Success could also come from carving out a niche for your
business to dominate. Starting a niche business means targeting
your product or service to a select group of customers with a
specific need. Perhaps it's a device that only seniors can use
or a service aimed at helping homeowners detect mold in their
homes. "It requires you to know what your specialty is,"
says Strickland. "You're targeting your resources [so]
your message doesn't get distorted. You're not advertising
on network TV when your customer is someone who only watches
specialty TV; you're not trying to sell tennis shoes to people
who only wear sandals."
Since you're not spreading your resources too thin, your
niche business can gain maximum penetration in your market, notes
Strickland. And if you're in a small enough niche, you
won't be terribly price-sensitive, as you likely won't have
much competition. The hard part of a niche business, though, is
that it takes longer to get the word out about your company and
build a dedicated customer base. And while focus is good, too small
a niche can limit your customer base and, by extension, your
company's profitability.
David Phillips struck just the right balance with his Mt.
Pleasant, South Carolina, business, Custom Development Solutions.
As owner of this consulting firm that specializes in planning and
executing capital campaigns (such as fundraising plans) for
nonprofit organizations, Phillips knows his market is a very
specific one. With a background in the nonprofit industry, Phillips
knew exactly what his target customers wanted, and he diligently
pursued those clients upon his 1996 start. "I spent three or
four hours a day on the telephone," recalls Phillips, 46.
"I called former clients and colleagues of mine, finding leads
and chasing those leads with phone calls." He built his niche
business on his reputation and grew it via word-of-mouth
recommendations from clients, a strategy that has his business
projected to gross $2.5 million this year.
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Hey! Go Get Your Own!
If you've got that maverick spirit, you may just want to build
your very own business from your very own business idea. It's
your light bulb, and you want to make it shine on your own. While
building a business from your original idea will garner you more
glory (because it'll be yours alone), it will also require more
foundation-laying than other methods. You'll handle everything
from payroll and answering phones to setting up distribution and
securing vendors. And because this method is so open-ended, it can
be difficult to focus. Says Clark, "Many people never get
started because they're constantly trying to reinvent [the
idea]."
But don't totally knock that freedom-it's a great
benefit as well. "You don't have to fit somebody
else's model," says Clark. "You can pick your
product, your customers, your hours [and] your type of work."
Though it's an original business, Clark also suggests looking
at similar industry businesses for ideas on how to simplify
processes and save time. If you're opening a specialty online
retail store, check out other online stores and get background on
the industry-how are other businesses set up? "Try to adapt
those models to some extent so you're not reinventing
everything," says Clark.
Take advice from Jason Friedman, founder of Creative Realities
Inc., a Fairfield, New Jersey, company that designs
technology-enabled marketing displays, including interactive
kiosks, lighting, architecture, audio and video. Friedman, 33,
started the company in 1997, when he saw a hole in the market.
Formerly involved in theater, Friedman wanted to incorporate all
the elements he'd seen in marketing displays, make them
high-tech and use principles of architecture and design to target
audiences with a fresher message.
Starting from scratch, he chose to contract with independent
architects and designers-and when they would pitch their services
to big clients, he would join them, and they would both land the
gig. This strategy has garnered Friedman such clients as Bank of
America, Gap, TiVO, Time Warner Cable and Xerox (just to name a
few), pushing his company's 2004 sales to $12 million.
Everything Old is New
You see it being done somewhere, but you're sure you can do it
better. It's that business concept that is already out in the
marketplace. While you're not exactly copying someone
else's idea, you will be using elements of a previously
existing business to create your company. The strategy worked for
Ryan Azevedo, 34, and Lisa Katz, 40, co-founders of Jiggerbug.com,
an online rental site for books on tape or CD, or for immediate
download. Taking a page out of the NetFlix manual on DVD rentals,
these entrepreneurs took the rent-by-mail concept and modified it
for the audiobook market.
Speaking from Jiggerbug.com's Los Angeles locale, Azevedo
says he wanted to combine his love for audiobooks with the NetFlix
rental philosophy to create the company in 2003. "It seemed
like the easiest solution," says Azevedo, who charges $19.95
to $39.95 per month for the service, which includes a two-week free
trial. "[NetFlix] had already gone out and started educating
the customers." That concept familiarity, no doubt, has
boosted Jiggerbug.com's sales, which are projected to reach
about $2 million in 2005.
That's perhaps one of the best virtues of starting a
business based on an idea already out there, says Strickland. It
can also potentially extend the life cycle of a particular
business. The downside is that you must stay away from patent or
trademark trouble-don't forget that companies can sometimes
have process patents, too. And since the concept is already out in
the marketplace, there's no stopping another enterprising
entrepreneur from borrowing from the same idea to create his or her
business and give you more competition. "The 'better
mousetrap' requires a sound business behind it," cautions
Strickland. "Exciting products aren't enough."
Whichever business startup strategy you choose, remember that
you're still going to have to build on solid business practices
to be successful, says Strickland. "That's true whether
you're a franchisee, whether you bought an existing business...
whatever," she says. "How you execute and how you use the
systems you have will determine [your] success."
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