Competition for New Business

Hi there:

I'd like to ask a question about starting a new business. My husband and I
are considering starting a small service business. He is already working in
this business (really likes it and is quite successful at it), but he works
for someone else.

A couple of people have told me lately that there are a lot of these small
service business around already and a lot of competition. Our city has a
population of about 1 Million.

My question is, is it possible to do well at a business when there is
already a lot of competition, by taking a lot of customers away from other
existing small businesses providing the same service? With better
marketing, and just plain running the business well?

Thanks,
Cynthia

"cynthiaquilts" <cynthiaquilts@hotmail.com> wrote in message
news:c9biaa01fpe@enews3.newsguy.com...

> My question is, is it possible to do well at a business when there is
> already a lot of competition, by taking a lot of customers away from other
> existing small businesses providing the same service? With better
> marketing, and just plain running the business well?
>

Cynthia,

My opinion: it is easier to start and succeed in a business for which there
is already a market. Creating a new market for a new kind of product or
service requires that you educate your potential customers, and in general,
a small/inexperienced/start-up business is not in the position to do so.

The other end of the spectrum, another not-so-great place to start, is in
overcrowded and/or a mature market. For example, computers. There are way
too many "computer consultants" out there, because everyone who lost their
programming job (or whatever) and hasn't been able to secure another job,
becomes a "computer consultant". Also, selling computers (I think) isn't
that hot of an idea, because the market is mature: everybody who needs a
computer has one, and knows where to get another one when they're ready.

The ideal thing to do, really, is to find a product or service that has a
great demand, but for which there is a small supply of people to fulfill
such a need. In 1999, for example, there was a great need for programmers
who could upgrade antiquated accounting systems such that they were Y2k
compliant. That was, unfortunately, a short-lived opportunity, but I think
its a good example.

Another good kind of business to start would be for you to enter into a
mature, established market, but with some big advantage over others. For
example, computers that are way faster than anything else out on the market,
(although this concept has already worked to death).

There is, however, a reality to face. There is no real such thing as finding
and starting the "perfect" business. The fact is that, overall, most
business fail sometime during their first year or so due to a lack of sales,
lack of ability to deliver the product, or lack of the skills and experience
required to run the business.

This reality of which I speak is not the fact that most businesses fail, but
the fact that you and your husband need to take a leap of faith if you are
to begin. Whether this particular business succeeds or fails is not the
point. If the business fails, and you manage to live through it, you can
learn from your mistakes and start another business. The heart of the
entrepreneurial sprit is the desire and the ability to work hard, compete,
learn, learn from your mistakes, and persevere.

Tell this group more about the business opportunity. Since you already have
a ton of competition in your town, there is no big secret here. Also,
keeping such a secret greatly limits the ability of people on this group to
offer you anything but general advice.

Mike

In article <c9biaa01fpe@enews3.newsguy.com>, cynthiaquilts@hotmail.com
says...
>
> Hi there:
>
> I'd like to ask a question about starting a new business. My husband and I
> are considering starting a small service business. He is already working in
> this business (really likes it and is quite successful at it), but he works
> for someone else.
>
> A couple of people have told me lately that there are a lot of these small
> service business around already and a lot of competition. Our city has a
> population of about 1 Million.
>
> My question is, is it possible to do well at a business when there is
> already a lot of competition, by taking a lot of customers away from other
> existing small businesses providing the same service? With better
> marketing, and just plain running the business well?
>
> Thanks,
> Cynthia
>
>
>
Think in terms of developing a unique sales proposition. That is, how
will you differentiate your service from that of your competition. This
unique advantage can be anything that is part of the buying decision of
the customers and is best based on actual dialog with potential
customers.

In other words, ask process serving customers questions like "What are
the three most import factors that you consider when hiring a process
server". Or, "What do you like and what do you not like about process
servers", etc. If your husband is involved in the sales side of the
business he may already have this sort of information. If he is not,
don't presume that what he hears on the service side of the business are
"buying reasons". For instance, customers may tell the service side that
speed and accuracy is the only thing that they care about while they
tell sales that they will only buy for a low price, etc.

Take the customer responses and answer the question "Can I make profit
providing what the market desires". If the answer is "yes", off you go.
If the answer is "no", off you go - in search of a different project.

While not wanting to sound self-serving, you need to do a business plan.
To write a business plan the author answers a series of questions
similar to the above. The answers help determine a project's viability.
Writing a plan focuses you on your project's key result areas and
answers what should be the first question asked - "Is this project a
good use of my time and money?". If the answer is "yes", the process
creates a knowledge base to allow you to move forward successfully.
There are a multitude of resources on the web to help you do a business
plan, ours is at the below link.

