When we last spoke, we discussed how to know if starting a business is right for you. We laid out a to-do list that contained a plethora of things, but today I’d like to talk about one of those things more in-depth. How does one “know their place” in an industry? How do all of these industry leading businesses find themselves in the position to, well, lead the industry? I’m going to try to answer that question as briefly and concisely as possible.
First we must look at the industry we want to go into. For you, that might be trading cards, video games, sneakers, clothing, or literally anything else. Let’s take a look at Squeaks Game World and our place within the industry. We are a smaller, more niche store. We carry many of the same products as your larger stores, but oftentimes at more competitive prices. If you were to cross-compare products across major stores like Trollandtoad to our store, you’d find that we both carry many of the same things. That being said, it is no secret that no store can touch the selection of Trollandtoad. Why is that? Well because they are a multi-million dollar operation with a much larger market reach. So for us to compete with a store like that (compete being used very loosely on our behalf; most definitely not theirs) we must specialize.
One of the ways we can do that is by tailoring our purchases to those that give us a larger margin and therefore allow us to compete with them on price. Buying larger collections, doing more volume on niche products, and higher dollar inventory can provide those. We can also specialize, such as carrying inventory that they don’t have. In this case, graded cards are something over the years Trollandtoad never carried, so we did. It allowed us to get a foothold in the market and make a name for ourselves as a store that you can turn to when you want graded products, for a fantastic price, without the hassle that you can find with buying high end cards on platforms like Ebay. Now Trollandtoad has managed to break into the graded card world by allowing 3rd party sellers to sell graded cards (ourselves included). In this case, Trollandtoad found their place within the graded card sector of the industry as more of a facilitator of sales. So why didn’t they just go all-in on graded cards? There are a multitude of factors that could be a completely different article, but the reality is that it just makes more fiscal sense for them to facilitate graded card transactions than to purchase and resell the cards themselves. So we found our place within the industry in a smaller sector of graded cards, while Trollandtoad found their place within the industry as a sales facilitator. This is how companies are formed, planned, and then act.
The whole moral of the above is that your place within an industry will be ever-evolving. You might start doing one thing, such as selling every type of sneakers in the shoe business, but then eventually realize that by specializing into one brand of sneaker, or one size of sneakers, might actually make your business more successful. This is why doing research before even jumping in is huge. First, figure out what you want to be doing within your respective industry. If you want to sell shoes and lots of them, you’re looking at a high-volume, low-margin, model. From that point you’d want to begin studying competitors with a similar model and figuring out how you can compete. This is an organic process that is ever evolving. You might find that in your planning you wanted to start as a high-volume, low-margin, Amazon-esque business, but instead you pivot to a higher-margin, lower-volume model because there are more openings for success. Have you ever heard stories of businesses that weren’t making it, but then they rebranded as high-end fancy boutiques filled with “upscale” products? Those are examples of where businesses may have entered an industry in one place, and found that it was completely oversaturated and instead needed to enter a different sector of the industry. It doesn’t mean your day to day operations necessarily change (although many times they will), it just means that your homework is about to pay off. In this instance you studied your industry and your competitors and utilized that knowledge to make a sound business decision and planted yourself in “your place” within the industry. Sometimes those moves will work out, and sometimes they won’t. You’ll continue to rotate through the different places until you find your niche. The age-old phrase, “if at first you don’t succeed, try, try again” is very relevant here.
Speaking of the homework mentioned above, let’s get you started on it. Here’s the to-do list for this article.
- Pick a section of your industry you want to go into (so for sneakers, maybe you only want to flip high-end, or maybe only Nike shoes).
- Research your competition. Similar to the above example, where Trollandtoad had a stranglehold on the market, there was an opening with graded cards. Study your competitors and try to find that opening for you. Hopefully you’ll find something nobody else is doing. Note: Don’t be upset, or even surprised, if you find a niche and another company adapts to what you’re doing. Imitation is the sincerest form of flattery. It means you’re doing something right.
- Now that you’ve researched, enter that sector of the market and begin working. If things are working out, you can continue to evolve and expand into other sectors if you desire. If things aren’t going as planned, analyze why, and repeat steps 1 and 2 to find your foothold elsewhere.
Hopefully this explains a little more in-depth on how you can know your place and find a good plot to put your business foundation on. In the next articles we will look at how you can begin to build that foundation up.