Every business, organization and individual I know has been impacted in some way, almost always negatively, by the current economic downturn. The ripple effects of slow sales, shrinking home equity, foreclosures and job downsizing has been pervasive. Governments are experiencing record dips in tax revenues. Church and charity donations are logically imploding as citizens attempt to shore up their personal finances and survive the fiscal carnage taking place all around them.
As job losses occur, and I believe more startling, many of these jobs will not be replaced when the economy returns to a more normal footing, my marketing consulting firm is approached with a slew of new business opportunities being presented by fired and laid off workers. Many are former middle managers who have been terminated and received some type of severance package. Their goal is often to leverage this small purse into a business opportunity.
Some have panic in their eyes as they try to find an alternative way to make a living. Some are simply unrealistic. Many think they will need to fund their start-up with an investment round from angel investors. Most have never tried to launch a product before so the process is obviously daunting. The advice we seem to provide most regularly is this: slow down, vet your business plan again and be realistic in the assumptions you are constructing your enterprise around.
The universal issue that confronts entrepreneurs, and always has, is funding. If you have no available funds, cannot put any sweat in the game, or expect to use OPM (Other Peoples Money) in lieu of your own, stop now. There are Angel Investors who invest in early stage startups, however, they are rare, highly targeted and exceedingly choosy as they have a virtually unlimited supply of opportunities available. Most investors use the old three F adage for launch funds: "this type of start up money comes from Friends, Family or Fools".
So what can the newly driven entrepreneur do to launch a product in a competitive market with only a small amount of working capital on hand.
We typically attempt to customize a strategy including guerrilla and bootstrapping marketing. There is no single definition or road map for this type of market penetration strategy. Much like guerrilla warfare, which is free flowing and conducted based on terrain, climate, force size and enemy disposition, new products should take the approach that there is a chink in market armor, discover it and fill the niche.
Almost always a bootstrap marketing campaign starts at the local level. Every entrepreneur wants to see their product on every store shelf in America from the get go. However, the capital requirements required to support national distribution is huge. By working the home turf the product can be nurtured, tested, seasoned and most importantly proven. The most important day in any new businesses life is the day a re-order is placed. This confirms the first stage of market acceptance.
Here is a simple example of bootstrapping a product that we have utilized numerous times to successfully get a line of product in front of consumers:
Let's assume you have a gourmet food product that you are keen to get to market. Utilize the services of local private packer and build a minimal inventory.
Be sure to make sure that the packer signs a secrecy agreement that protects your recipe. Make sure that the label meets all government requirements.
Produce a short film production (DVD) with voice over, music optional. Modern recording equipment makes this process virtually zero cost. Shoot the piece (video loop) at home, or on a picnic table and in the lab/commissary of the private packer. Detail the product, how you developed the product, have on air quotes for attribution from friends and others that love the product and possibly show the lab work being done to safely produce the item in a government licensed facility.
If you live in a town that has five malls or lifestyle shopping centers, choose the property that has demographics most likely to appeal to consumers of the type of product you are selling. Then negotiate with property management to rent a cart or kiosk on a monthly basis. January through September you will pay a basic rent. October through December, the holiday season, your rate will soar, but so will sales.
Typically shopping centers are open about 70 hours per week. The cart can be manned by you, family members or hired students with a minimal salary and a commission incentive. The stand can be inexpensively merchandised with point of purchase display, signs and a television running the DVD video loop. Demonstration of the product will enable consumers to experience the features and benefits of your product. If the product is a food product, you will want to sample the product, for instance.
Once sales commence, and proof of product performance is confirmed, the kiosk can be replicated in nearby malls and ultimately in proximate cities. Typically, we plan sales models to enable the expansion of the cart or mall kiosk to additional locations utilizing the profit from the alpha location.
The bootstrap path described above is just one way to launch a consumer product without the benefit of a funding round or a rich Aunt Bertha available to write a big check. Most people do not have rich friends or family to reach out too for investment. The venture capital process is slow, daunting and fraught with tons of competition chasing precious few dollars. Nevertheless, successful entrepreneurs find a way and bootstrapping is often the most available method of getting a product to market.
We have used variants of bootstrapping many times to benefit clients seeking to overcome launch hurdles. Flea markets, consignment, advertorial, local management of national chains, targeted direct response and many more avenues can be crafted to fit the bootstrap model. Most new entrepreneurs have been lead to believe that a heavy capital investment is essential to insure marketing success. Experienced entrepreneurs know otherwise. They know that there are many other, usually more attainable, ways to achieve their goals.
Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.
After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.
Geoff Ficke and his consulting firm, Duquesa Marketing, Inc. (http://www.duquesamarketing.com) has assisted businesses large and small, domestic and international, entrepreneurs, inventors and students in new product development, capital formation, licensing, marketing, sales and business plans and successful implementation of his customized strategies. He is a Senior Fellow at the Page Center for Entrepreneurial Studies, Business School, Miami University, Oxford, Ohio.
