Business advice


The success of niche businesses
October 28, 2009, 6:34 pm
Filed under: Uncategorized

It really doesn’t matter how bad the economy is for niche businesses many times.  If you find a need and no one else is filling it, you can make out like a bandit.

Peter Shankman is a PR guy from New York.  I never heard of him until about six months ago.  A friend, also a writer, recommended that I subscribe to his email list: HARO www.helpareport.com .  The acronym stands for “Help a reporter out.”  Reporters knew for years he had connections with experts in all sorts of fields.  When one asked for experts on African soil, it took him five hours to get an answer and that’s when he decided there had to be a better way.  He started a Facebook group and the rest, as they say is history. He now has 80,000 subscribers and earned a $1M over the past year.

Currently, if you subscribe, and I do, you receive three emails every weekday.  There is one text only ad at the top of the newsletter.  There is nothing fancy or any specific layout.  The newsletter simply supplies information for the readers, both journalists and experts who want to get some publicity by putting their name on a reporter’s story  There have been others, but no one designed a model so easy to use and Shankman has left his competitors grinding their teeth in frustration.

Shankman saw a niche that needed filling and he stepped up and made out like a bandit.

The five founding members of Linkedin.com also seem to have hit on a niche.  We all need to stay connected and it gets harder the more we stay glued to our computers 24/7.  The founders started out with 350 contacts and asked all of them to invite their friends.  The site now hosts close to 50 million users and they are in 200 different countries.

Getting connected is important to humans and it is a needed shared by all demographics.  These folks hit on a great idea and others have been following.  Social media truly has changed the world.  Old friends to potential employers check out people on Linkedin.  If you don’t have a profile, it may be held against you when job hunting.

Experts, otherwise known as PR consultants, have been needing the inside scope into how to get in touch with editors for as long as I have been in the publishing world.  In the mid 80s, two ex staffers for a regional magazine got together in a bar and launched “The Bulldog Reporter.”  It launched via hand to hand by these guys speaking at dinner meetings of writers and PR professional groups around Los Angeles.  At the time, it was $101 dollars a year, if I remember correctly.  It provided PR people with the inside scope on what editors wanted and how they wanted to be pitched to.  This enterprise has been resold two or three times, expanded with other services and is still running strong 26 years later.

Niche businesses don’t take much many times to get started.  Look around and see what needs people are having since the onset of the recession.  They don’t have time to take care of their animals in many instances.  In Los Angeles County, hundreds were being turned into animal shelters.  Some, of course, was because of financial reasons.  You might consider fliers in your neighborhood for a dog walking service.

Coupons are a big thing since grocery prices went through the roof.  A couple of Moms have done quite well by starting a website that found the right coupons for certain cities.  The fee was small.  You might find a couple of friends willing to go and apply something similar among your contacts.

Niche businesses start small in many instances but are easy to expand when the need arises.  The Bulldog reporter now offers additional services, daily newsletters, conferences, etc.  (www.bulldogreporter.com ).  Peter Shankman has another newsletter already in the planning stages.

Niche businesses make great sense during the financial times our country is experiencing.

-30-

Advertisements


The “Shark Tank” is educational
October 11, 2009, 7:37 pm
Filed under: Uncategorized | Tags:

I hope everyone has been watching it as it shows up on prime time television.  There are many business lessons here in easy-to-understand language.

Last week’s biggest issue was the evaluation of a business that was already up and running.  Entrepreneurs come in asking for a set figure in return for giving up a certain percentage of their business.  Most offer to give away a much too small amount; and in some cases it causes them to lose out and have their trip be for naught.

A group came in with a company that sells designer belt buckles.  They were asking for $500,000 and this was based on current sales and what they were willing to give away.  No matter how the numbers were put together, it didn’t add up.  The business owner wanted the sharks ‘to see the bigger picture.’  That translated to sales he hoped to have in the future.  Obtaining venture capital doesn’t work that way; or, at least it shouldn’t.

The next most important issue that either makes or breaks a deal here in the ‘Tank’ is sales.  Do not come to them or any other venture capitalist with only a prototype of a product.  A couple of them did just that and it wasn’t enough.  They want to know sales during the past year.  They want to know the dollars you brought in and also how much was left over.  In other words, what was the net on the sales you made?  They want to know the projections for future sales.  Do you have orders?  Do you have a distribution chain lined up?  Have you been going to trade shows?  And in some instances, have you approached a major competitor, for a possible sale.  They and any other venture capitalist want to know if you see the big picture.

Knowing your market is also a part of it.  They want to know and do ask regularly how big the market is for any given product.  One woman had designed gadgets to insert into meat while it was cooking on the grill.  It told the chef whether or not it was well done, medium, etc.  The person had the numbers on how big the grilling business was.  It is huge.  George Foreman made a couple of mints on his grills.  That information along with her previous planning got her the deal.

Additional factors that come up:  do you know your competition; how much of your own money have you put into the business already?  Many details turn out to be important to the Sharks.  One man revealed to his determent that he had a personal bankruptcy.  That lost him the deal.  The Sharks concluded that theirs wouldn’t be the only money he would ever need to grow his business to its fullest potential.  If it came time for him to go to a bank and ask for more money it wasn’t going to happen.

Some of the misconceived ideas entrepreneurs come in with include thinking they are going to give away only 10 or 15 percent of their company in exchange for a big chunk of money.  It doesn’t work with these guys and I’m betting it doesn’t work with banks or other venture capitalists.  Get real when it comes to asking for financing.

Some of the entrepreneurs seem taken with the idea that one of the Sharks is going to help them.  The only they are doing is trying to do is make more money for themselves by investing with one of the small business owners.

The Sharks also want to know where and how you are going to use your money.  They have learned since the late 90s when entrepreneurs took investment money and threw wild parties.  That time is over.  Also, be prepared, if asked, to know when you will be able to pay this money back.

This show is a business class on prime time television.  If you don’t know when it is on in your area, search the tv guide website.

-30-