If you are the type of Freelancer/business owner who believes that a primary business goal is to annihilate and destroy your competition, then you’re likely destined to become a less successful entrepreneur. Research can now demonstrate the wisdom of the adage, “keep your friends close and your enemies closer.”
A 2004 study conducted by James Westphal, professor of management at University of Texas/Austin, examined CEO friendships in 293 U.S. companies and found that regardless of the intensity of competition within a given industry, rival CEOs who formed friendships enjoyed distinct business-related advantages over those who shunned competitors.
According to Westphal, not only is it possible to make friends with competitors, it’s advisable. He explained the advantages of friendships among rivals this way: when business owners get together, what do we do? Talk shop. We compare notes, discuss what’s new in the industry, talk about the economy and how it’s impacting customer behavior.
In other words, by going to trade industry conferences and meeting, greeting and getting to know rival Freelancers, you’ll obtain information and get exposure to perspectives that can help make you more successful. So think about following a bit of counter-intuitive advice and realize that business is not always a zero-sum game. A competitor’s win does not automatically mean your loss.
If getting chummy with the competition makes you feel a little queasy, then get friendly with a competitor based in another locale. The distance will create a boundary that could make it comfortable for the two of you to trade ideas about cheap and savvy advertising options, how to make your clients happy, or how to take advantage of, or protect yourself from, market trends.
In some instances, you may decide to collaborate with a competitor. It’s potentially risky, but forging a strategic collaboration with one of your competitors can benefit the bottom line and help both entities to thrive. It can be a smart expansion or survival strategy for Freelancers and other small business owners who are trying to remain viable. Maybe there is a partnership you can set up with the right semi-rival? It’s called coopetition.
Get to know a fellow Freelancer who works in your own, or a related, field. It’s preferable if each of you has discrete strengths, with limited potential for overlap. Meet for coffee and broach the subject of joining forces to make money. How can you combine your strengths and approach clients with an innovative and more desirable package? There’s nothing better than giving clients more reasons to do business with you.
Collaborations can work in a number of ways. Just a couple of months ago, a lady named Julie presented me with an idea where we can add-on or up-sell certain of each others’ services. There is potentially a complementary need in a market segment that we share and Julie wondered if some selective cross-promotion would be beneficial. Together, we’re hoping to gain entry to clients where separately neither could get in the door.
Another form of coopetition is establishing a referral relationship with a near-rival. Accountants and bookkeepers have done this forever, with much success. Their functions have similarities, but each party knows and respects the boundaries and knows how to work together.
Nevertheless, do not be naive. Take precautions and clearly define boundaries and expectations. Watch your back and work only with someone you know to be trustworthy. Also, do not underestimate the potential for difficulties in establishing and sustaining a coopetition arrangement. Assumptions about appropriate customer service or corporate culture can derail your best intentions. Careful planning and execution are crucial if coopetition is to work smoothly. In close collaborations, a written non-disclosure, non-compete agreement will be essential.
Finally, remember where friendship ends and business begins. There will be sensitive issues that are best kept to yourself, like new business initiatives or the “secret sauce” of how you deliver your unique services. Keep your antennae raised as you and a worthy competitor mull over ways to share resources or expertise and boost profits in the process.
Thanks for reading,