Hit them where they aren't!
The basis of entrepreneurism is fairly simple: find a market demand and provide the market a supply. However, we know that isn't how many entrepreneurs behave. Don't believe me? Watch a new restaurant open and then see the "emulation" by additional entrepreneurs. Look at blatantly saturated portions of the local economy(second hand stores, anyone?) and then watch as people struggle to obtain any portion of a more competitive market. So, what gives? The truth is, it's more than one variable, but we can identify the mind set that can provide existing businesses with more opportunities and can guide new entrepreneurs to areas of the market where demand exceeds supply.
1. People confuse marketing and advertising (they are not the same).-Identifying your target market may help you advertise more effectively, but marketing and advertising are two distinct disciplines. Marketing is a process of identifying potential consumers, their preferences, delivery systems and effective communication methods within a defined system. Advertising is the act of calling the public's attention to something. When we confuse Marketing and Advertising, we mistake our individual interests (what we see and hear) for the market reality. This is one way in which our personal preferences can warp our perception of what the market actually needs and what it can maintain.
2. People use other business to "test" their idea, and then replicate the businesses. Have you ever heard someone exclaim after a new business opened "that was my idea", only to watch as they attempt to open virtually the same business a few months later? In a conservative environment, we sometimes want to "test" success by watching what others do and then "improving" it with our own ideas. Realize that saturating a market simply means that you both lose over time. Additionally, we sometimes open businesses in the same category that we feel are "different" from our competitors, but those differences are unperceivable by the average customer. When consumers see a homogeneous mixture of businesses within a category, then your only way to compete is on the basis of price, and eventually everyone looses that battle.
3. People assume that if a business type doesn't exist, it must not work within an area. It's easy to talk yourself into stagnation. Not having a particular category of business doesn't mean it can't work, and it doesn't guarantee success; it simply means we don't currently have that type of business. Do a market analysis to determine if a market exists for a business/product/service category. Remember that truly unique niche businesses can sometimes exceed market expectations.
4. People are hesitant to create cooperative businesses environments, because we exist in an era of domination. New businesses or existing businesses that pick up a new product category or service can "freak out" competition. If businesses are the same relative size, why not share the market? Specialize and create cooperation between entities that allows each of you to increase your customer base. Otherwise, you engage in a competitive environment that forces you to change your mission and vision with every perceived competitor, and that is not sustainable.
5. People fear change. When given the choice between actually doing something or remaining passive, most people will remain passive. "That's the way we've always done it." "Thirty years ago this is what happened." "If it ain't broke, don't fix it." Trends change. Organizational structures change. Consumer expectations change. If you don't change with changing market trends and identify NEW market trends, your business or organization will stagnate over time.
6. People open businesses for the demographic that they represent instead of the demographic that they need to serve. This problem is more complex, but essentially it means that we establish businesses that we want instead of what our customers need. It is important to realize that you need to like your business to maintain passion, but it's hard to be passionate about something that doesn't have a customer base to support a profitable business. Entrepreneurs are generally "hungry" and first generation entrepreneurs are rarely affluent. So, we sometimes end up with an over abundance of businesses that cater to one end of the economic spectrum while avoiding another.
So, what can businesses and entrepreneurs do to grow their existing businesses or start a business with a better chance of success? Nothing in life is guaranteed, and the variables that determine success and failure are more nuanced than what we can write about in a short article, but here are some points to consider:
1. Use existing resources to determine if your products/services have a market available that substantially exceeds what your sales goals are. Ask questions! No one will think less of you. We have market data available and specialists that want to help you succeed. Utilize the resources around you. The following are some of our larger market gaps in Emporia:
Existing Market Gaps
Top 15 Categories Total Potential
Automotive Dealers $12,804,005
Building Material and Supply Dealers $5,608,295
Full Service Restaurants $5,038,148
Other Motor Vehicle Dealers $3,635,469
Electronics and Appliance Stores $3,108,323
Clothing Stores (New) $2,951,936
Limited Service Eating Places $2,832,962
Other Miscellaneous Store Retailers $ 1,282,902
Drinking Places- Alcoholic Beverages $943,303
Book, Periodical & Music Stores $839,083
Sporting Goods, Hobby, Musical Instruments $730,863
Home Furnishing Stores $652,810
Jewelry, Luggage & Leather Goods $352,519
Shoe Stores $336,378
Office Supplies, Stationary & Gift Stores $216,785
2. Keep your friends close.- Market nodes establish themselves when like minded businesses with similar goals, products and customer demographics locate close to one another. Last weekend I saw several people hopping from gift shop to gift shop downtown. Because we have Stanley's, Burnap Brothers, Second Love, Forget Me Not, Studio 11, Junque Drawer Emporium, Plum Bazaar and others within just a few blocks of one another, they created a shared "node" for anyone looking for a gift.
3. Survey the target market.- If you don't know if your business concept, a new product/service or a business off-chute will work, ASK! Create a survey for your customers or create a survey for potential customers. We can help!
4. Know what is going on with other businesses/community events. One of the biggest ways you can differentiate your business (it doesn't cost anything) is through knowledge and service. People across demographic categories are typically busy and want more "value" added to their lives. If you can figure out things within the community that coordinate well with your mission, and communicate those events/items to your clientele, it's an easy way you can reinforce your brand. "Sharing" customers with other nearby businesses may seem counterintuitive, but keeping clientele within proximity actually helps grow your sales over time, and allows you to specialize in a niche.
5. Realize that change is inevitable, and in an era where the customer is king, you can resist change for a while, but only at your peril. KEEP TRACK OF TRENDS in products, services, and consuming environments.- Existing businesses will often get so overwhelmed within their "own four walls" that they forget that new trends emerge in products, services and customer interaction all the time. Part of a successful business strategy is thinking about how products, services and interaction is changing in the area, and then developing initiatives that can intersect with those changes. We tend to be a little behind the coasts for "trends". What are categories of businesses similar to yours doing that you can emulate within more progressive areas?
6. Partner with your target demographic.- Sometimes that easiest way to penetrate a target demographic is through partnerships. Sometimes, these are business arrangements between people of two separate demographic groups (age, income, gender, etc.), and sometimes a partnership simply includes an advisory board for your business that includes people in your target demographic. If you want to open a children's clothing store, having input from moms in your target group might be helpful. If you want to sell professional men's and women's clothing, a focus group board may help you determine what your market wants. These individuals may become financial contributors in your project beyond just consuming your goods and services.
When determining how to compete, expand your sales, or enter a market,remember it is the memorable differences that differentiate your business from competitors. Trying to be "like" something, whether in exterior design, products or specials will inevitably fail. People like the originals. Successful businesses find a way to compete on the basis of their strengths and their competitors weaknesses. Niche marketing, improved service, accessibility and environment work may lead to more success than trying to undercut pricing of a national buyer.
Remember that you have resources at the Small Business Development Center at Emporia State University and at Emporia Main Street that can help you identify and take advantage of market opportunities. What are you waiting for?