Sun, May 26, 2024

Mondays with Rick: Use your pain points for new business opportunities

Dr. Rick Franza, Professor of Management at the Hull College of Business, discusses a different, timely business topic each Monday in this column. This week, he talks about how and when to take advantage of business opportunities. The interview has been edited for clarity and impact.

ABD: Several weeks ago, we talked about the importance of innovation in business success, but often, innovation involves taking advantage of new opportunities. What should we view as opportunities?

Rick: Author, Clayton Christensen, who developed the idea of “disruptive innovation,” said that business opportunities come from jobs or things that need to be done, the pain points. What are your pain points? What things are you dissatisfied with? If you realize you’re having a problem getting something done, it may be an opportunity to start a business. What things can you do that aren’t being done?

Amy Richardson of Richardson Professional Solutions is an awesome example of that. She identified a need in the marketplace. Richardson Professional Solutions offers back-office services for small businesses to allow them more flexibility with their time. No one even knew that the market existed, but she was addressing a pain point for companies.

ABD: When you see this type of opportunity, how can you take advantage of it?

Rick: You need to have some level of expertise. Ask, do I already have the expertise, or can I quickly learn what I need to know to fill that need? There has to be a market pull in place, but you also need to be able to deliver on that. Some first-to-market companies failed because even though they understood the market for it, they couldn’t deliver.

Franchising is a great way to get into new markets. They have the expertise built-in. It’s an excellent opportunity to fill gaps in the marketplace.

ABD: How do you assess the opportunities that are out there?

Rick: There are two categories of opportunities – one is the product, and the other is the process. Changing your product and potentially abandoning what has been successful is risky. Will the market accept it? Where it’s less risky is on the process side. If you do a new process to make a better product or how you deliver it, the customer doesn’t really see it.

You have to do some kind of research. Can the market support this? You can do focus groups or survey your customers. Market acceptance is critical. You have to understand the timing of the market.

And you have to do a cost-benefit analysis. What is my ROI? Will the market bear the margins I need to make?

While we think of innovation as creativity, there’s a lot of blocking and tackling to be done in determining if a business opportunity is right for you. You have to do market research and cost analysis. If you don’t have those, it doesn’t matter how creative you are.

ABD: Sometimes, as things become modernized and mass-produced, people appreciate handcrafted items more. Is that a good place to find a new business opportunity?

Rick: Sometimes large companies will abandon their lower-margin items, and that’s often an opportunity you can take advantage of. Niches are good and are actually better for smaller businesses. As a small business, you’re not able to get to the scale of a larger company. You’re also more nimble and able to adjust. If you make or sell handcrafted items, you can see what other handcrafted things you can add to your portfolio.

Partnering and outsourcing are also important to small businesses. You may understand the market for a new opportunity, but you need a partner because you can’t do it yourself. But if you partner with someone, you need to offer them something. It may be access to your customer base or marketing.

ABD: Sometimes you may not be first to market, but you still see that a popular item is one you could produce. Is it a good idea to jump in on what may turn out to be a fad?

Rick: What’s important in this opportunity is differentiation. Ultimately, big companies have the ability to flood the market, so you’ve got to give the customer a compelling reason to buy your product. How is it different or better or has more value? How you differentiate yourself in the marketplace is the key.

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