Most successful businesses face competition. Even if you were at one point the only company in your specific business niche, your success may have inspired others to start their own companies and compete with you.
Competition can be great for consumers, but it can be very hard on businesses. Especially when the other individuals trying to compete with you don’t employ fair practices, your company could suffer massive financial losses or even face eventual closure. What are some of the unfair competition practices that your competitors might use against you?
They might combine their buying power to undersell you
If multiple competitors work together, they could potentially drive your company out of business. If two or more businesses of similar scope to yours start working together when placing orders for supplies or products, they could potentially offer the same things that your company does but at a lower cost, all without taking any losses. Such arrangements put your business at a significant disadvantage because you cannot access materials or products for the same cost.
They might agree to sell items at a loss to drive you out of business
Frequently an accusation levied against big business, loss-based pricing can be highly unfair. A new company could move into a small community, and inappropriately price their items in local businesses.
If your competitors know that they only have to take a loss for five months before they get to absorb some of your share of the market, they might drop their prices unrealistically low and then increase them when you are no longer in business.
They might engage in corporate espionage or target your staff
Your trade secrets, such as your recipes and proprietary formulas, might make your company unique or allow you to offer better product than your competitors. Some businesses will either try to embed someone on their payroll in your company when you hire new staff or try to recruit your staff so that they can have access to your trade secrets or your client list.
You have rights when competitors violate the law
There are rules about what is fair and appropriate when doing business. Companies that engage in unfair competition not only damage the business that they target but also the general public because they likely intend to increase their prices when they no longer have to compete with your company.
Documenting your concerns and taking a business with questionable practices to court may be the only way to stop them from attacking your company unfairly.