In business, we are conditioned to outsmart our competitors and think of them as enemies, so can we really turn things around and work with our competitors?

It is self-evident that entrepreneurs and small business owners are the driving force behind the UK’s economy. In London, it is said that SMEs make-up 99.8% of the business ecosystem here and they help London thrive as a global metropolis.

In order for small business owners to create jobs and drive economic growth in London and the UK, they must first thrive and achieve success individually. Most business owners attain that by creating opportunities beyond the limits of local high streets. They may choose to raise their online profile, form partnerships with other like-minded entrepreneurs, join a professional institution to strengthen business connections, to name but a few. Increasingly though, we have seen quite a number of small business owners also look to work with competitors.

Calling it “competitive collaboration” by Harvard Business Review, working with competitors is actually less radical but more beneficial than one would think. In this article, our small business accountants in London will discuss the benefits of working with competitors and methods that you can try.

Why work with your competitors?

Since the dawn of commerce, we have been conditioned to think that business is a zero-sum game and when our competitors and we aim for the same market, a person’s gain will result in another person’s loss.

To a great extent, it is true that global giants do compete fiercely and those who fail to capture any market share stand to lose out. In the UK, the news is also littered with brands that ceased to operate due to keen competition. But competition is not always bad. Competitors keep you on your toes and avoid complacency, they motivate you to explore the differentiators and even encourage you to narrow your focus on a niche market.

Working with competitors, on the other hand, can also yield several unexpected benefits, particularly when you join forces with them to:

• Enter a new market
• Create a new product
• Create economies of scale and cut costs
• Share business knowledge

Most importantly, we strongly believe that people outlive companies and strong business connections outlast competitions. The moment you stop treating your competitors as enemies and start treating them as your partners, you will see areas that you and they can collaborate and thrive.

Entering a new market with your competitors

The changing shopping habits of consumers, from buying products from a brick and mortar store to an online shop, are not new and yet they still catch many traditional small business owners by surprise. It is said that consumers now spend one in every five pounds online and if you have a traditional store, it means you are likely to see 20% less sales but your overhead (business rates, rents and wages) will continue to increase. Needless to say, this is not sustainable and you need to react swiftly.

To capture the online market, small business owners need a functional website with eCommerce capabilities which are not cheap to create and manage. To overcome this challenge, entrepreneurs can choose to pull their digital resources together or work with a competitor who already has an established online presence.

Creating a new product with your competitors

Toyota makes and sells cars worldwide, but that does not stop them from forming alliances with competitors to create new products. So far, they have partnered with Subaru to create the BRZ sports car, as well as BMW on the next-generation Supra.

Creating a complementary business is easier than one would think. We have seen traditional graphic designers work with web designers to combine both online and offline design into a single package, or brewers collaborate to produce a new beverage. If you are willing to try, the sky is the limit.

Creating economies of scale and cutting cost with your competitors

The theory of economies of scale is sound – when you can increase the scale of your operation, the cost per unit of output will decrease. This theory can apply to the full breadth of most business operations.

For small business owners who need to purchase raw materials for instance, it is easy to see cost-saving straight away if you can join forces with your competitors. When you combine your purchase with them, the higher volume of goods means a greater discount for you and your competitors.

Sharing business knowledge

Let’s be clear and say that we are not referring to trade secrets here, rather it is about sharing what works and what doesn’t when it comes to marketing and general business operations. Small business owners can learn a lot from their competitors and vice versa. When knowledge is shared, there is always a chance to solve each other’s problems and create opportunities to collaborate.

How can Berley help small businesses in London

Small businesses in London are important drivers of economic growth and sustainable job creation. At Berley, our small business accountants recognise that and will do whatever we can to help entrepreneurs thrive and make an impact.

One of the things we do to help small business owners is to lessen the workload pertaining to accounts, bookkeeping and payroll. Think of us as your financial controller (but without paying the big bucks), or view us as your sidekick who is always here and ready to assist. With us managing your business finances diligently, providing regular updates, and taking proactive steps to your accounting processes, you can concentrate on running your business and making it a success.

Talk to us today by calling on 020 7636 9094 or via our contact us page. We offer a transparent and honest approach to your accounting needs with no hidden charges.

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• Challenges of entrepreneurship: 8 things to watch out for
• 5 ways to manage rising business costs

This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.