greater reliability, faster speed, or increased convenience.
■ An underserved or new market. A market for which there is greater demand than competitors can currently satisfy, an unserved location, or a small part of an overall market—a niche market—that hasn’t yet been dominated by other competitors. Sometimes, markets become underserved when large companies abandon or neglect smaller portions of their current customer base.
■ New delivery system or distribution channel. New technologies, particularly the Internet, allow companies to reach customers more efficiently. This has opened up many new opportunities for businesses to provide products or services less expensively, to a wider geographic area, or with far greater choice.
■ Increased integration. The occurs when a product is both manufactured and sold by the same company, or when a company offers more services or products in one location.
Your business should incorporate at least one of these factors—more than one if possible. Ideally, you can bring a new or better product or service to an identifiable but underserved market, perhaps using a more efficient distribution channel. Evaluate the ways your business concept addresses the elements described above. Your concept should be strong in at least one area. If not, you should ask yourself how you plan to make your company truly competitive. To help answer these questions, fill out the following worksheet.
worksheet: Is Your Business Concept Sound?
To determine how sound your business concept is, answer the following questions about your proposed product or service:
Is your product or service new or improved? Does it fill a gap in the current market or improve on what’s already available? If so, describe how:
Is it serving an underserved or new market? If so, describe that market:
Does it allow companies to reach their customers more efficiently? If so, state how:
Does it build on products or services you already offer, or can you both manufacture and sell it?
Traditional to Entrepreneurial
| PRODUCT/SERVICE | WHERE THE IDEA ORIGINATED |
| No Fear | No Fear is a sports company founded in 1989 by three surfer buddies whose inspiration was to spread positive messages of self-esteem and to encourage all people to perform to their potential. At the same time, the founders eschewed traditional corporate values in favor of socially responsible and ethical business practices that emphasized an approach to commerce that transcended merely chasing profits. Originally selling T-shirts plastered with existential slogans that defied traditional fears of danger or mortality, they promoted wholehearted engagement with life, and expressed contempt for established social mores. No Fear now has an entire line of products, including SoBe No Fear energy drinks under the same brand, in a joint venture with SoBe, and No Fear trucks in partnership with GM and Nissan. The company currently employs about 450 people. |
| Martha Stewart | Martha Stewart, a former stockbroker and fashion model, built a business empire based on the domestic arts. She founded a catering business in 1976 and became well known in New York society circles for her talent at planning and executing parties. Her first book, Entertaining, was a cookbook that featured recipes and photographs from parties Stewart had catered. It became the best-selling cooking book since Julia’s Child’s classic Mastering the Art of French Cooking. From there, Stewart went on to write many more books and rapidly became a media personality through her newspaper and magazine articles and appearances on national television. In 1990 she created her successful homemaking magazine Martha Stewart Living. In 1997, Stewart gathered all of her domestic arts ventures under the business Martha Stewart Living Omnimedia (MSLO), Inc. In 2006, MSLO reported revenues of $288.3 million. Although in 2004 she was convicted of lying to investigators about a stock sale and served five months in prison, Stewart has successfully emerged from that scandal and has continued to expand her empire, including creating a 24-hour satellite radio channel and inking deals with department store Macy’s and warehousing firm Costco to deliver Martha Stewart–branded frozen foods. |
| Whole Foods Markets | The Austin, Texas-based natural foods store currently has hundreds of shops throughout North America and the United Kingdom, but its roots are humble. In 1978, a 25-year-old college dropout and his 21-year-old girlfriend wanted to open a small organic grocery store. They borrowed $45,000 and founded Saferway—an ironic twist on the name of supermarket giant Safeway—in Austin. At one point, the couple was so strapped for cash they were actually living in the store, in violation of local zoning laws. They changed the name to Whole Foods after merging with another natural grocery in town in 1980. In 1984, it began expanding to new markets, frequently by acquiring other, local health food stores. In 2007 the firm reaped $6.6 billion in revenues, and it has regularly reported annual growth rates in excess of 20 percent. |
Positioning Your Product or Service
A crucial factor in a successful business is a clear strategic position that differentiates you from your competition—and the ability to maintain your focus on that position. All too often businesses fail because management loses sight of the central character of the enterprise.
Defining a clear strategic position enables you to capture a particular place in the market and distinguish yourself from your competitors. Different companies may sell a similar product, but each may have a very different sense of what the business is all about.
Suppose four companies are making jeans. Company A defines itself as selling work clothes; Company B sees itself as a sportswear manufacturer; and Company C identifies itself as being in the business of selling youth and sex appeal. But Company D has never clarified its mission—it just sells jeans.
These different positions affect the way each company markets itself, how it designs its jeans, what subsequent products it produces, and even the employees it hires. The first three companies may all succeed and rarely be in competition with one another. But Company D, which misses the big picture, is almost certain to fail over time as it flounders in its attempt to compete with all of the other, more focused companies.
Is First Best?
Believe it or not, being the first to bring a product or service to market isn’t always the best route to success. Often the maker of a truly innovative new product or the provider of a creative new service has to break down all sorts of barriers: such entrepreneurs frequently have to educate people on how something works or why it offers value. The second or even third business in a market may be the one that profits from the groundbreaking work of others.
A second aspect of positioning your company and maintaining focus is the development of a company style or corporate culture. By creating a consistent style that permeates every aspect of your enterprise—from the design of your stationery to personnel policies—you give your customers and employees a sense of trust in your company.
The best way to figure out your key differentiator or differentiators is to make a direct comparison to the other companies—or products or services—that are most like yours. In doing so, you’re looking to find a clear, objective differentiator that will
