How to Revive Your Amazon Sales
Three common entry strategies. Which one has the most appeal. Is there one entry strategy that you believe has more risk than another
The authors of our text, Barringer and Ireland recognize the three most common entry strategies as First Mover Advantage, Second mover advantage and Niche Market.
In the case of first mover, the company is the first to enter a new market. This can be an advantage because the company will set the standard and start the trend as well.
Second mover has the luxury of hindsight as they can identify the already established market and then make improvements to their products before entering the market. Facebook was a second mover company as Friendster and Myspace already existed, but Facebook was able to identify what was wrong with those two, and then dominate the market.
Niche Market is a small sector of customers that your product or service will appeal to. On the other hand a niche market is unlikely to experience much competition due to the small market.
Personally the Second Mover strategy appeal most to me as it provides a clear picture of the market. Your customer base has already been identified and the market is established. Second mover also allows a chance to release an improved product right from the start.
In 2007 San Diego faced some horrible wild fires, thousands of houses were burned to the ground, many of with at 40,000 plus gallons of water sitting in their pools. I spent a few nights being evacuated several times along with most of my friends and family.
Following the ciaos, I got on the Internet and started looking for solutions. The most practical solution I found was in Australian, many homes are required to have “fire trolley,” basically it’s a 5 to 10 Hp pump mounted on a handtruck for portability. I immediately looked into importing these but they carried a hefty price tag. Alternatively, I looked into cheap; China built “trash water pumps,” that are frequently used by contractors. After a little more research I was able to mate this pump with fire fighting equipment. I was able to blast 150 gallons of pool water per minute, easily over the roof of a two-story house.
Soon after I was importing nearly all the parts and having the final assembly take place in my garage. Sales were great for the rest of the year and through the next fire season, even though no fires broke out. I eventually sold the company and the domain to another company and I lost interest in it.
From the start of this, I always wanted to take it a step further and actually install automatic starting fire pumps that would have sprinkler mounted all over the roof of a house and kick on when a fire was detected. Unfortunately this is the kind of product that is hard to sell until a problem occurs.
Wouldn’t it be great if we could sell a product that would really help people quit their addition to smoking cigarettes? There are current products in this market attempting to help people, but they all have their own flaws. The patch and gum delivers the nicotine that smokers crave, but they do not take into account the mechanical addition smoker have setup for their smoking routines. The solution we are proposing is not new, but it has been poorly executed in the past. An electronic cigarette is capable of delivering the nicotine that smokers crave, with the mechanics of real cigarettes, without the harmful smoke and chemicals.
The Current Market
The market is large, “In the United States, an estimated 24.8 million men (23.1 percent) and 21.1 million women (18.3 percent) are smokers.” (%^&*()) Many of these people are now well informed about the dangers of smoking but are having trouble because of the addictions involved.
“It is estimated that nearly 17 million Americans try to quit smoking each year. That is great news! The bad thing is that only about 1.3 million Americans are able to remain smoke free. Only 8 percent or so of smokers that quit smoking are successful in their efforts.” (healtheffectsofsmoking.org)
The bad news is that there are many “quit smoking” devices targeting this market of people. There is nicotine gum, nicotine patches, self-help tapes, hypnotherapy, and several more. Also, there is what is commonly known as an electronic cigarette.
Electronic Cigarettes, or commonly known as eCigs, have been produced in China for over 10 years now. They have been sold in the US through a few different means, mostly online or at mall kiosks. The basic design is a small batter inside of a aluminum tube powers a micro chip that heats a “atomizer” which vaporizes the glycol and flavoring as the user inhales. This creates a safer, simulated smoke that delivers the taste and nicotine, similar to a real cigarette.
For the past 10 years, these China made eCigs has been plagued with problems both mechanically, safety wise, and how they are marketed and sold. After reviewing over 100 different types of eCigs on the market today, the conclusion has been drawn that the majority are way too low of quality and are just basically garbage. Some tended to overheat and nearly catch on fire, others failed after only a very short time, some had massive short cuts. Some of them even tested positive for lead paint. China has had a bad rap for sometimes producing low quality, unsafe products and the eCigs are no exception. The breathable chemical, like the medical grade glycol and flavoring are also very questionable when it comes to safety. Ecigs have been sold on the primarily on the Internet and over priced mall kiosks. For the past few years, several bad apple companies have given really given eCigs a bad rap, they have been selling the kits to customers for just $10.00 or so shipping cost, then a month later charging the customer $100 to $200 as their “trial” expired.
