Double Your Pleasure One is never enough: Is another successful product just what your company needs to grow?

How do you expand on success? For Graham Kjestrup, anentrepreneur in Stanton, California, the answer was inventing a newproduct. Kjestrup's company, National Sign DisplayManufacturers Inc., produces signs that real estate agents canplace in the lawns of homes for sale. In 1999, the company hadgrown to $3.4 million in sales and was selling its products throughabout 10,000 sign stores nationwide. Sounds like a picture ofsuccess-especially with sales increasing 10 to 15 percent peryear-but after 13 years in business, Kjestrup wanted the company togrow even faster. Says the 38-year-old, "There was a cap onjust how big the company could grow from the real estatemarket."

Kjestrup decided that the fastest way to boost business would beto invent a new product. So in 1999, he developed the SandScrew, acorkscrew-type piece of lightweight steel that screws into anyground surface and holds beach umbrellas, volleyball poles and flagpoles. The product had great market-research results, and best ofall, Kjestrup could produce it using his existing equipment.

Soon, though, a challenge presented itself: how to sell thisinnovation to an entirely new market-drugstores, mass merchants andsporting goods stores. After all, Kjestrup was just a small vendorwith one SKU. Sales were slow in summer 2000. Earlier this year,however, Longs Drugs, a 400-store chain on the West Coast, pickedup the $9.99 SandScrew. And just recently, Kjestrup receivedapproval from Wal-Mart and Ron Jon Surf Shop as well as interestfrom Albertson's and other grocery store chains. Although theSandScrew has only generated about $150,000 in sales to date,Kjestrup expects profits from the product to triple next year.

A Fresh Start

The road to success isn't easy, and Kjestrup worked hard toget the SandScrew into big retail stores. Here are some of thesteps he took:

Learn the industry. Kjestrup's firstadvice for entrepreneurs seeking success in a new market is toeducate themselves. "Our product is seasonal, and most of thesales for the following summer are made by November," Kjestrupexplains. "This is different from the sign business, whereorders come in every week. [Retail] stores also mark our product upby 100 percent, while sign shops typically only use a 50 percentmarkup." Kjestrup also learned that building strong sales insmaller regional stores helped ease mass merchants' resistanceto taking on a one-line company.

Find the key. Research showed Kjestrup thatpackaging was the most important factor in selling his product."Without [the right packaging], SandScrew was just a steeltube with a hole," he says. In fact, Kjestrup spent nearly ayear perfecting his packaging before he pursued retail stores.

Don't count on help. At first, Kjestrupattempted to find a broker to market the product through a seriesof agents nationwide. But that strategy flopped. "The agentsdidn't make enough money from our product, so they didn'tspend any time on it," he says. In the end, Kjestrup and hissales manager had to promote the product themselves. Kjestrup hopesto use agents later, once there's a proven demand for theproduct.

Be patient. Buyers place most orders forseasonal items during just two months of the year, and many likefor products to be around for a while before giving them a chance.The result, says Kjestrup, is that "you have to make acommitment to the new product and give it at least two or threeyears to develop." That's quite a contrast to theimmediate impact on sales Kjestrup can often see in the signbusiness.

Don't expect size to matter. "Peoplein this new market didn't care that we had been in business andhad substantial sales," says Kjestrup. "They just saw usas a one-line company. The only time our size mattered was inWal-Mart's final evaluation, when [the retailer] wanted to besure we could deliver a large order."

Don't ignore your initial market. Whileinnovating his new product, Kjestrup continued to pay attention tohis original customers. He still seeks out new ideas for the realestate market. In fact, his customers suggested the idea foranother product, a clear box with a pull-down front that sits atopthe "home for sale" sign and holds sales fliers. Thatlatest invention's in the running for an order from HomeDepot.

Back to the Future

According to Kjestrup, the biggest adjustment in targeting a newmarket is learning how to work backward. Most companies workforward, meaning they create and develop a product and then figureout a sales and marketing strategy. Working backward, in contrast,means learning what the customer and retailer want beforefinalizing the design of the product.

When you don't know your market, working forward isdangerous-a business faces too many unknown requirements.Kjestrup's sign shops don't worry about packaging, UPCcodes, how a product fits on the shelf, when orders need to be in,discount structure, advertising programs or product liabilityinsurance. But those are all worries in Kjestrup's new market.And while the SandScrew may have limited direct competition, thereare hundreds of companies vying for coveted shelf space as summerseasonal items.

Working backward is a good idea for independent inventors.Often, the biggest mistake inventors make is to wait until theirproducts are ready-after huge investments-before finding out whattheir distribution channels want. Some inventors think knowing whatend users want is enough. Problem is, they usually don't haveenough extra money after development to recover when their productsneed changes. Knowing what the customer and the retailer wantfirst, before spending too much money, is the best route for anynew product.

Almost all growing businesses have tried, usually withoutsuccess, to branch out into new markets. It's not uncommon fora company to have five, 10 or even 20 products that never made it.Such companies never really have a chance at success-they don'tproperly commit to their products. That commitment starts, just asKjestrup found, with discovering what the new market wants. Followhis advice, and you could be launching the first in a long streamof winning products in new markets.

Don Debelak is a new-business marketing consultant and authorof Think Big: Make Millions From Your Ideas.Send him your questions at dondebelak34@msn.com.

Contact Source

• National Sign Display Manufacturers Inc.
  www.sandscrew.com