Would You Compete with a Friend’s Business?

We live in a highly competitive world, as one would expect as a result of some of our capitalistic values. “Let the best business win” is often the unspoken motto by which we live. Anyone who has taken a basic economics course knows that for the most part, competition is good for the consumer. It protects them from overpaying, as what often happens in a monopoly. I respect this unwritten rule for the most part. I don’t want to pay $20 for a hamburger at a local restaurant. While I don’t consider myself a businessman, the truth is that I have become one in many ways. I manage a blog, but I also earn a few extra bucks doing so. I also do a few odd-jobs online that earns me a little extra income.

While I have come to embrace capitalism and the ongoing competition of businesses, this is not to be confused with the ends justifies the means. There are many practices that businesses take that I am not okay with. While many of them are often difficult to detect in corporate america (unfair wages, sweat factories, unnatural chemicals in food, etc.), I have personally experienced one that I personally would deem a “malpractice” and figured there was no one better if I am over-reacting to ask than my readers. Before I ask your opinion, let me fill in you in on the details without naming names.


Is It Okay to Compete with Your Friend’s Business?

While I don’t have any formal training in business, I do have enough practical experience to know when something is just not right. There are many great examples of blurring the lines of ethical business methods, but the one that I want to talk about is this: Using Someone’s Service Only to Compete Directly Months Later.

This one is a personal pet-peeve of mine. Would you ever think of going to a chiropractor to get adjustments to your back, become friends with him by all standards, ask him how much he charges, take a copy of his registration form, learn his system in and out, and then start your own business using the exact same business model in the same market, directly competing with him? I understand the desire to make a living, but there’s a crucial difference between doing your own market research and using your “friend” to do all of the legwork for you.

While this may be perfectly legal, it a huge slap in the face with the person you were supposedly friends with. It’s a great example of when greed overrides the moral compass. Friends don’t directly compete with friends’ business – it’s that simple – or so it seems to me.

This is something that I have always stood by. While I understand the basics of a free market, I also strive to be a person who does not take away business from those who have helped me for years. A great example of this is when I started my own business back in October 2011, almost two years ago. There was one other person who was offering these services in my niche that I knew of and I knew that I didn’t want to directly compete with her. More importantly, I knew that I could offer better services that would blow the competition out of the water, while keeping the price the same. I wanted to make a profit, but I didn’t want to hurt her business – and that’s the truth of it.

To accomplish both (earn some money, while not directly hurt her business), I figured the best way to offer the same service without taking her income was to do the following:

  1. Never take her clients. To contact her clients directly and ask them to try my services would make me the bad guy. I knew this was a line I wasn’t willing to cross. In fact, I turned away people who were her clients and told them I didn’t feel comfortable asking them to switch services (after learning they were her clients).
  2. I accepted slower growth in order to preserve my reputation. I knew that treating others fairly would work in my favor. It did mean less money, but I accepted this.
  3. I did my own market research and offered new features. The last thing I wanted to do was to be seen as copying her. I created a new system for collecting client information, and offered cool features that made the lives of my clients easier. It meant extra work for me, but it was worth it if it meant I would grow my business. It also meant that my business model was almost entirely unique.
  4. I talked to her directly, telling her my honest intentions. I didn’t want to be seen as the bad guy, even to her. Even if I was accepted as just another business trying to seek out honest business, I knew that this was not the niche to make enemies. We never were really close friends, but we respected each other and the other person’s business. We also knew that what we did took a lot of time and there were enough clients for both of us.

After nearly two years, I have had some decent success. I will never make a living off of this service, but enough to eat out once or twice a month. It’s not a lot by any means, but it is something that I take pride in. I take pride in being the go-to guy. After entering the market in what I see as an honest and patient way, it paid off. My competitor got busy with other services and even sent some of her clients my way. I bet you don’t hear that happening in the business world very much. I work to earn the little extra income that it produces – and now I have been slapped in the face by one of my own clients. I guess it was only a matter of time before I had some competition.