One final complaint that has been voiced repeatedly is the 3-piece design of the existing eCigs. There a battery with microchip, an atomizer and a cartridge that kind of holds the juice. The problem is it does not hold it well and it tends to leak everywhere. Also, the atomizers tend to hold bacteria and wear out, making them unsafe for long-term usage.
The Business Idea
Knowing all this information about the existing market, we certainty have a second-mover situation and advantage. We are able to see the mistakes of all the competitors and enter the market with a better product. The first step to this was choosing the best manufacture that could also get us a competitive price. The second step was to keep very tight requirements on each aspect of the manufacturing process; everything must be built to our exact speck. Quality control became an extremely important factor. And most importantly, we dumped the 3-piece design in favor of a two-piece. A brand new atomizer is now built into every single cartage, and given the new name of cartomizer. Every time a cartomizer is dried up, the user simply and easily replaces the cartomizer with a brand new one.
We knew there must be a better way to sell and eCig. After all, the majority of cigarettes are currently cold at convenience stores and gas stations, so why not choose to sell in that market? Online sales are also important, but we needed to make it clear that our product would be scam free, we would never charge their credit card without their knowledge.
Inventory is a critical factor of these sales; we have to maintain enough products in stock to meet the demands of our distributors and all the direct customers shopping at our ecommerce site. The problem was solved by shipping airfreight directly to our distributor form the factories and also having products shipped directly to our warehouse to be sold to online customers.
The Results (to date)
After launching Cig2o in a few hundred test stores 6 months ago, our response has been terrific, the brick and mortar store’s sales have fueled the ecommerce site and the product has started to really take off. After 5 months of growth, a big name distributor has got on board and placed a very large order that will be delivered directly to them in the next few weeks. We are projecting continued growth for both Cig2o and the ecommerce site Cig2oSore.com for all of 2011.
The most frustrating experiences you have experienced lately as a consumer. What would it take to eliminate that experience? Is this the beginnings of a business idea? Respond to two of your classmates’ postings and in your responses, reflect on the ideas they have given and note which ones you would pay a business to offer.
I do a lot of shopping on the Internet; I usually try to buy as much of my work needs and “toys” on the internet because I can almost always find the best prices. However some times I need something that same day and depending on the item, I do not know where to go that I’m sure has a good price and has the item in stock. This frustration could be eliminated if a system could be in place that would tie into stores inventory systems and keep an accurate count of what was in stock and where. So basically all I would need to do is search a database from my location and it would give me local store options that were sure to have the product on hand.
Recently, I had to deal with some sub-par contractors and it really got me thinking. These contractors were all licensed by the state, yet there were huge differences in the quality of work and pricing. After watching the TV show “Holmes on Homes,” which is a show about Mr. Holmes redoing other contractor work because it was less than quality, I think that he should create a franchise. Holmes has already started to create a name for himself and his known for his excellent work. He could use this to create a much higher level of schooling for contractors that would also keep track of them. Therefore, if you a hired a state licensed, and “Holmes Certified” contractor, you would know that you were dealing with a quality contractor. Of course the school would have to keep tabs on its certified contractor and make sure they only turned out quality or they would be revoked.
Barringer, B.R., & Ireland, D.R. (2010). Entrepreneurship: Successfully launching new ventures (3rd ed.). Upper Saddle River, N.J: Pearson Education.
Many factors combine to determine the ultimate success or failure of a new venture. Identify three factors that support the successful development of a new venture and three factors that may serve as barriers to new venture development. Respond to two of your classmates’ postings.
A new business venture is always risky, in fact, “statistics show that 8 out of 10 new businesses fail within the first three years.” (Mason, 2010) There are several factors that come into plan when determine if the new ventures will succeed or if it will be of the 8 of 10 failures.
In order to succeed with a new venture, there must be a thorough business plan, enough capital, and the right opportunity. Having the right, well thought through business plan can be a huge decider of the out come of the new venture. A business plan should clearly describe the direction, goals and roadmap the business. It takes a substantial amount of money to start any venture and often businesses will run out of money before they can really get going. Raising enough capital is essential for any new venture. “ An opportunity is a favorable set of circumstances that creates a need for a new product” (Barringer, 2010 p.42) For a new venture to be successful, there has to be a need or they need to create a need for the new products or services, this is their opportunity.
