If you have a business in an expanding market like many of the cities in Southern California, or Phoenix, or Dallas -- a major concern has to be protecting your business as new competitors arrive. This can be especially frustrating if youve been there awhile. Maybe going all the way back to when it was just you and one or two other competitors.

Too frequently business owners unknowingly change their focus. They see a new guy come to town and they immediately think about how they can keep him from becoming successful. While a second location may have been on their mind, now that they see a competitor opening up, they panic and rush to get an expansion going. Many times this leads to selecting a poor location or moving ahead with less than sufficient resources (capital and people.)

The owner may have a fine, growing business with profitable sales handled by skilled, well-trained employees. But fear sets in. He or she worries that this new operator may take all their business, their employees and leave them right were they were when they first started out.

While it is definitely possible that number one in town may have gotten a little complacent, a bit out of touch with his customers, or maybe even overly cautious in taking on new products or other revenue generators and as a result -- the fear is justified. In that case the heir to the throne provide a much needed wake-up call.

Assume for the moment that is not the situation. The older, established business owner has been doing all the right things. He has been working his business plan. Thats right the continually updated plan he began with, which he has routinely changed to reflect what he learned from his visits to the trade shows and his associations meetings. The projections have been updated and the assumptions on which the new revenue numbers were based were constantly reviewed for accuracy. Changes were made when appropriate.

With this document he has always had a plan for the future. A new competitor just needs to be reflected in the assumptions.

The point here is that if the market is growing around you, trying to keep the same percentage of the market may be a bad idea.

I suggest that focusing on maintaining and increasing profit margins should be the priority, not chasing sales. Revisit costs and processes, upgrade equipment, spruce up and clean up to put a fresh face on the business.

We have lots of examples to observe. The successful fast-food operators keep their focus. McDonalds strayed a bit when it went all-out to increase the number of its locations (and keep in mind, its really in the real estate ownership business.) They soon woke up to the fact that sales were off and poor products and service were to blame. Burger King says nah to counting calories and comes out with an even bigger Whopper.

The auto industry provides another example. The Big Three (now the Smaller Two and a division of Mercedes) focused on market share and forgot about growing profits and controlling costs. Now Toyota which never took its eye off customer and the bottom line, has to be concerned that its ever-increasing share of the market (which happened because it managed every aspect of its business so well) brings more and more concern over its dominance of this industry. How long will it be before we hear cries of, Break up the Yankees - err Toyota?

But for most of us the best thing we can do to protect our business in a growing market is to focus on maintaining our profits and making the pie bigger rather than trying to take a bigger piece.

Restaurateurs can begin a catering operation or open an espresso bar with great baked goods. They can expand their businesses by getting more production out of the same kitchen and selling more to their same customers. If you sell and service boats and outboard motors, then start selling and servicing snowmobiles or ATVs. If your game is providing mortgages for homes, start lending money to businesses for new equipment.

To bring in different revenue sources, you may need to invest in another person or two, or buy some additional equipment, but you wont have to set up and capitalize another entire operation in a new area where you will have to attract all new customers.

Competition need not be feared. Many times it can make you better, and when they begin advertising and promoting their business they just may bring more customers into the market who will want to sample your products and services.

Take a hint from the legal business; when theres only one lawyer in town, he starves to death, but when there are two, they both become rich.