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By Janice Brand


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You might be friendly with some of your competitors, but you've still got to keep tabs on them. Business is business.

You know they're out there.

You see their brochures on your new client's desk; you smile politely at them over watery cocktails at networking parties. In your mind, you can hear them tapping away at their laptops while you've shut down for the night. Fact is, they're probably sending emails and making phone calls to your clients right now. They're the competition -- and you've got to keep up with them.

This means knowing what they're up to, what they're charging, who they're getting work from and how. You might even be friendly with some of your competitors, but you've still got to keep tabs on them. Business is business.

When Bob Steiner, a restaurant consultant based in Amagansett, N.Y., launched Out East Restaurant Consultants a year ago, he was prepared to face off with some big companies. Steiner planned to address the same kind of restaurant management issues that established corporate competitors had been tackling for years -- hiring, inventory, cost control, and marketing. In order to compete with them, Steiner knew that Out East would have to outperform its competitors in some key areas. To this end, he sought to identify their weaknesses.

"When I did my research, I posed as a potential client," Steiner says. "I put all my information together as though I were a customer. At my biggest competitor's Web site, I left an email -- no one got back to me. I called and they told me I had to come to their office in Philadelphia to talk."

Diagnosis: poor customer service.

"Now someone there could have been having a bad day," says Steiner, "I don't know. But these are the things I thought about when I started consulting." Consequently, Steiner has made it his policy to get back to callers as soon as possible. When it comes to customer service, "time is of the essence," he says.

A key part of Steiner's research was finding out what his competitors were charging. He discovered that one charged $500 for the first hour and $300 for every hour thereafter. Steiner couldn't believe it. "If someone's almost bankrupt, how can they afford that?" he says. Yet further research showed that nearly all the competitors' rates were as high. Accordingly, Steiner found he could lure clients by charging half the competitors' rate, and still make a good profit.

Because Steiner's tool of choice for researching competitors was the Internet, he became familiar with his competitors' Web sites -- and learned from their shortcomings. He deemed his biggest competitor's site "too busy." "If you go to their site and look at it," he says, "it would take you ten minutes to figure out that they're consultants." By contrast, Steiner made sure that his own site was clean and unambiguous: "Out East: Restaurant Consultants."











Other than clients, Smith has relied on "people who offer different services to the same client base" for information that has helped her to stay ahead of her competitors.








Is it Legal?

Keeping tabs on the competition is a slippery slope, so watch where you step. You don't want to land yourself in court on charges of industrial espionage or theft of trade secrets. If you're worried that you've broken the law in your attempt to monitor your competitors, you should either keep it to yourself or consult an attorney. A less expensive option would be to check out the Web site of R. Mark Halligan, a Chicago lawyer who specializes in trade secret law. (If you're having trouble sleeping, the case studies you'll find here may cure you.) You might also look through FreeAdvice.com, which offers a lot of handy legal advice. Look under "Intellectual Property," then click on "Trade Secrets."



Sharon Smith of Peterborough, N.H., helps small and medium-sized businesses to develop and document their growth models. She thinks milking competitors for information about themselves is a futile proposition, so she usually doesn't bother to try. "You'd think that the best source of competitive information would be your competitors," Smith says, "but since [they are competitors], they may not be real eager to share the kinds of things you need to know."

Smith finds that clients, on the other hand, are a more accessible source of competitive information. A book packager wanted Smith to quote a single, bottom-line fee before awarding her a project. The client volunteered that other consultants she'd used had arrived at their fee by adding their hourly rate to expenses incurred and then marking up the total by a certain percentage. "She wasn't telling me the amount I could charge, but [rather] a variety of approaches that would be acceptable to her," says Smith.

Other than clients, Smith has relied on bankers -- "people who offer different services to the same client base" -- for information that has helped her to stay ahead of her competitors.

"For example, I talked last week with a banker who suggested that I target CPAs because he thinks a lot of people turn to their CPA when they need to come up with business plans. And while the CPAs might be willing to handle that kind of thing when business is slow, they're more likely to want to off-load it if the request comes during tax season. In other words, out of the range of business planning and analysis services I'm offering, the banker was telling me that he thinks one of the strongest markets is for help in writing business plans." In short, the banker pointed out to Smith that a need wasn't being met -- by her or by her competitors -- and hence suggested how she could grow her own business.

Despite her reservations, Smith has found at least one type of competitor to be forthcoming with valuable information -- former ones. "I've also gotten great tips from someone who was leaving the consulting business to take a full-time job," says Smith.

Mind Games: Don't Think of Them as Competitors

Unlike Smith and Steiner, graphic designer Joanna Ralston avoids naked competition altogether. She divides other graphic designers into two camps -- friends and foes. Three years ago, when she began her freelance career in Vermont, "I got to find out who was more of the 'spy' group and who was more of the 'yes, I can see you're a professional' group," she says. "[The latter] are the people I prefer to work with."

By relying on the friendly folks and ignoring the foes, Ralston transforms would-be competitors into colleagues. When she first went into business for herself, she identified the other designers who shared her collegial business attitude by calling them and asking for a chance to meet.

"I didn't start out saying, 'Got any work?'" she says. "I said, 'Hey, here's who I am.' I just wanted to meet other graphic designers, not really to pump them for information. There were a lot of people whose work I respected, and I wanted to meet them. If that led to any work, that would be great -- [but] I don't like to spy, because it comes back at you." In this way, Ralston established herself both as an open, non-threatening newcomer and, eventually, as part of a group that provides its members with the type of competitive information that other independent professionals have to get by more stealthy means.

By her own admission, of course, Ralston's anti-competitive attitude has cost her some jobs. "I had an interesting situation where I applied for a job doing printed material for one of the local colleges," she says. "A friend of mine asked me if I'd mind if she applied for the same job. I don't worry about these situations, I figure the best person is going to get the job anyway. She ended up getting the job. The way I look at it, there's plenty of work to go around. It just meant there was another job for me down the line, and there was."

Essentially, Ralston prefers to be part of a trusting and diverse freelance graphic design community rather than part of a paranoid one. "We all do so many different things that there isn't a lot of competition," she says. "What there is is a free exchange of information. We'll ask each other: 'Did you ever run across this situation, and if so, what did you do?' We've shared billing information and tax questions. I can't imagine doing it any other way."

Independent professionals deal with the competitive aspects of business in different ways. Some find excitement and economic advantage in knowing as much as they can about their business rivals, by whatever means available; others prefer to reserve their time and energy for the work of their trade itself. In the end, however, whether you view your competitors as villains or colleagues, you're still in competition with them. Business is business.

January 3, 2000
Primary Editor: Eric Gershon
Illustrator: Lawrence San
Production: Keith Gendel

We'd love to hear your comments about this article!

Janice Brand is a freelance writer who lives in Charlestown, MA. If you like, we'd be happy to put you in touch with her, or with any of the other IPs named in this article.


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