For example, if you're in the restaurant business, there are plenty of places your customers can go to find a meal. Just sit on a bench at the mall for about 30 minutes and people-watch. It doesn't take a rocket scientist to figure out that very few people are missing any meals.
There's also a good chance that one or more of your competitors is a much larger, corporate-based business benefiting from economies of scale that translate to lower prices, and maybe even more services. This is the plight faced by small hardware stores forced to compete with the Home Depots and Lowe's of the world.
This is why a small business must differentiate itself. And one very strong and attainable differentiation factor is customer service. But as easy as it may be to achieve, it ain't gonna happen on its own.