Whether you're considering starting your own business -- or looking for ways to expand an existing enterprise -- there are three time-tested secret weapons you can use to help gain a sharp competitive edge. These weapons are three broad business strategies that can help you to create a new business or push your company to the next level of success:
- Go on a treasure hunt and find an underserved niche
- Buck the conventional wisdom
- Spot a new trend and pounce
If you adopt these strategies as your entrepreneurial mantras, so to speak, you're more likely to identify and take advantage of real opportunities to expand your company's product line and customer base. The stories of America's highest-achieving entrepreneurs prove that applying these strategies in imaginative, clever and timely ways can help catapult a small start-up to the status of industry leader.
Go on a Treasure Hunt and Find an Underserved Niche
In the business world, there's nothing more exciting than finding an underserved niche that represents a lucrative market that everyone else has failed to spot and target. That's like finding gold bullion at a crowded beach -- it was there for everyone else to see, but you were the one who took notice of that golden glint in the sand.
That's what happened to Gary and Diane Heavin, founders of the Curves International fitness franchise system. When the company launched in 1992, the Heavins had just $10,000 in savings to invest in their company. Today, Curves is the world's largest fitness franchise system, with 10,000 franchise locations in 65 countries.
How did Curves soar to the top? Instead of competing head-to-head with fitness giants like 24 Hour Fitness or Bally Total Fitness, the Heavins opted to serve the fitness needs of three underserved niches: middle-age and older women who are eager to get in shape but might feel intimidated by large gyms teeming with young, hard bodies; busy working women whose schedules could more easily accommodate the Curves 30-minute workout; and budget-conscious women who simply couldn't afford the pricey monthly membership dues charged by the major gym chains. Early on, Curves clearly distinguished itself from the pack of gym competitors; its services and clientele were different.
Targeting an underserved niche is a path that small start-ups can take. Even a huge multi-billion-dollar company can't offer everything for everyone. Targeting the right niche -- one that other business owners have neglected or ignored -- can help build a strong and loyal customer base while limiting competition.
Another entrepreneur who followed this strategy was Liz Lange. She launched a phenomenally successful designer maternity clothing company. Liz Lange Maternity eventually sold for an estimated $50 to $60 million in 2007. She also partnered with Target to launch a secondary, discount version of her line.
Like the Heavins, Lange reached the heights of success by targeting an underserved niche. In her case, that meant zeroing in on the needs of pregnant fashionistas -- women who refused to let a pregnancy deprive them of their fashion sense. Lange used newly developed stretch fabrics to create chic, fitted and stylish maternity clothes. They were nothing like the tent-like and frumpy maternity clothes widely available in department stores.
Buck the Conventional Wisdom
Bucking the conventional wisdom means ignoring those who say "It won't work" or "It's never been done that way." When entrepreneurs overly rely on conventional formulas for success, they're left with a business that's, well, conventional.
The most successful entrepreneurs are willing to veer away from established formulas and ways of thinking. If you've launched your own business, don't just blindly accept the so-called best practices of your industry. Look at them with a hyper-critical eye. Dissect them, slice and dice them, contemplate different "what if" scenarios in your mind.
With no capital to speak of -- just $700 in cash -- John Paul DeJoria, cofounder of hair products giant John Paul Mitchell Systems, bucked the conventional wisdom when he launched the Paul Mitchell line of hair-care products and decided to sell them solely to stylists and salons -- never to supermarkets or drug stores. Today, the company boasts more than $900 million in annual salon retail sales.
That unique system of distribution nurtured exceptional customer loyalty. The Paul Mitchell brand not only provided quality hair products for use in salons; it also created a new revenue stream for the stylists. Many of their own customers bought the shampoos and conditioners for use at home.
Sara Blakely, founder of Spanx, bucked conventional wisdom when she approached hosiery mills with the idea of manufacturing footless pantyhose. The product she envisioned was a body-shaping undergarment that would hide panty lines and firm up a woman's backside so she could wear her favorite slacks and open toe sandals with confidence. Blakely knew there was a market for such a product. But time and again, she was told footless panty hose was simply a bad idea. The mills were accustomed to making hosiery designed to improve the appearance of a woman's legs. But Blakely was trying to convince them to manufacture a product that was completely hidden under clothes. She got rejection after rejection. It's a good thing she persevered, though, until she finally found a willing mill in North Carolina. Today, Spanx's estimated retail sales are in the neighborhood of $350 million.
Spot a New Trend and Pounce
Often, a shift in cultural or economic trends will create new entrepreneurial opportunities. Sometimes that shift arises from advances in technology. Geek Squad founder Robert Stephens was paying attention to such trends when the home PC market exploded. He figured out that most PC owners had limited technical knowledge. If their hard drive crashed, they were thrown into a state of panic. But unplugging their PC and hauling it off to a repair shop, where it would stay for a week or so, wasn't an attractive option. Stephens spotted the trend, pounced and captured an emerging and underserved niche. Geek Squad made house calls.
When Stephens launched Geek Squad back in 1994, the cash-strapped college student had just $200 to invest in his business. But that same business eventually fetched millions in 2002 when he sold the business to Best Buy.
Andy and Rachel Berliner launched the Amy's Kitchen brand of organic vegetarian frozen meals because they realized that more and more Americans were trying to eat healthier diets, eschewing processed foods in favor of organic vegetables. Vegetarians themselves, the Berliners were also keenly aware that they'd have no formidable competition. They had personally sampled the frozen vegetarian meals already on the market and they were terrible. The Berliners knew if they used quality ingredients and recipes, their business would thrive. Today, Amy's Kitchen generates annual revenues of $270 million.
All these entrepreneurs are featured in a new book, The Risk Takers: 16 Women and Men Share Their Entrepreneurial Strategies for Success. The book explores in depth how hugely successful entrepreneurs have applied these three strategies -- and seven others -- to propel their business to the top of the heap.
For entrepreneurs, it's often easy to lose sight of long-term goals when you're preoccupied with day-to-day business operations. But keeping these three strategies in the forefront of your business planning can help keep you on track to take your company to the next level and beyond. Throughout the life of your business, you can channel your creative energies into finding new and fresh ways to apply these principles to create competitive advantage, expand your product line and customer base, and keep your business vital. Just think of them as your three secret weapons.
© 2010 Renee & Don Martin, author of The Risk Takers: 16 Women and Men Who Built Great Businesses Share Their Entrepreneurial Strategies For Success