Posted by David Oates 6 months, 1 week ago

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I mean this strongly. Well, sort of. Let me explain. 

I continue to meet countless of would-be entrepreneurs who had an idea for a business with a real differentiating value proposition that were deathly afraid of getting into the fray because of what they perceive to be a landscape already littered with established players. Their justifiable concern centers on the amount of money and time it may take to get customers to switch to their product. The capital requirements alone can scare even the most seasoned business owner away.

That makes sense, but for companies that can demonstrate a new approach, the opportunities might be tremendous. Starbucks stands out as one of the most notable examples. Their quality and, as relevant, Seattle-style, in-store experience changed the game of the commodity coffee business. Up until then, the beverage was a “throw-away” product; something restaurants and grocery stores sold with little margins and more out of a requirement than anything else. Craft beer became another well-known illustration, with regional companies declaring the end to “fizzy yellow” brews. 

The fact remains that practically any market can be upended with the right offering, and therein lies the rub. Entrepreneurs can most certainly enter a new market, and often for less marketing dollars than they envision, even in competitive industries if their offering is unique and valuable to the intended customer. More to the point, the product itself can’t be the only difference. Amazon didn’t necessarily offer better books when it debuted in the late 1990’s. They beat Borders and other brick and mortar retailers by providing a better, more convenient, experience. 

This example leads back to my “sort of” comment. Possessing a product or experience that is similar or only marginally better than rivals won’t get folks to shift their habits to you. A successful business owner needs to break the mold after understanding the latent demands that exist without even the customers’ knowledge. Doing so is the hard part of entering a traditional market. Entrepreneurs do so on a leap of faith because any rational business owner would tell you many ideas your ideas will drive you to bankruptcy. After all, you will run against the tried and true path toward profitability.

One last word of caution. If at all possible, stake your differentiator on something other than price. Rivals, often with more substantial cash reserves, can undercut you quickly into bankruptcy and drive you right out of business. It also becomes a challenge to capture a potential customer base that only buys their current product for lack of anything better. Take the high road and offer something better that will command a HIGHER price. 

Any industry can be ripe for the taking my a new entrant and can do so knowing that there’s a viable market to be had. The trick is coming up with something that customers feel is worthy of changing habits. That better mousetrap adage still rings true. Building one and promoting it properly can be lucrative and in short order. 

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