With the economy starting to show signs of a recovery, this is a great time for entrepreneurs to explore new ways to gain a competitive edge and reinvigorate their product development efforts.
U.S. manufacturing in February 2010 grew for the seventh month in a row, according to the Institute for Supply Management. And the Commerce Department reported in January 2010 that factory orders were on the rise. When unemployment figures begin to fall and consumer spending bounces back, you want your business to take full advantage. Here are five broad business strategies, which will help you in this quest.
Go On a Treasure Hunt and Find an Underserved Niche
Develop specialized products that cater to a lucrative market segment your competitors have neglected or ignored. This is a useful strategy for startups and established businesses alike. Ohio-based Invacare is the world's leading manufacturer and distributor of wheelchairs and home healthcare products. But company CEO Mal Mixon still looks for opportunities to tap underserved market niches. One such niche: paraplegic athletes. In recent years, Invacare has developed more flexible sports wheelchairs that employ lighter composite materials. At the 2008 Paralympics in Beijing, China, athletes using Invacare Top End sports wheelchairs and hand cycles brought home more than 122 medals, 50 of which were gold.
Liz Lange, founder of Liz Lange Maternity, became an icon in the fashion world by tapping this underserved niche: pregnant fashionistas. Lange used newly developed stretch fabrics to create chic, fitted and stylish maternity clothes that were nothing like the frumpy maternity clothes widely available in department stores. Lange eventually sold her business for an estimated $50 to $60 million.
Often a shift in cultural trends will create new entrepreneurial opportunities. If you stay current about trends, you can take advantage of new opportunities when they first arise and develop products to meet emerging demand.
That's what Andy and Rachel Berliner did when they launched their Amy's Kitchen brand of frozen organic, vegetarian meals. The couple recognized that more and more Americans had become wary of processed foods; they desired a healthier diet. A growing number of Americans were also becoming vegetarians. But the vegetarian convenience meals already on the market tasted dreadful. The Berliners introduced a brand of vegetarian frozen meals that used quality ingredients and recipes. Today, Amy's Kitchen generates annual revenues of $270 million.
Buck the Conventional Wisdom
Ignore those who say, "It won't work" or "It's never been done that way." High-achieving entrepreneurs veer away from established formulas and ways of thinking. Don't just blindly accept the so-called best practices of your industry. Dissect them, slice and dice them, contemplate different what-if scenarios. Challenging conventional wisdom can open the door to competitive advantage.
Tova Borgnine, founder of the Tova brand of beauty products, bucked conventional wisdom when she decided to branch out into fragrances. Instead of collaborating with an established fragrance maker, she opted to work with a specialist in exotic essential oils. Experimenting with such ingredients as French lavender and sandalwood from India, they finally decided on the right formula for a one-of-a-kind fragrance, dubbed Tova Signature.
Later, Borgnine really bucked conventional wisdom when she pursued -- and ultimately secured -- cable network QVC as the product's primary direct-sales marketing vehicle. Sure, fragrances are often advertised on television, in hopes of luring consumers to the local shopping mall to sample the scent and then plop down their credit card. But selling a fragrance directly on TV is an entirely different matter. Borgnine, however, knew what she was doing. In her appearances on QVC, she was the picture of Beverly Hills-style beauty, glamour and sophistication. Viewers wanted to be just like her, and QVC sales of her Tova Signature fragrance skyrocketed. More than 10 million bottles of the fragrance have been sold.
Exploit Your Competitor's Weakness and Make it Your Strength
Study how your primary competitors conduct business and identify their shortcomings in product quality and customer service. Talk to prospective customers and listen closely to any beefs they may have. Find ways to make these deficiencies your own company's strengths.
When Mal Mixon first took the helm of Invacare, he looked for ways to challenge the wheelchair market leader at the time, Everest & Jennings. E&J then controlled 80 percent of the wheelchair market. After studying his competitor, Mal launched a series of initiatives. He realized a glaring weakness for E&J was their product delivery time and that, when personal mobility is at stake, people want that wheelchair now. He expanded the company's warehousing and distribution network to offer quicker delivery times than his competitors - only one day after order placement. He also included financing options, volume discounts, cooperative advertising funds, and prepaid freight. Mal's bold management decisions eventually catapulted Invacare to the top, usurping E&J. Invacare today generates annual sales of $1.8 billion.
Before Sara Blakely launched her Spanx brand of body-shaping undergarments, there were certainly other body shapers on the market. But she knew they were too bulky and felt too confining. When she wanted to wear a dressy pair of slacks with sexy sandals, Blakely discovered that cutting the feet out of a pair of pantyhose offered a better solution. That gave her the idea for Spanx. Using hosiery material, she developed a better body shaper that could make women look a size smaller and eliminate panty lines. It took her a long time to find a hosiery mill willing to work with her on a prototype, but eventually her persistence paid off. Today, Spanx holds multiple patents and generates about $350 million in annual retail sales.
Trust Your Gut
As an entrepreneur, it's difficult to summon the courage to buck conventional wisdom and assume high-stakes risks unless you've mastered this strategy. The most successful, independent-minded entrepreneurs develop and learn how to trust their intuitive powers. There's actually an expanding body of research confirming that intuition is a real form of knowledge. It's a skill that's particularly valuable in the most chaotic, fluid business environments, when you must make high-pressure decisions at a moment's notice.
This strategy can also help you persevere during trying times and fully commit to ensuring that your business succeeds. John Paul DeJoria and his business partner, Paul Mitchell, launched a hair products manufacturing company after convincing an investor to sink half a million dollars into the venture in exchange for a 40-percent share of the company. But then the investor abruptly backed out. That setback left the two entrepreneurs with no capital to speak of, just $700 between them. Instead of scrapping their plans, however, they forged ahead. Each man was willing to trust his gut that their personal sacrifices -- DeJoria even became homeless for a stretch and slept in his car -- would eventually lead to a thriving business. Today, John Paul Mitchell Systems generates more than $900 million in annual salon retail sales.
Renee Martin is coauthor of The Risk Takers: 16 Women and Men Share Their Entrepreneurial Strategies for Success (Vanguard Press). www.RiskTakersBook.com