparing it with the competition.
By making referrals and helping other businesses to grow, business owners can benefit from the goodwill generated and receive referrals that help their businesses to grow too.
There are commonalities to be found in the threats competitors face and common ground can be found in discussing these and seeking solutions.
Having a relationship with competitors means that when the economy slows down, it is possible to come up with a plan together to help things pick up.
Building a genuine rapport with competitors means a business owner may be first in line when a company is considering selling, consolidating or partnering with another brand. Good relationships with competitors can help businesses to grow in new areas, both in market segments and geographically.