From the July 2002 issue of Entrepreneur

Although plenty of entrepreneurs choose to go after opportunities that are easy to spot, you shouldn't overlook the many hidden opportunities that are out there. If you keep an open mind, you just might uncover a gem. That's what brothers Dan and Russell Schlueter, 42 and 43, respectively, did. At a trade show in 1977, the Harvest Ventures founders spotted an opportunity that everyone else passed by and successfully incorporated that product into their business. Now they expect 2002 sales of their Waconia, Minnesota, pet products company to exceed $10 million.

Opportunity Knocks

According to Dan, their business--which at the time sold only one product, a chew bone for dogs--hit a turning point in 1997 after they attended the Backer Show, a pet trade show in Chicago. "We were exhibiting our Harvest Chews [for dogs]," he says. "We walked [around] and saw a man everyone was ignoring. His booth was small, without a lot of fanfare, but he had a great demonstration. He put three or four cups of water in a bowl with just a small amount of pellets, and the pellets absorbed everything. The demonstration was extraordinary."

When the Schlueters stopped and talked to the demonstrator, they discovered the "miracle" pellets, intended for use as kitty litter, were made of silica sand, a very strong absorbent. From the start, the brothers felt the pellets would offer a significant benefit to users: 4 pounds of silica sand lasted as long as 28 pounds of traditional kitty litter. Says Dan, "[We] look for products that are different and that can be demonstrated." Convinced they had a winning innovation on their hands, Dan and Russell set out to strike a deal with the largest silica gel manufacturer in China so they could add the pellets to their product line.

As it turned out, the Schlueters were right in a big way. The litter pellets they now sell--called Ultra Pearls in grocery stores and mass merchandisers and Crystal Clear Litter Pearls at pet retailers--have gathered numerous awards, including the 1999 Outstanding Technology Achievement Award from Petsmart and the 1999 Editors' Choice Award from Cat Fancy magazine.

Thinking Outside the Box

But this kind of success can't be achieved without a lot of hard work. Following the trade show, the brothers talked with industry experts to make sure others agreed this innovative product had real potential. Next, they gave out free samples to people with cats. After receiving positive feedback, the brothers felt they had the foundation needed to move forward.

But would price-conscious consumers really pay $14 to $16 for a 4-pound bag of Crystal Pearls, when a 14-pound bag of a competing brand cost only $6 to $7? The Schlueters thought so. The price difference wasn't really all that significant when you consider that a 4-pound bag of Crystal Pearls lasts 30 days--as long as two 14--pound bags from the competition.

At this point, the Schlueters had a competitive price and a great product demonstration. In 1998, they hit the pet trade show circuit again. By 1999, they were able to land not only the big pet retailers, but also dozens of distributors that served independent pet retailers.

By this time, grocery stores also were starting to show interest at trade shows, and in 2000, the brothers were able to introduce Ultra Pearls in grocery stores and mass merchandisers nationwide. Grocery stores are often difficult for entrepreneurs to sell to, because they're forced to go through food brokers, who aren't interested in supporting small-volume products. But these brothers had a tactic for getting by such resistance. According to Dan, "A major reason for our success in grocery stores was our willingness to offer them a better margin." In a low-margin business like grocery stores, every extra percentage point makes a big difference.

LET ME THINK
If you've stumbled upon a great idea for a new product but you're not sure which features would make for a better mousetrap, check out www.creativitycentral.com. The site belongs to Maria and Charlie Girsch, authors of Fanning the Creative Spirit: Two Toy Inventors Simplify Creativity (Creativity Central). Log on for "stretcher sizer exercises" that aim to help you think in new ways. The site also lists some of the top books written on the topic of creativity.

If your employees need to get their creative juices flowing, check out Aerobics of the Mind, a series of game and puzzle cards for use in groups.

Steps to Success

You can spot new opportunities with a strong chance for success by following these criteria:

1. The product has a big difference people will notice. With so many thousands of products on the market today, you won't succeed without a big enough advantage to make people stop and take notice. In the case of Crystal Pearls, the product had two features customers observed immediately: First, it came in a much smaller, more convenient bag--4 pounds vs. a 14-pound bag of traditional kitty litter. Second, Crystal Pearls clearly absorbed all fluids, while competitive products simply turned the liquid into little clumps.

2. It has a strong selling point that will entice the distribution channel to carry your product. If you can't get the distributor to carry your product, it won't matter if consumers like it or not because they'll never even get the chance to see it. Because a distribution channel may only carry 10 to 25 percent of the products available to it, getting distributor support requires that you have at least one strong selling point. The Schlueters had two advantages: First, the smaller bag that's attractive to customers is also attractive to retailers because it allows them to produce more sales per amount of shelf space than the competition; and second, the Schlueters were able to offer a better margin. One of the biggest mistakes inventors make is to believe distributors will carry their product for less margin because their product is new. Actually, the opposite is true: Distributors want more margin from a new product.

3. Pricing should be comparable to competing products. In the case of Crystal Pearls, a month's supply cost about the same as a month's supply of a competitor's product. Fact is, consumers are more likely to take a chance on a new product if it's close in price to existing products. Most consumers have been burned dozens of times on the supposed benefits of a new product, so they approach new product claims with a great deal of skepticism. A high price is all they need to decide not to buy.

The Schlueters clearly have an entrepreneurial bent. In addition to Harvest Ventures, they run two other businesses: Sourcing Solutions, which helps companies locate international sources for their products, and RDS Associates, which creates engineering solutions and custom parts for the motorcycle industry. But an entrepreneurial spirit only works when you sell products or services that people value. To attain business success, keep your eyes open for opportunities, follow the guidelines for a saleable new product, and move fast before someone else discovers your "golden goose."

PATENT LEARNER
The Federal Consumer Information Center Web site is loaded with helpful, easy-to-understand articles about patents for new inventors. Topics range from the Document Disclosure Program, which inventors can use to establish a record of their invention for just $20, to how to submit an appeal to the Board of Patent Appeals and Interferences when your patent application has been denied. Another great source of information is the U.S. Department of Commerce's pamphlet Patents and How to Get One: A Practical Handbook ($3.95). To order a copy, log on to www.uspto.gov.

Don Debelak is a new-business marketing consultant and author of Think Big: Make Millions From Your Ideas.

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