Entrepreneurship - Rhonda Abrams

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company; start a line of specialty food products Associate in law firm Set up a legal practice; develop software for the legal industry in an area you see as lacking Fashion salesperson or apparel buyer Start a clothing design or manufacturing company; create a website to sell apparel Engineer in large manufacturing company Found a start-up based on a new idea in your field; become a consultant to manufacturing companies Sports enthusiast Develop new equipment for your sport; open an online sporting goods store; offer personal training services; start a sports camp Animal lover Establish a chain of doggie daycare facilities; develop a new line of pet food products

      The basis of all business is meeting needs and wants. You can devise a wonderful new product, or create a fantastic new service, but if it doesn’t address some real and, ideally, important need or desire, people won’t buy it and inevitably, your business will fail. Even Thomas Edison recognized this fact when he said, “Anything that won’t sell, I don’t want to invent.”

      Of course, great companies have been built on what seems to be totally new ideas—things that people didn’t know they needed or wanted until someone created them. No one knew that it would be absolutely critical to walk around with 10,000 songs available at all times until the invention of the iPod, right? Yet, there had been MP3 players before that, and Sony Walkmans even earlier. Indeed, the desire for music is as old as humankind. What the iPod represented was a substantially improved, enjoyable, and intuitive way to meet a longstanding need and wish for music-on-demand.

      Some entrepreneurial businesses turn out to be far more successful than others. What sets those apart? What do highly successful companies do—or seize on—that gives them greater growth?

      A company is more than its concept. Success also depends on a concept’s execution—management, marketing, financial management, and many other operational considerations. Increasingly, however, a company’s values and corporate culture contribute to its long-term viability and its appeal to customers and employees alike.

       Better, faster, cheaper

       In business, “better, faster, cheaper” is the mantra for how to differentiate your product or service from other similar products or services. (In the high-tech industry, it’s often “smaller, faster, cheaper” because more-compact size is highly desirable in components.)

       The beauty of this mantra is its simplicity: People indeed always look for a better, cheaper product. And “faster” can apply to how the product works or performs, or how a customer gets it, or how quickly you get it to market.

       Remember this phrase as you assess the viability of a business opportunity. In other words, ask yourself: Will your product be better, faster, or cheaper than the competition’s?

      As you develop your business concept, keep in mind that successful businesses incorporate at least one of the following factors that are basic to a successful business concept.

      ■ Innovation. The most exciting, and often most risky, entrepreneurial companies are innovative companies. They bring something to the market that either is new or significantly alters and improves on an existing offering. It can mean developing and deploying new technology. But more often, it involves building on an existing product or service, or improving on it, or finding a new use for it. For example, search engines existed long before Google. The company’s founders, Larry Page and Sergey Brin, came up with a new, more effective way of ranking search results (an algorithm based on how many other pages linked to a page and their importance) that searchers found more reliable. Innovation is not limited to technology. Many successful companies innovate in low-tech, no-tech, or services industries.

      ■ Underserved or new market. Many entrepreneurial companies succeed by bringing a proven product or service to a market for which there is greater demand than competitors can currently satisfy, establishing a location that has been overlooked by competitors, or identifying a market that has not yet been served or dominated by a competitor. These can be new markets, such as introducing a product or service to a new country. At other times, markets are growing, and there just aren’t enough competitors in the same geographic location. Markets can also become underserved when large companies abandon or neglect smaller portions of their current customer base. Sometimes an innovative company leads the way and others follow once the innovators have built or created customer demand. This often leads to “me-too” businesses that can achieve remarkable success. For example, after SuperCuts built acceptance for low-cost hair services, other companies, such as Great Clips, came in and followed on that success. Great Clips now has more than twice as many locations as SuperCuts.

      REAL-WORLD RECAP

       Factors of a successful business concept

      ■ Innovation

      ■ Underserved or new market

      ■ Lower price

      ■ Higher quality

      ■ Convenience

      ■ Service

      ■ New delivery method or distribution channel

      ■ Increased integration

      ■ Lower price. Customers often are tempted by lower cost options, and being a low-cost leader is a time-honored strategy for a business concept. Unless you have some sort of strategic advantage, though, such as a unique production or distribution method, secret supply sources, or arrangements with partners that make your own costs consistently lower, this can be a strategy difficult to sustain in the long term. If your only key differentiator is that you provide a cheaper product or service, it is fairly easy for someone else to beat you at your own game. SuperCuts, for instance, was able to be profitable with low-cost hair care services because it standardized procedures, enabling the company to serve customers faster and with lower-paid stylists, thus giving it an ongoing cost advantage.

      ■ Higher quality. Often innovation comes in the form of higher, or different, quality. An entrepreneur may recognize an opportunity because of a lack of high-quality offerings in an otherwise robust market, or may notice customers expressing dissatisfaction with current options. For example, many people like the convenience and price of fast food, but often find it not terribly healthy. In 1993, Steve Ells, a culinary-taught chef working at one of the best restaurants in America, decided to open a fast food Mexican restaurant based on high-quality, often organic, ingredients. His company—Chipotle—became the forerunner of a new trend in the prepared food industry, later reaching a market value of over $10 billion.

      ■ Convenience. Making a product or service available in a more convenient way for customers can create a viable business opportunity. A neighborhood hardware store might have higher prices, say, or a mobile pet-grooming service that goes to pet owners’ homes might provide the same products or services as a storefront service but far more conveniently, thereby attracting and retaining customers. Enterprise Rent-A-Car, for example, picks up customers at their residence or place of business, for free. This added convenience sets Enterprise apart from the competition.

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