In most cases, disciples like this are asked to leave the Blood Demon Sect and found Clans in the surrounding areas. Their heirs will then have the chance to enter the Blood Demon Sect.
Generally speaking, even if the Solitary Sword Sect came into the region, they would ignore such people. As a result, the Xiao Clan’s territory had been relatively peaceful in recent years.
However, that peace was mostly because no large Sect had made any attempt to bully them; often there would be friction with surrounding Cultivator Clans.