--
Dave Miller
FundablePlans - Create a custom business plan online - only $39.95
http://www.fundableplans.com

On Mon, 31 May 2004 02:34:55 +0000, Dave Miller wrote:

> While not wanting to sound self-serving, you need to do a business plan.
> To write a business plan the author answers a series of questions
> similar to the above. The answers help determine a project's viability.
> Writing a plan focuses you on your project's key result areas and
> answers what should be the first question asked - "Is this project a
> good use of my time and money?". If the answer is "yes", the process
> creates a knowledge base to allow you to move forward successfully.
> There are a multitude of resources on the web to help you do a business
> plan, ours is at the below link.

Norm Brodsky's answer to the 'business plan'...

http://www.inc.com/magazine/19980201/862.html

"cynthiaquilts" <cynthiaquilts@hotmail.com> wrote:
> My question is, is it possible to do well at a business
> when there is already a lot of competition, by taking
> a lot of customers away from other existing small
> businesses providing the same service? With better
> marketing, and just plain running the business well?

If your pockets are deep enough, you can force your way into a market with a
TON of advertising. However, the market isn't as dumb as some people think
it is. It will quickly find out if you offer a better service/product than
your competition.

The key to market penetration is usually neglected niche marketing. What is
the competition not offering or offering reluctantly that your business can
offer and the public seems to want? If you can find such a niche, orient
your entire business towards. Everything from your business name down to
the business stationary you use.

If there are social groups that need your service, you or your husband give
a speech to them. Raise public awareness of your business and speeches is
one of the best ways. I agree with Mike Turco. You need to tell us more
about what your business will focus on to enable us to help much more. Let
it all hang out. The more you do, the more we might be able to help. Read
"[MOD] How to get good advice from m.b.m.m. v.1.01" and follow its
guidelines.

And now for my standard advice I give to all wannabe entrepreneurs.

"What I recommend you do is determine what your sales territory is. What's
its radius? Double that and add a healthy 10% more distance then go and
talk to people out that distance that are in the same business you want to
start up. Literally, drive there. Do not do the following over the phone
or email or through snail mail. Show up on their doorstep during the slow
time of their business day. Tell them that you want to start up a similar
business at such-and-such a location and if they would consider you
competition. If they say you would be, drive further away from your
proposed business location until you find a business that says you're not.
If you have to go to a different country, do so.

Once you find a business that says your two territories won't overlap, ask
if they wouldn't mind answering some questions about how to start and run a
business like theirs. Play to their egos and they'll love to talk to you.
Everyone likes to feel important and worth listening to ... especially
business owners when it comes to their businesses. Have a list of questions
written out on a notepad, but do NOT write down their answers. Instead,
bring a tape recorder (yes, put it right out in the open ... no need for
spyware ... and besides it plays to their egos as their words are being
treated as worthy of being recorded) and concentrate on getting as much
information out of them as possible ... as well as picking up the other half
of the answers they give in body language. If they say something you don't
understand, speak up and ask for clarification. Let them wander off your
list of questions since where they wander to might be a place you never
thought of asking questions about and should have been. However, keep an
eye on the questions you've written down and try to ask them all before the
interview concludes. Of course, always yield to customers that come in.

After you've interviewed one owner, go home and digest what was said.
Listen to the tape on your way home. Think over it all. Adjust your
business plan accordingly. Adjust the questions on that notepad and then on
your next free day, head off in another direction and do the same thing.
Try to interview at least twenty businesses. A hundred businesses would be
ideal. Interview the good, the bad, and the ugly. If you're lucky, you'll
interview one that is going out of business or has just went out of business
so you can hear about the dark side. Likewise, interview those businesses
you think are bad. Keep in mind that since they're still in business, they
are probably doing something right ... if just being the only game in town
for your products/services.

Share as you give. Let them know what you think is a good idea and they may
tell you their own gems. Don't get paranoid that they'll steal your good
idea. They will! Or rather, you should HOPE they will as that means your
ideas are actually good ones. These are the individuals that are the best
judges of your business ideas. However, you'll never know if your business
ideas are good unless you tell these business owners them. Also, if you're
not willing to share, don't expect them to as well. In fact, it will likely
take you telling them your best idea for them to tell you theirs. Also, ask
them to read over your business plan right there before you. Naturally,
don't leave a copy of it behind. What one of these business owners is going
to tell you will be better than ALL the advice from ALL the business
professors on the face of the Earth. Even from the ones that are going out
of business! These business owners are DOING IT RIGHT NOW ... whereas
business professors live in the fairyland of academia.

