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.
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.
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