Last week, I wrote about comparing your site design with the designs of other, more established sites within your category.
This week, I’m writing about comparing your business model in the same kind of way. With a couple of caveats.
What exactly is a business model? It’s what you do, how you do it, and how it makes money.
Comparing business models is a little more complicated that comparing homepage designs, but well worth the trouble.
If you think about it, business models have never been so transparent as they are online. You can learn a huge amount about your competitors’ businesses just by studying their sites in detail.
Read their privacy policies. Read their “What we do” or “First-time visitor” text. Check out their affiliate programs if they have them. See where and how they advertise. See who is behind the company. Find out who their investors are. Look through their customer service policies. Read their FAQs. When you’ve finished looking through their sites in detail, start doing searches for articles written about the company.
Just by studying a competitor’s site and using your favorite search engine, you can learn a huge amount about their business model. Probably much more than they’d like you to know.
That’s why there are so many “Non-Disclosure Agreements” flying around. Site owners know how vulnerable their businesses are to someone else executing the same idea – and maybe doing it a little better.
If you have a small online business, spend some time analyzing your close competitors. You’ll learn a lot about them – and about the competitive strengths and weaknesses of your own model in that space.
But here are those caveats I promised.
First, don’t imagine that your competitors are all stupid. They’re not.
Once you have invested your heart, soul, and savings into your own model and business, it can be tempting to believe that you’re the only one that “gets it.” You’re the only one who sees the future clearly. Everyone else is deluded, mistaken, foolish, and dumb.
If you find yourself thinking this way, slap yourself. Because you’ll almost certainly be making a mistake. The others in your space are not all stupid. You can learn things from them. There are some areas in which their thinking will be stronger than yours. And vice versa.
By the same token, don’t make the exact opposite mistake.
While some entrepreneurs will be overconfident and figure everyone else is dumber than they are, other entrepreneurs will take the opposite tack and assume that everyone else is smarter.
There’s a real danger here as well. If you figure that everyone else is smarter and more experienced than you, you’ll doubt every aspect of your own business model and plan.
And self-doubt can be an entrepreneur’s worst enemy.
The trick to getting the best from this model comparison exercise is to be brutally objective about it.
But maybe you’re the kind of person who would say, “Hey, Nick, the way I succeed as an entrepreneur is by being an egotistical S.O.B. who believes that I always know best.”
Well, there’s something in that – self-delusion can be a powerful business tool.
But if this is the case, you’re probably better off having someone else do the comparison. Ask a colleague whose opinions you respect – or outsource the job to an outsider.
But however you choose to get the job done, do it.
What’s to lose?