Often times, when a new venture fails, it because they lacked a plan, ran out of capital and did not have products or service that that were in demand. Not having the right business plan cause a new venture to fail quickly, after all, the plan is our roadmap for success. New ventures will often fail because they simply run out of capital. It is very easy to under estimate the amount of money that will be necessary to start a new venture. Getting consumers to buy your products or services is essential. The new venture simply will not survive without sales. Therefore, its important to exploit the right opportunity with products or services that there is a market for.
Barringer, B.R., & Ireland, D.R. (2010). Entrepreneurship: Successfully launching new ventures (3rd ed.). Upper Saddle River, N.J: Pearson Education.
Mason, m. (2010). Research on small businesses. Retrieved from http://www.moyak.com/papers/small-business-statistics.html
Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources they currently control. (Barringer, 2010, p.6) To me being an entrepreneur means having the ability to be creative, my own boss and be able to improve the lives of other people that are affected by my ideas.
Some of my earliest memories have an entrepreneurial value. As a child I was always seeking information and problems solving. I even dabbled in having a fruit stand and lemonade sales in the summer time. In high school, my friends and I were always coming up with different way to make money. After I turned 16, I was buying, fixing up and selling cars at a dealership rate. At 18 and friend and I bought a failing baseball card shop and figured out new ways to sell over a million baseball cards. By age 22 I was really on a roll and I stated a complete clothing line. We were able to quickly get nation wide exposure by promoting bands and musical artists. After seeing my own stuff on, MTV, VH1, David Lettermen’s show, Jay Leno’s show and several more, I knew we had something. Eventually went back to school, finished college and at age 27 I stated a small Fire preventing water pump company, which did pretty well right at the big California fire storm of 2007. Eventually I sold the company and the domain name for a very decent profit.
After which I went to work for a company made up of a group of individual DBA’s that sell a wide rang of products in various markets. They are basically a group of experienced entrepreneurs that all operate under one roof. I have worked on the online markets for numbers products while at the company, including the selling of E-cigs, Porsche rims, carbon fiber helmets, inferred thermometers and several more projects. Currently, I am just starting on a new project there that was my idea and my creation. This means not only will I receive a profit share, but I will also be an owner of this company/DBA should it be successful. It is still in the very early phases but I have received a great deal of help and support from some of the senior members at Spark.
Although I am 29 years old, I have had a descent share of business experience. I grew up in a family of entrepreneurs and small business owners. I graduated a few years ago with a bachelor’s degree in economics and I am now pursuing my MBA to push my business skill level even further.
“If you swing for the fences, entrepreneurship may be your best choice. If you prefer a consistent batting average, perhaps you should reconsider.” (Allen, 2010) What Scott Allen is saying here is that if you like and can handle risk, than you can be an entrepreneur, but if you prefer a steady income, you may prefer a different career. Personally, I like the risks and rewards that are involved with being an entrepreneur. However, all my risk taking has been very calculated, as I do not like to gamble. I have crafted my own life around the notion that I am a young entrepreneur. This has mean finical and time investment. I am always working, always thinking about the next big item. I often spend 10 or more hours working per day, just to go home and continue working on my own projects or educating myself about a new possibility. At the same time I do not have a family or other people relying on me to make a steady income. I have kept my personal expenses to a minimum, but I have never been afraid to invest my own money in my projects.
I have always been motivated, not by the money itself, but what the money from a successful project means. Making a great deal of money from an entrepreneurial project in our modern society usually means your idea was a good one and was at the right time. I have never been driven by money along but I am personally drawn to success. I strive to be successful and think I have an excellent chance at becoming a thriving entrepreneur.
Allen, S. (2010). Risk, reward, and entrepreneurship. Retrieved from http://entrepreneurs.about.com/od/becominganentrepreneur/a/swinging4fences.htm
Barringer, B. R. (2010). Entrepreneurship successfully launching new ventures (Third ed.). Boston: Prentice Hall.
Startup companies face a long uphill battle to become successful businesses and in these tough economic times the climb is ever harder. However, many companies are surviving and even becoming thriving businesses. These successful entrepreneurs in charge have a firm grasp of the legal necessities and requirements of them needed to start and maintain a profitable business. Having knowledge of the business laws and regulations on a business is a necessity for creating and growing a startup company.