Don't forget these individuals after you interview them. Send them a nice
thank-you snail mail letter for taking the time to answer your questions.
When your business opens, send them an invitation to come and see it.
Ideally, hold a special Grand Opening dinner and invite all the good
business owners you interviewed to it. Give them a group tour of your
business (no matter how small the shop is ... even if it is a desk and a
computer in a corner) and then treat them to a nice meal. I'd recommend a
barbeque at your house/apartment so it is informal and relaxed. Do NOT
drink alcohol or do drugs at this dinner. Listen, listen, and listen some
more. You've got the most valuable think tank right there eating your
hamburgers. They'll just naturally talk shop and focus most of that talk on
YOUR shop. The only bad part of all this is that it would be bad form for
you to tape record it ... thus why you need to remain sober so you can
remember it all. Then after they leave but before you do clean-up, write
down all the important things they said.

And don't stop doing this after you open your business. At least once a
month (if not once a week), visit still more businesses. And for one
afternoon, make this part of any vacation or business trip you take
anywhere. In fact, you'll very likely get more out of these interviews
AFTER you open your business than before you did. After you open your
business, you can really start to talk shop since you're now currently
running a shop. This worked great for a little-known starting-out
pizza-parlor owner by the name of Tom Monaghan ... the founder of Domino's
Pizza.

Now if you want to really succeed, see if the good ones are also willing to
sit on your Board of Directors (or Board of Advisors, if you don't want to
give them any control power). The rest of your Board of Directors should be
made up of marketers (at least have one) and one accountant. I'd recommend
the board number nine. Your Board of Directors will help you keep the big
picture in mind and an eye on the future.

Lastly, if you're not willing to do the above, you don't have what it takes
to start and succeed at your own business. Period."

Additionally...

"Work on a business plan. Regardless if you're going to get a business loan
or not. A business plan forces you to think of all aspects of your
business. Question every aspect of it. Think how you can do it better,
cheaper, and faster. Always remember to K.I.S.S. it. Keep It Simple,
Smartass. [Yes, I know it is usually said as "Keep It Simple, Stupid", but
it is the smartasses that make things more complex and difficult than they
need to be. Stupid people keep it simple (usually too simple) because
they're stupid.] And forever keep in mind that this is a business you're
starting and a business is to turn a profit. It doesn't turn a profit and
it's just an expensive hobby of yours. Your goal should be for the business
to work for you and not you work for it. If you only ever work for it, the
only thing you've made is a job for yourself. If that's all you want, don't
start a business (and all the headaches it entails) and just go work for
someone else. As for how much time to invest into your business plan,
studies have shown that those that work less than six months on their
business plan have a 90% failure rate. Those that work six months or more
on their business plan have a 90% success rate. And to start off, get a
copy of Michael Gerber's "The E-Myth". It's real value is helping you
determine if you're a Technician, Manager, or Entrepreneur. Be honest with
yourself and you'll save yourself a lot of grief."

Also...

"The lifeblood of capitalism is communication between businesses and their
customers/clients. Yes, this means advertising, but that's just one aspect
of the communication I'm talking about. There's also public relations (such
as appearing on local radio talk shows), business image (everything your
customers see), and, most important of all, word-of-mouth. Approach all
expenditures on such communications as simply an investment. Track how much
you spend and what profits it generates for you. Be always willing to
experiment with new approaches but discontinue unprofitable ones once
they've shown themselves to be this. If you employ a marketing firm, hold
them accountable. Ditch them if they don't produce profits for you after
six months. Don't let emotion decide their fate. Let's the cold hard facts
of accounting be the heavy. And nothing gets a marketing firm to work hard
for you more than them knowing you expect results and will ditch them if
they don't produce.

As for what gets you the best bang for your advertising buck, that would be
postcard advertising. The key to postcard advertising is the mailing list.
You want to target those who will most likely become your customers/clients.
Spend a lot of time thinking over who this might be. Once you're in
business, find out the demographics and psychographics of your customers and
market to those. As for the postcard itself, EVERY single word on it should
be carefully chosen. The goal of the postcard is to get its recipient to
take some form of action. That action could be calling and/or visiting your
business or visiting your business' website. The best way to get them to
visit your physical location is to make the postcard a meaningful coupon
they can use. Use color, bold, and all caps in the text of the postcard
sparingly and to just give impact to key words. ALWAYS send out two
differently designed postcards. One to one half of the mailing list and the
other to the other half. Design them so you can track results, such as
giving different telephone numbers to call. If one pulls in more than the
other, try to figure out why that happened and test that theory in your next
mailing. Advertising should always be considered to be fluid and not etched
in stone. Adjust with the times, be topical, and always be willing to
experiment."

And finally...

"Barter, barter, barter! Almost all businesses can barter with other
businesses. This is a great cheap way for you to get something (product or
service) you need for your business for a fraction of its cost ... if not
essentially free. Think what other businesses have that your business
needs. Not wants, but NEEDS. Don't overdo barter or you'll be strapped for
cash. Now think what they (or their family members) might need or want from
you. Note I also said "want" this time. If they foolishly use barter for
their desires, that's up to them. Don't you make that judgment call for
them. One person's desires can be another person's needs. Now go and talk
to them about a trade.

