From the February 2004 issue of Entrepreneur

If you walk down the aisles in any grocery store, you're sure to see a dizzying array of products for sale. Not surprisingly, several entrepreneurs feel intimidated by the prospect of bringing something new to market-especially when their main competitors are well-known and financially stable corporations.

But as the Berish family has found, start-ups can still find success in a marketplace dominated by big companies. They didn't let the wave of competition stop them from creating 3 Vodka Distilling Co. in Chicago in 2000. Founded by brothers Brian, 40; and Brett, 34; along with their father, Barry, 70, 3 Vodka was launched to offer a unique take on the same old vodka formulas. "What we saw in the liquor industry [was] that it is a very copycat, 'me too' industry," explains Brian. "If something is hot, then you have everybody else trying to copy exactly what was done."

Determined to succeed, the three entrepreneurs decided that entering the vodka industry would require offering something genuinely distinctive. Their niche product? A type of vodka distilled from soy plants. Because most other vodkas are typically distilled from corn, wheat or potatoes, the Berishes chose to build their brand by promoting its unique soy component.

Initially, restaurant owners and distributors shied away from trying 3 Vodka. But once they heard the product was distilled from soy and could therefore play perfectly into today's "no-carb/low-carb" phenomenon, Brian notes, they were more willing to give it a shot.

This is a key strategy for starting in any competitive market, explains Jennifer Vessels, a certified management consultant with Next Step LLC in Redwood City, California. It's vital for your company to find a legitimate niche within that huge market. "If [you] have the same product for the same audience, and [you think] your product is a little bit better," Vessels says, "that's setting yourself up for failure."

Starting up will still be difficult, even with an established niche. Vessels says you'll need a reserve of capital and strong determination to get you through those first months of pounding the pavement. To gain credibility, try partnering with a more established brand in a noncompetitive industry (such as a snack company, if you happen to sell drinks).

Also, you can use your small size to your advantage. If you're marketing to a younger demographic, for instance, pump up your status as an independent business. "They may think it's a huge advantage that you haven't been in the business for 60 years and catering to the bureaucracy," says Vessels. "You can say: 'We're young, we think like you, we're flexible, and we cater better to your needs.' "

3 Vodka has certainly taken that competitive strategy to heart, positioning itself as the brand of choice for young adults who are looking for something completely new. The strategy seems to be working, with annual sales at about $3 million. "Everybody's going to say 'no' and 'don't do it' the whole way through," says Brian. "You've got to keep moving forward, and you have to make everything happen."

DO'S AND DON'TS
  • Do research your intended market, from distribution to consumers' buying habits.
  • It's the only effective way to identify your niche.

  • Don't enter a saturated market head-on with the market leader.
  • Be sure to set yourself apart, or else you'll get lost in the crowd.

  • Do set up partnerships with more established companies in sister industries.
  • Don't believe so strongly in your product that you become delusional.
  • Don't think it's the best product in the world and that everybody should know it. Be confident but realistic.

  • Do think positively.
  • Says management consultant Jennifer Vessels of Next Step LLC in Redwood City, California: "If you have the right ideas, the right passion and the right execution skills, you can make just about anything work [at] just about anytime."