The Business Plan:
A company’s business plan should be both strategic and comprehensive. Since this is the blue print of the business, it needs to cover the overall encompassing concepts of the business as well as the layout for general day-to-day activities. The business will need to include the structure of the administration, sales strategies, marketing goals as well as other foreseeable goals and milestones. A comprehensive business plan will be a key tool for raising the capital needed to start the business.
A company has several legal entity choices when deciding how they would like to conduct business. These choices will have effects, both positive and negative on aspects like taxes, liability and employment structures.
The solo proprietorship is a popular choice for small startups because no further steps are needed to create a separate legal entity. The business pays taxes under the owners social security number and it treated like and extension of the owner. A major downside of a sole proprietorship is the lack of legal protection from obligations of the business.
Another popular entity is a Partnership, also described as “the association of two or more persons to carry on a business for profit as co-owners.” (Lambert, 2003) In a partnership, you get the benefits of expanded management but other the other hand; each partner is responsible for the liabilities of the other partners.
A Limited Liability Corporation, or LLC, is another very common type of business entity. In a LLC, business receives the benefits of pass-through tax treatment like an S corporation, but members are not personally liable for the obligations or debts of the other partners. A Limited Liability Partnership, or LLP is very similar and is usually favored by working professions such as a doctor’s office.
A Corporation, by definition is a separate entity, as in a separate person. Ownership of the corporation is made of shareholders, who are not directly liable for the actions of the company and can buy and sell their shares. The corporation is also made up of a team of people that are critical to the operations, the directors of corporations, officers of corporations and shareholders.
The directors of a corporation usually referred to as the boards of directors are elected to their positions by shareholders. At annual shareholders meeting, each shareholder is usually allowed one vote per share that they own. The board of directors has the authority to manage the corporation as they see fit. However, corporation’s board of directors usually opts to hire a staff that will handle the day-to-day operations. These board members are generally referred to as the executive committee or other smaller committees. These committees can be tasked with making management decision to keep operations running smoothly. Other day-to-day operations tasks maybe also assigned to individual board members and officers of the corporation. Directors of the corporation play the role of acting on behalf of the best interests of the shareholders, therefore the shareholders with, or without cause can remove directors. The board of directors is also responsible for appointing officers of the corporation.
Officers of the corporation are usually made up of a president, vice president, secretary, and a treasurer. These officers act as agents for the corporation are giving certain authority such as implied authority, which is needed to conduct daily business. The president of a corporation is not automatically given the authority make binding contracts; however, usually when a president is additionally a chief executive officer, CEO, he or she will then posses more authority. “A president with an additional title such as general manager or chief executive officer has broad implied authority to make contracts and to do other acts in the ordinary business of the corporation” (Mallor, 2010, p. 1054).
Naming the company is a very important aspect of how the company will be portrayed by the public. Many companies will use a separate trade name then their corporate name. A trade name, also know as a doing business as or DBA is a name the general public recognizes as your business. This name is often trademarked, giving the business legal ownership of the logo. A corporate name however is the name in which if filled with Secretary of State.
Before the business can choose a name, they must first conduct a name availability search with the Secretary of State in their state. Once an available name is determined, if will need to registered as wells as any DBA and trademark information. Additional trademark searches need to be conducted to ensure legal use.
Depending on the type of business, several avenues of funding can be used to raise the necessary capital to start and grown the business. Funding for startups usually comes from the owners, friends, family, banks, venture capitalists, angle investors, and shareholders.
Owners are usually on line for funding their own startups. It’s pretty hard to ask others to risk their money without the owner first taking a risk. However, often the owners will not have enough access to cash to fund their entire startups and need to ask for outside assistance.
Friends and family can be the easiest or hardest area to raise the necessary fund to start a business. Typically, your friends and family will not be as finically savvy as a bank or venture capitalist will be looking over the business plans and model. But at the same time, since there is a relationship with these people, it is very necessary to be overly carful with these funds.
Banks can offer loans to provide the capital necessary when starting a business. These loans are considered to be debt financing. Often they will require liens, such as a real estate or equipment liens, to offer secured loans. An alternative to getting a commercial bank loan is a Small Business Administration, or SBA loan from the federal government.
