10 Tips on How to Research Your Competition

Darren Dahl

Keeping tabs on your competition is a great strategy for growing your business. Follow these tips, from fellow small business owners, on which tools are best and how to get started.

Competitors. Whether you want to admit it or not, they're out there and they're hungry for your customers. While it might seem unfair given everything else you need to keep on top of in building up your business, you might want to consider devoting the time and energy into keeping tabs on your competition. "By monitoring competitors on an on-going basis you get to know their behavior and so can start to anticipate what they will be likely to do next," says Arthur Weiss, managing director of UK-based Aware, which helps businesses gain competitive intelligence. "You can then plan your own strategies so that you keep your customers and win (not steal) customers away from competitors." In other words, keeping tabs on your competition is a great strategy for growing your business.

The good news is that while hiring someone like Weiss can save you or your employees from spending the time to conduct research on your competitors, you can also employ several techniques to get the job done virtually for free. Here are 10 tips from entrepreneurs and small business owners on how you can start gathering information on your competitors.

1. Go beyond a google search. There's no doubt that any research project these days should begin with a simple Google search or visiting your competitor's web page. But there are also a variety of tools either supplied by Google or that relate to Google's search results and AdWords campaigns that might give you interesting insights into your competition. For example, Sheel Mohnot of FeeFighters, a comparison shopping website for credit card processing, says he uses the following tools to keep an eye on his competition:

• SpyFu: "A great resource to research what keywords and Adwords our competitors are buying," says Mohnot.
• Google Trends: For Mohnot, it's helpful when he wants "to stay on top of the latest in [his] industry, comparing [his company] to others, and seeing where people who come to [his] site go."
• Google Alerts: "We keep alerts for ourselves but also for all of our competitors to know what they are up to," says Mohnot. (P.S. Don't forget to set up an alert on your own company to see if anyone else is talking about you.)

2. Do some reporting. There are great and inexpensive resources for checking up on your competitors online and offline. "I recommend routinely tracking what the industry analyst firms like Gartner are reporting about your industry, as well as trade associations and advocacy groups," says Becky Sheetz-Runkle, author of Sun Tzu for Women: The Art of War for Winning in Business. "These organizations are doing research and studies that evaluate the people who are and should be your competitors. What are they telling you about where the industry is trending? Where are the unmet market needs that you can fill?"

Other resources you can use to dig up information on your competitors include: Alexa, Compete, Keyword Spy, Hoovers, and ReferenceUSA.

3. Tap the social network. Of course, given how companies are increasingly using social networking sites like Facebook, LinkedIn, and Twitter as marketing outlets these days, you might be able to pick up interesting facts about your competition—and maybe even your own company—just by tuning in. "We find that monitoring tweets, Facebook posts, blogs, and other new media mentions of our competition is an easy, cost-effective way to stay in tune with and in the know about the public's sentiment about our competitors," says Michael Meschures, the president of Spaphile.com, a weekly deals site that shares high-end spa and beauty offers. "In a similar vein, we track our competition by keeping a very close eye on review sites, such as Yelp and Citysearch. We scour through reviews to find mentions of our competitors' deals, and then target that particular Yelper or Citysearcher's other favorite businesses so we're always one step ahead of the competition." Even if your competition isn't social media savvy, it's a good bet that they produce newsletters—either e-mail or print varieties—that you can sign up for to get the latest and greatest news and updates on things like new products or services they are introducing and what events they might be attending.

4. Ask your customers. When it comes to identifying sources of information about your competition, don't skip over the obvious ones—like your customers. "Speaking to customers is one of the best (and cheapest) ways of gathering real information on competitors," says Weiss. "Whenever you win a new customer, find out who they used before, and why they switched to you (i.e. The reason they were dissatisfied with their previous supplier). Do the same when you lose a customer—identify what they preferred about your competitor. If you gather enough of these stories you'll get a very clear idea on what competitors are offering that customers view as preferable. You can then adjust your own offering to beat that of the competitor."

5. Attend a conference. Attending industry trade shows and conferences—as well as joining industry associations—can be a great way to learn about who your competitors are and what they're offering, says Amy Lewandowski, who heads up marketing at online retailer, PepWear. "We attend these conventions anyway so we make sure to visit competitors' booths while we are there and observe their interactions with customers, pick up literature, and check out the quality of their products," she says. "I am always shocked that most of them never visit our booth."

6. Check in with your suppliers. If you work in an industry where you share the same suppliers as your competitors, it could pay to ask them some simple questions. "Talk to your suppliers and spend time getting to know them," says Zach Berning, co-owner of Overland Gourmet. "While they may not tell you what your competition ordered or their volume, ask better questions." For example, if you ask them how many units of a certain product have been pre-ordered for the next month, you might find out not only what your competition might have ordered, but what other products your supplier might be bringing in as a result.

7. Hire your competition… Another strategy is to hire employees from competing firms—especially sales people—and team up with competitors' partners, suggests Sheetz-Runkle. "No one knows more about the inside of those organizations than the employees," she says. "Find out all that you can about how these companies operate, and more importantly, what's on the horizon for them? Where are they taking their business? What markets are they venturing into? How are they leveraging innovation to cut costs and advance productivity? Where is the highest level of dissatisfaction with their products or services? No one has more and better intelligence when it comes to sales than disgruntled sales people."