Lastly, ONLY buy used. Never buy new anything that doesn't ABSOLUTELY have
to be new. All it has to look like is being in good condition ... and not
even that if it's in the backroom and your customers will never see it. Go
to sheriff auctions, business liquidation sales, and garage sales; scan the
classified ads in newspapers; browse the online auction sites (like eBay); a
nd hunt for bargains. Find a place to store these bargains during this
collection phase. This collection phase usually takes about six months.
The key to being a business success is keeping your start-up expenses as low
as possible and buying used is one of the best ways to do this. [The other
way is barter.] If you do buy something new, it should be with a great deal
of thought on why it has to be new and not used. Again, if the customers
see it, it only needs to look like it is in good condition and that's it."

Good luck!

Scott Jensen
--
Peer-to-peer networking (a.k.a. file-sharing) is entertainment's future.
If you'd like to know why, read the white paper at the link below.
http://www.nonesuch.org/p2prevolution.pdf

On 3 Jun 2004 17:00:00 GMT, "Scott T. Jensen" <stj@charter.net> wrote:

>"Barter, barter, barter! Almost all businesses can barter with other
>businesses. This is a great cheap way for you to get something (product or
>service) you need for your business for a fraction of its cost ... if not
>essentially free. Think what other businesses have that your business

I am beginning to think that bartering goes along with everything else
in that you get what you pay for. I traded services with an
accountant, and I really don't think I'm getting a good bang for my
buck/time. If I was a paying customer I'm sure I would get faster
service. I have had this experience before as well. I am considering
just paying an accountant for this.

"cynthiaquilts" <cynthiaquilts@hotmail.com> wrote in message
news:c9biaa01fpe@enews3.newsguy.com...
>
> Hi there:
>
> I'd like to ask a question about starting a new business. My husband and
I
> are considering starting a small service business. He is already working
in
> this business (really likes it and is quite successful at it), but he
works
---snip---

You must find where you are different and better than the others and then
emphasize this in your brochures, handouts, sound bites, referrals, etc.
Study the proliferation of retail specialty stores to see how this is done.
Toys r Us was nothing more than a break-away from the likes of Target,
Sears, K-Mart, Penny's, etc. Now look at the expanding category dominant
marketplaces from PetCo to the Gap to even a cup of coffee at Starbucks.
Each one grew by clearly defining their difference from the norm.

What does your husband do? I'm sure we can help.

Wayne

<dap99@i-55.com> wrote:
> "Scott T. Jensen" <stj@charter.net> wrote:
> >"Barter, barter, barter! Almost all businesses
> >can barter with other businesses. This is a
> >great cheap way for you to get something
> >(product or service) you need for your
> >business for a fraction of its cost ... if not
> >essentially free. Think what other businesses
> >have that your business
>
> I am beginning to think that bartering goes along
> with everything else in that you get what you pay
> for. I traded services with an accountant, and I
> really don't think I'm getting a good bang for my
> buck/time. If I was a paying customer I'm sure I
> would get faster service. I have had this experience
> before as well. I am considering just paying an
> accountant for this.

This usually happens because there's no formal written agreement between
bartering parties. You should get one. Spell out everything. There should
then be no problems since you all have agreed what's expected by each party.

Scott Jensen
--
Like a cure for A.I.D.S., Alzheimer, Parkinson, & Mad Cow Disease?
Volunteer your computer for folding-protein research for when it's idle.
Go to http://www.distributedfolding.org/ to sign up your computer.

"cynthiaquilts" <cynthiaquilts@hotmail.com> wrote in message
news:c9biaa01fpe@enews3.newsguy.com...
>
> Hi there:
>
> I'd like to ask a question about starting a new business. My husband and
I
> are considering starting a small service business. He is already working
in
> this business (really likes it and is quite successful at it), but he
works
> for someone else.
>
> A couple of people have told me lately that there are a lot of these small
> service business around already and a lot of competition. Our city has a
> population of about 1 Million.
>
> My question is, is it possible to do well at a business when there is
> already a lot of competition, by taking a lot of customers away from other
> existing small businesses providing the same service? With better
> marketing, and just plain running the business well?
>
> Thanks,
> Cynthia

1. Depends if the current customers are satisfied or not...and the service
that they need, as well as barriers to change...if they are locked into
long-term contracts, then you'll get very few people interested until their
contracts are up.
2. Can you offer something better than what they are getting...better
service, quicker service, or cheaper service (pick two)...if you are going
to be a better quality and faster, are there enough customers willing to pay
for this?

D