Venture capitalist and Angle investors will sometime step in on more risky ventures; in return they may want a more significant piece of the business or higher repayments. Angle investors, usually play a similar role to venture capitalists but they usually goes a step further by providing funding and guidance to the owners. Typically, angle investors have been successful in their own business and can offer great advice and an outside perspective.
Corporations have an advantage as they can raise funds by issuing stock options of their company. This is where multiple people can be owners of a company without being liability or debts of the company beyond their investment. “A corporation needs not only to be established in conjunction with the rules of incorporation under the laws of the individual state, but must also be maintained as such by following ongoing requirements and formalities.” (All Business, 2009)
It has been said time and time again that a company is only as talented as the people that work there. Choosing the right employees for a startup is trickier than for a regular business. Most startup businesses need employees that are capable of wearing many hats. That is to say it is necessary to have employees that are willing and able to perform many tasks over a wide range of areas as in a startup there may not be resources to hire every position needed. Employees may also need to work for less money than they would have to at an established business. Money is often tight in a startup until sales can really be established. To compensate for this, employees may be willing to accept stock in the company in lieu of higher salaries.
The best way to ensure you have quality employees is to perform a thorough interview and vetting process. During this process the qualifications of the interviewee should be checked and verified. Questions should be asked about previously work history and qualifications.
Employees of the business have certain rights such as child labor laws and minimum wages. The child labor laws are federal laws that restrict the working hours and conditions of children ages 14 to 18. Minimum wages have been standardized by the federal government and may also be higher individual states. These are a set minimum wage the employees must receive for work done on a per hour basis.
The use of consultants and independent contractors is an alternative to hiring employees for certain tasks of the business. These are people that do not officially work for the company, but are brought in to perform a specific task. Independent contractors have some advantages to the company “Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.” (IRS, 2010) However, the IRS has set strict guidelines on who is classified as an independent contractor.
Contracts between employee and employer called Employee Agreements can be beneficial to both parties. Employment Agreements can ensure that both parties know exactly what is expected of them, and how they will be compensated, for example wages, stock and fringe benefits, for these activates.
Another contract that is often overlooked, but can be critical for any startups is a Non Disclosure agreement, or NDA. This essentially a contract that is signed by employees stating that will not release any company secrets they learn while employed and even after they are employed. This is extremely important in today’s business world fore several reasons including the abuse of patients. A patient, while secure in the United States, does not always offer the same protection overseas.
Taxes and Regulations
“In this world nothing is certain but death and taxes.” (Benjamin Franklin) The same is true for companies. Taxes are different depending on the type of entity the companies is but in generally, taxes will have to be paid to both the sate in which the company operates and Federal Taxes. Generally, business will be obligated to pay, Federal Income Tax, State income tax, Unemployment tax, Disability Tax, Sales Tax, use Tax, Real Estate Property Tax, and a various amount of other taxes depending on the activates of the business such as Alcoholic Beverage Taxes.
With all these taxes and expenses to track, having a good accountant or accounting department is an essential aspect of a startup business. This will ensure that accurate bookkeeping and records are maintained and up to date. This will keep the business on track and out of trouble for with government for not paying the appropriate taxes, which could result in serious fines. Having an accountant prepare annual and semi annual finical report is an essential tool getting more investment in the business as well as well as stock holders.
For a startup business, an important decision is where is it going to be located. Depending on the type of business being conducted, different locations will serve different needs. If the business needs foot traffic coming in the door, then a popular retail location may be necessary. However if traffic is not needed, for example an ecommerce business, then more economical industrial locations will be better.
Different area will have different regulations on them called zoning laws. Zoning laws allow certain types of business activates in certain areas. The local ordinances can control the business hours of operations, exterior lighting, types of chemical that can be used, manufacturing limitations and so on. Therefore, it is vital that accurate research be conducted on the area in question before making an offer to lease or buy.
In addition to zoning laws, many states have laws that regulate the process of manufacturing that the business uses called Environmental Laws. These laws are in place to protect the environment and local residents from harmful air emissions, water pollution and storage of harmful substances
Any seasoned venture capitalists knows, the vast majority of startups companies fail in the first few years. This is why it is vital that entrepreneurs have a firm grasps of the legal necessities and requirements needed, as the business is bound to have numerous important legal aspects that need to be addressed, in order to help the company startup up, grow and thrive.