8. ...And watch who they're hiring. You can also learn something by studying the kinds of jobs your competitors are looking to fill, says David B. Wright, the chief marketing officer at W3 Group in Atlanta. "For example, if a company is hiring a programmer, they will include information about exactly what technologies the candidates need to know, which tells you what they use," he says. "Also look at what positions they are hiring—if they're looking for a patent attorney, they could be working on some big new inventions. If they're hiring for several HR, they may be preparing to expand overall."

9. Conduct a survey. If you're interested in getting a comprehensive report of all the players in your industry, you might consider conducting a survey. "A year or so ago, I hired someone to e-mail several of our competitors and ask them the same questions about their services," says Jeff Huckaby, CEO of RackAid, an IT management business in Jacksonville, Florida. "We looked at price, response time, how the sales request was handled, etc. By doing this, we learned how to clearly differentiate our sales process from that of our competition." While Huckaby says he learned a lot from the process and plans on doing it again, he does have one caveat: "I am a big fan of outsourcing this. You don't want to run into someone you were spying on at an industry conference."

10. Call 'em up! Once you have done enough research to identify who your competitors are, you might want to try an old school tactic to take it from there: Just call them up and ask away. "One of the best ways to research competition is to call them and ask whatever you'd like," says Jordan Harbinger, the co-founder of The Art of Charm. "You'd be surprised how often companies will tell you everything you'd like to learn over the phone, especially if the question is phrased in a context that makes sense. For example, if you want to know how many people work there, you can say: 'I'm looking for individualized attention, and my fear is that your organization is too large, and I'll get lost in the shuffle. How many coaches do you have on staff? Oh, wow, that's quite a few. How much support staff do you need for a team that size?' This approach has served me very well."

4 Essential Way to Attract Investors

Doug Collom

(Editor’s note: Doug Collom is vice dean and an adjunct lecturer on venture capital and entrepreneurship for Wharton San Francisco. He submitted this story to VentureBeat.)

There really isn’t a one-size-fits-all formula that can be followed for optimizing the chances of attracting professional investment. Each company is different and faces challenges and issues that can be overcome only through creativity, perseverance and resolve.
There are, however, some elements that are so basic they cannot be ignored. Most institutional venture investors either expressly or intuitively address these requirements whenever they evaluate a business plan for a potential investment. Here are four to be especially aware of.

Is it a company or is it a product? – With the dramatic level of innovation that’s taking place through startups in the social media/Web 2.0/online business arena, this question is increasingly important. Implicitly, investors want to know the product development – something that can go in a variety of directions. For example, can the product be developed to include additional features and functionality that will effectively redefine the offering in the eyes of the customer? Can the product be adapted to address the needs of more than a single vertical market? Is the product so compelling that the emphasis in the business plan shifts to the customer acquisition strategy?

The mobile application market is a good example of a product category that, in general, doesn’t offer a sufficient foundation to support a company. Individual app developers typically don’t require much capital or labor to be successful, and they don’t require professional investors. In contrast, there are online gaming companies—Zynga, Playdom, Social Gaming Network and others—whose product roadmaps concentrate entirely on the rapid development and production of new “hits”. Businesses like this require all the resources and disciplines of a full-fledged company to support their growth objectives.

How big does the market have to be to attract investment? – After the dot-com bust, the anecdotal answer to this question was $1 billion - or at least an annual growth rate that would get you close to $1 billion quickly.

In 2011, there is far more latitude, depending on the business plan of the company. With the advent of open source software, online development tools, cloud computing, and the ability to reach massive customer markets instantly through the Internet, startup companies have become much more efficient in product development and customer acquisition, and can more rapidly get to proof of concept and positive cash flow than ever before.

As a result, companies with online business models, for example, may not require nearly as much capital as they once did. Moreover, angel groups aren’t swinging for the fences the way the mainstream institutional VC firms do. Instead, (to continue the metaphor) they’re frequently only looking to hit singles and doubles, and may be quite content to realize exits in the range of $10-$100 million.

Is prior management-level experience required? – Obviously, it doesn’t hurt. In particularly tough times, prior executive experience in managing a VC-backed startup may be a non-waivable requisite. Management experience of any kind is always a positive factor, since it directly relates to the credibility of the management team in the eyes of the investor.

Obviously, there are many amazing startup companies that have been built by founders with no previous experience, and lacking this experience should not deter an entrepreneur who believes he or she can build a great company. There are effective ways to work around the experience issue if it is an impediment to getting an invitation to present before a VC firm. Teaming up with a co-founder who does bring the necessary experience, finding a mentor who carries personal credibility, or organizing a board of advisors with relevant experience and expertise are all ways of addressing the issue.

Do you need to have customers or even first revenue? – There is a lot of dialogue around the need to “bootstrap” early stage companies to the point where a product has been developed and commercially released. This is particularly true of social media, gaming and other online business companies. In seeking to access professional capital, it comes down to supply and demand. Professional investors will look to tangible indicators of success and validation of the business model in evaluating a company’s prospects.

These might include website traffic, conversion rates, your ability to launch a beta and more. Without anything but an idea to show, very few companies get funded to any meaningful degree.

For more traditional “brick and mortar” companies, the ability to get to “proof of concept” through bootstrapping methods is much more difficult. It is also likely that the amount of all-in professional capital necessary to support a company in this category to an acceptable exit—including the amount of so-called “seed stage” funding—is substantially higher than for a social media or gaming company, for example. As a result, there may be a lower expectation that founders will be able to bootstrap to get to professional funding, but the emphasis will be commensurately higher on the other investment basics, including size of the market, likely market impact of the technology, barriers to entry, credibility of the management team and the like. As a result, the bar to funding for companies in this category is fundamentally as high.