Research Your Industry
When Vicky Dionne, 40, and Tina Leuthner, 39, wanted to create handbags, they knew jumping into an industry with no prior experience wasn't wise. Before becoming stay-at-home moms, Dionne ran a portfolio and Leuthner did pharmaceutical sales and marketing. When the idea to design handbags came up, the pair decided to gain experience by selling others' handbags first.
Tina and Vicky's Picks started almost three years ago, after the partners did extensive research and attended accessory shows. Choosing to work with smaller designers, Leuthner and Dionne took small steps, first selling bags through home shows, which allowed them unfettered customer opinions. "It was kind of like being a bartender," says Dionne. "They would tell us what they wanted in a handbag and all the problems they had [with them]."
In addition to doing market research like this, research the industry itself. Heidi Neck, assistant professor of entrepreneurship at Babson College in Wellesley, Massachusetts, notes that every industry "has its distinct character and ways of doing things. New entrants with little knowledge of the unspoken rules, etiquette, major players (people, not companies) and other nuances not found in published industry reports will have a difficult time establishing legitimacy."
Dionne and Leuthner were able to get a different industry perspective buying handbags from wholesalers, which helped them tremendously when they launched their own line last year. Having already built a good retail customer base through Tina and Vicky's Picks, the partners intermixed their bags with other designer bags and watched customers' reactions. After one season, Dionne and Leuthner focused solely on their own line, calling the new venture Cristina Vasiliky--the partners' real first names.
Cristina Vasiliky bags are currently sold mostly in New York metro area boutiques. Like the designers they first bought from, the partners have already secured a booth at AccessoriesTheShow in New York City. They hope their line will be carried nationwide, but plan to take small, calculated steps. "We don't want to leap too fast," says Leuthner, who projects 2006 sales of $150,000 for the Summit, New Jersey, company.
If you choose to gain experience by working for a future competitor rather than starting your business right away, your situation may differ from Dionne and Leuthner's. "Many industries require employees to sign noncompete agreements," says Neck. "A would-be entrepreneur is wise not to sign such an agreement."