How to Deal with Getting Burned

There are many ways to react when you are directly affected by someone you trusted. You can get angry, call that person names, seek revenge, or you can live with it and continue to do what you do so well. I’ve chosen the latter. While part of me is hurt that someone would use my services and then create their own using many of the systems that I personally created, the other part of me understands that they are just trying to make a little extra money. I don’t hate them – but I do wish they went about it a little differently. But, that’s just me. (or is it? Tell me if you think there is anything wrong with using a friend’s ideas to compete with them in the comments below)

Instead of seeking some sort of revenge, I know that I have the upper hand. I’ve been in this business for nearly two years and I don’t plan on going anywhere. I know what works and what doesn’t, and I have a few more ideas that I can implement to make things that much better. I’m not going to let a little competition stop me from offering a valuable service to my clients.

Readers, I really do want to hear your opinion. This post was not meant to be pointing the finger, but to initiate a conversation on the topic at hand, so let me know what you think.

11 Responses to Would You Compete with a Friend’s Business?

  1. krantcents says:

    I don’t have a problem with someone copying my business, but they do not have to take my customers. It is a choice to open your business in the same area to directly compete with me. I would look at that as a betrayal.

    • Corey says:

      Yeah, I guess this other person, in fairness, is not trying to steal my customers at all. I didn’t mean to suggest that. Thanks for the comment kc.

  2. Copying someone’s business model, while it may suck for the individual business owner, is actually good for the market as a whole.

    If you are running your business inefficiently and someone else can do it faster and cheaper, then it makes sense for that person to start the business and take as many of your clients as possible. However, if they have an inferior product and/or a higher price, you have nothing to worry about.

    If you are the best at what you do, competition doesn’t really matter. If you aren’t the best at what you do, it’s only a matter of time before someone does it better and puts you out of business.

    With all that being said, I love your service and am thinking about starting it up again with my new site! 🙂

    • Corey says:

      Spoken like a true entrepreneur… Thanks for the feedback. I definitely understand where you’re coming from.

  3. Mr. Utopia says:

    Here’s an idea/suggestion: Can you reach out to this “friend” who has wronged you to somehow combine/collaborate together? You obviously didn’t provide specific details, so I don’t know if that’s possible or if you are even willing to try. However, maybe by working together you can create synergy and make your original business all the better (while giving this other person some of the pie)? That way you don’t have to compete and the hard feelings maybe go away.

    • Corey says:

      Thanks for the constructive feedback Mr. Utopia. I’m not sure that is best, but who knows. The problem is there isn’t much of a pie to go around in the first place. We’ll see how it plays out.

  4. Crystal says:

    I completely agree. I had some of my own clients decide to start their own blog ad business after seeing or asking how I operate. Their key was to charge less commission than I do. But none of those people seem to offer the full services that I do (like answering all blog ad inquiry emails…more than 90-95% which turn into nothing), but at least 3-4 of them have seen moderate success by just making a list of participating blogs and offering them out to advertisers. Sometimes at much lower rates than what I know that blog is worth, which I think is a disservice. It’s also annoying as hell.

    But at least I know that my business covers more, I personally will answer any questions I am ever asked, my clients generally receive better overall money or at least the same even after my cut, and I have grown to have more than 400 blog clients while my next largest competitor seems to have around 100. I’ve also simply outlasted a couple of people, but others take their place. I just keep doing what I do.

    • Corey says:

      Yeah, I agree. It’s hard because I don’t have a patent or trademark on the business and I understand everyone’s desire to make money (trust me on this one), but it doesn’t make it easier when it happens to you.

  5. Bummer 🙁 I saw what you are talking about and knew you had originally done the same thing. Personally I would be upset but it is part of business. Hopefully you.can shoe more value than the other person or show a history of success yo differentiate.

    • Corey says:

      Yeah, that’s what I’m hoping too. We’ll see. I may have jumped to some unnecessary conclusions, but it was hard to know how to feel.

  6. Buck Inspire says:

    Yikes. I would feel how you are feeling. Way to not let the bad feelings totally consume you. I had no idea about the extra drama behind the scenes. Sorry you had to go through this. Sadly, money changes a lot of things, even friendship. I would never do that to anyone and actually don’t like to mix business with pleasure to avoid these situations. On the bright side, it does add extra motivation and fuel for you to take your service to another level. After the dust settles, if you are the best, I’m sure the marketplace will respond accordingly.