Stepping Out

Niche Hunt

In the world of entrepreneurship, outsource contractors start with some enviable advantages--usually they're already experts in their fields, the start-up costs are minimal, and they often have established contacts with companies that need their services. But even that head start doesn't guarantee success. Just because you're an information technology whiz or a star accountant from a Big Six firm doesn't mean you know how to market yourself, how to price your services or even how to define your target market.

The potential outsourcing market is enormous, but taking a shotgun approach and spraying the market haphazardly won't produce results. "You need to define your target market within that huge market," says Jennings.

Take Ramos and his partners at ROWE, for instance. They've homed in on the relatively narrow oil and gas industry for their financial services. By doing so, they've gained clout as experts within that field.

Once outsourcers have contacted a company looking for their services, they bid on the proposed project. This can prove tricky. Bidding often presents a hurdle for outsource contractors whose businesses are still in the infancy stage. Knowing how much to charge can be baffling, and quoting the wrong price can kill a business before it gets off the ground--bid too high, and you risk losing the client; bid too low, and you wind up losing money on the deal.

"The biggest mistake you can make is underpricing your service," says Jim McCalla. "In the beginning, you want the business so badly, you tend to underprice."

Determining the right price for your service may take some trial and error, but you should get a feel for what's an appropriate fee fairly quickly. When pricing, keep your overhead in mind as well as any materials you may need to furnish.

Although it's important to define a specific market for your services, don't turn down work because a portion of the project is beyond your expertise. You can parcel out portions of a job that don't fall within your realm of expertise and still compete for a wide range of projects.

ROWE Energy Services is doing just that. "We've formed alliances with engineers, land managers and lawyers, so if we have a project that is greater than we can handle, we know where to go to get the information we need," says Ramos. "No job is too big for us."

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This article was originally published in the August 1997 print edition of Entrepreneur with the headline: Stepping Out.

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