You have always wanted to do something on your own. You have two options. You see someone struggling with some issue and you provide a solution for that pain point. Or, you notice someone doing well in a particular business, and you think the market is huge and even you can try.
There are many cases where one has observed an existing business and started another successful one on the same lines. For example, Facebook is not the first social network. Orkut was doing quite well and MySpace had millions of users. But, Facebook entered the market and made a huge difference. Flipkart was neither unique nor the first e-commerce site. Its founders worked at Amazon and started a similar business in India. Ola may have been inspired by Uber!
Me-too products are not bad. It depends on how you address the product or solution, and how you enhance the value of the same.
Let us say you have figured out a product, service or solution. You are new to business and do not know how to start. Read on to find out your options.
One of the best ways to start a business is to try a franchise model. There may be an existing and established product that has great demand in your area. Get a franchise. The owner of the product/solution would have already spent a lot of money and energy developing the model, and may be focusing on marketing. As a franchise owner, you can learn a lot, including how to set up premises, marketing, managing communication and logistics. The revenue may not make you rich overnight, but it should give you decent income.
Start your own me-too business
You noticed something interesting and think you too can do it. Why not? If someone can do it, so can you. But, remember, if you can, someone else can do it, too. Hence, value enhancement is critical. If you choose a me-too product, figure out how you can enhance its value to the end user(s).
You need to observe the market closely before opting to go for a me-too product, and position it carefully. Ask yourself, “Are there too many players in the same market?” Do some research and write down about all the players in the market, what they offer and their features. If there are too many players, decide what you want to become—a market leader, a challenger or a follower.
If you want to be a market leader, you need deep pockets (funding) and the ability to offer high-end features. Create a niche, or a new brand. The market will see you as a premium provider.
If you want to be challenger, start and prove yourself. Scale up and become aggressive. Attack other leaders on all fronts, including pricing.
If you want to be a follower, follow a leader. Be content with your smaller margins.
Once you have decided where to position yourself, you need to figure out pricing. While it depends on your vendors, logistics and operations costs, check if your pricing is lower, same or more than the market.
When you price your product lower than the market price, people may suspect that there is something wrong. Brand value will be lower until the buyer realises the actual quality. As you have to cut costs, product features may have to be reduced, along with minimum warranty. Since the price is lower, your profits may be lower, and you might have to focus on larger volume sales. Any adverse drop in quality may ruin your business. Generally, you may notice a lot of cash burn due to various problems including rejections by customers, if quality issues arise. Hence, you need to be careful all the time.
For pricing your product at market price, find geographical areas where the competition is lower. Try to maintain quality and optimise costs. Do not offer large discounts to attract customers. Consumers are smart. They look for the best price and go there. Try to survive. Once you get noticed as doing good business, some big player may acquire you.
If you want to price your product higher than the prevailing market price, offer premium products that are also niche. Create strong brand value and provide high emotive appeal.
Styling must be appealing and have high quality. Hire smart sales people. Investments will be high. Risks will be higher. But, as a niche player, you can make a difference and be a market leader in this me-too line of business.
When there is lot of competition, it is obvious there is demand. There is always space for one more player, if you play smart.