Niche is nice

It seems that in times of economic downturns, there are lots of people who become "consultants". Some are serious. Some are just looking for some income until they find a new full time job at a company. Most won't make it.

A friend who has been working for a while in marketing communications approached me, and she said she plans to become a consultant. We talked about her business idea and how to go about starting a business (including my strong recommendation to get a book that describes the basics of starting a business (link to blog post)). One area that made me feel better about her business idea is that she does have a niche (link to Wikipedia definition of niche) she will target. Not just that she wants to focus on e-marketing, which I don't think is a tight enough niche by itself(lots of these new consultants say they do e-marketing). But she has a specific business idea where she knows potential customers have pain, is in an area she has expertise with, and even has contacts at potential clients who she can contact that she thinks her system would improve their lives.

As I've talked about before (link to blog post), one common problem with people who start a new business is they want to sell to anyone who could possibly use their business. Unfortunately, this is not a focus. You just don't have the resources to do this effectively. Instead, it is much better to "pick the low hanging fruit".

Another company I work with is a local bicycle retailer (link to store's web site). The owner is a friend of mine, and I helped him a lot when he opened the shop (including investing in the shop, so I am actually a part owner and on the board of directors). I saw right from the start that he has a very targeted niche - high end mountain bikes used for "all-mountain" style riding. Yes, he gives up potential sales of children's bikes, road bikes, commuter bikes, etc. But he is doing well with this very tight focus. His customers would often drive 30 minutes to come to his shop, passing over a dozen other bicycle shops on the way to see him. His shop filled a need that other shops didn't.

Of course, there is no guarantees for my friend and her new consulting business, but I feel much better about her idea than I do about many others of the new consultants that are out there.

Trade Show Focus

I went to a sports trade show last weekend and saw some booths that it was obvious weren't going to succeed. Basically, a trade show booth needs to have a specific goal, and then take steps towards reaching that goal.

This booth in particular was a Japanese firm who had a line of lights for bicycles (bicycles and Japan - both interests of mine, so definitely caught my eye). Guy came out and told me about the products, which looked like an Ok product. Not sure they were that different than the other products on the market, but perhaps it was good enough to make a go.

But what was not clear was whether they were making sales of lights at the booth, or trying to sign up dealers (how most products are sold in the bike industry). If they were selling lights there, they should have had some sort of offer very obvious. Many booths have "show specials" listed, usually at a discount of of standard retail. The guy never mentioned anything when we talked.

If signing up dealers, they were at the wrong place, as this particular trade show was a consumer show (the industry has a different show in the fall). And truthfully, a product like this would be best sold through one of the big bike industry wholesalers (BTI, QBP, etc.), as bike shops buy most small goods from them (and only go direct for major manufacturers).

I have seen this many times before, including with a client I work with. This client went to an industry show the first year they were in business, but to save costs did everything themselves and also brought friends (who lived in the area where the show was, but weren't really knowledgeable on the products) to man the booth. They were just launching their product in the US. The booth was beautiful, so no problems there. But the only goal they did meet was to see if there was interest in their product, which there definitely was. But the number of customers they gained out of it was not what they hoped for. They assumed that if they just showed the product, the sales would follow. Unfortunately, it doesn't work this way. That was a $50k lesson.

The second year, I was involved and made sure we talked about goals up front, then put some processes in place to meet those goals. The main goal was setting up showrooms, so we set up a process to really work with showrooms who showed interest, including signing up some right at the show if they were open to it. This proved to be much more effective for them.