Keep your friends close, but your competition closer

I had an economics professor tell me this story once. I have no idea if it's completely accurate or taken from a book, but years later I still find it interesting.

McDonald's has a pretty successful track record. Rarely do you see a McDonald's location go out of business. When McDonald's is considering opening up a new location, they spend thousands of dollars and commission a study to look at factors such as:

• How far away is the closest McDonald's?
• What's the average income of the surrounding neighborhood?
• Is it a commercial or residential area?
• How much would the real estate cost?
• How much traffic does the road get? At what times of the day?
• What speed are the cars going?

Here's what Wendy's does:

• Open franchises next to McDonald's.

If the area can support a McDonalds, in all likelihood a Wendy's will thrive there too. And now they've saved all that time and effort researching locations. Take a look around in your town and as you travel. They are often in very close proximity.

So how does this apply online? Don't turn a blind eye to your competition. Learn from their successes and failures. Subscribe to their e-newsletters or RSS feeds. Use tools like Alexa and Google News Alerts to keep track of what they are doing. But also collaborate with them when it makes sense. After all, there's probably room on your street corner for both Big Macs and Frostys.