6 Critical Steps to Succeeding in an Untapped Industry
Pioneers in new fields and innovators face extra risks. Here's how to venture forth wisely.
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Pioneering in a new industry is more or less an experiment with many variables at work. The market validation for a certain product or service might be wrong. Or the entrepreneur might discover findings that immediately disprove the hypothesis.
If a founder prevails long enough to have an initial product launch, a poor execution could set the project back, giving future competitors the chance to bypass the same mistakes and pounce on the opportunity.
When I launched AlertBoot, my encryption services firm, it represented a potential revenue disruption for many in the IT services business. I was actively recruiting channel partners who felt cloud-based security threatened their business model. I often heard, "Why would I deploy your services for a percentage of a small yearly fee when I can charge big money for setting up servers?"
The landscape has since changed and my company now has a network of reseller partners. But being a disruptor in the early stages was a painful and expensive process that instilled in me the six following critical lessons for succeeding in an unexplored industry:
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1. Research market opportunities.
I've done market research many times only to learn that pursuing some business opportunities would be a waste of time and money in the long run. Spending a few thousand dollars and a couple of months on research is much cheaper than starting a venture without market validation.
2. Get over the ego trip.
Being a business owner should be a constant learning experience no matter what stage of life a person is in. As soon as an entrepreneur admits he doesn't know everything, he will open doors to greater educational opportunities.
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3. Supplement weaknesses.
A business owner should identify personal flaws, find people to fill gaps and partner with people who have knowledge of the market he or she wishes to tackle. Being surrounded with people who complement or enhance skills is crucial for an entrepreneur's gaining a well-rounded industry perspective.
4. Know when to cut losses in a partnership.
I was recently approached by a group that had spent $70,000 of investor money to develop a medical identity management solution. But these players weren't willing to take a pilot customer's feedback. They were trying to raise another $600,000 to build a product that nobody seemed to want, so I opted out of the partnership. Don't try to force things to work. Sometimes you have to be willing to let an opportunity go.
5. Maintain a secondary revenue stream.
Because my company offered a software service, it had baseline recurring operational expenses in order to keep the service running even though there wasn't a rush of new customers. In the early stages, I had another business that helped me avoid taking on debt or bringing on additional investors. If there's no other business to draw upon, consider doing consulting work on the side.
6. Listen to potential customers.
In the early stages, top executives should be involved at the customer front lines. I personally perform four or five product demonstrations a week because it gives me great insight into customer needs. Clients want service providers to tackle their pain points and are more than willing to describe their problems so that a solution can fit a functional gap for them. Such insight can help an entrepreneur make a product more relevant and useful to its target market.
No product is 100 percent ready at its initial launch, and perfecting the product takes trial and error. By persevering through the unknowns and taking every opportunity to learn and quickly adapt, it's possible to establish a solid foundation that no savvy copycat can shake.
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