One of the biggest challenges is I have is convincing a blog owner to link out to other sites. It seems counter intuitive. Why do I want to encourage my readers to leave my site? Why do I want to steer them to a another blog that has more and better information ?Why do I want to help other blogs? Aren’t they my competition?

To really get why it is key to link out you need to grasp why exactly you are blogging. I tell people the reason they have set up a blog , any blog, is BRAND YOURSELF AS AN EXPERT. If you are using your blog to promote your business or online presence . If you have set up to make money. If you are simply sharing your vast knowledge for the good of mankind. You are the centre of your niche news hub and and an expert.
To back up your statements, to have others regard you an expert, to have a healthy and thriving blog you must link out.

1. I would be helping my competition.

#1 reason site owners go ballastic is when I link out from their site to “competition” . It goes against everything we know in marketing to mention competitors. Groundswell has good bog post Should you talk about your competitors? when blogging. Blogging isn’t just about “advertising” how great you are. You need to be a part of the loop. You can’t ignore your competitors if you want to be a part of the loop.

Being an expert or centre of your niche news hub means you are all knowing. Discuss your competitors latest goings on- their successes and failures. Figure out how to use to your advantage. Match them or do better.
Pointing out their successes makes you a part of the “conversation” as well as further branding yourself as the expert. By judging you become judge.
Ignoring your competitors is short sited. Sometimes a competitor does do it better. If you are to be an “expert” in your field then you must show authority all all things within your niche. Give credit where credit is due. Post why you disagree with their idea or concept. Talk about what they did and why it worked. Talk about how you would do it differently or what a you learned from it- or expand on it and take the idea on as your own. You will engage your readers and encourage “conversation” or buzz as well as cement yourself as the expert.

Tips for linking out to your competition- use their company name in anchor text and not choice keywords. If your competition has a big enough online present the company name itself may be a keyword for search engines. i.e. Google would see FTD on a page as a “flower” related term. For the very nervous use “click here” in your anchor text.