How Entrepreneurs Create Value in Any Industry
Not Only Growth Brings Good Chances of Making Money
So… maybe you want to start a business and you are facing this question: Which industry? And then the next logical question is: what’s going on in that industry and how can I make money from it? Millions of articles on the Internet try to explain how to research and answer those questions. But here is a quick way to think about this in a fresh and strategic way.
We all know that every industry experiences four main stages: Introduction, Growth, Maturity and Decline. And we all get that the stage with the most opportunity is the growth stage. But for creative entrepreneurs there is money to be made at every stage, and here’s how.
During the first wave of Internet companies back in the early 2000s, there were a lot of companies that made millions of dollars providing services and support to a number of companies that soared. Think about Cisco providing servers and routers to Hotmail. Yes, Hotmail was sold for millions to Microsoft and its founder became rich overnight. But Cisco had a great ride too. And not only that, Cisco was not among the thousands aspirants to be Hotmail that never made it.
So what can you do? Well, you need to look for the next new thing as it’s on its way up. Think Skype, maybe eight years ago. Think Apple iPad, less than five years ago. This means you have to keep your ear to the ground and keep up with what the next best thing is going to be. What about video chat on mobile? That’s a new innovation that needs support. What can you offer to companies developing and refining video on mobile to help them succeed? That’s where you’ll make a buck or two.
The growth stage is great and everyone wants a piece of it. Facebook and Twitter are examples of companies experiencing tremendous growth. Some entrepreneurs are (arguably) barking up the wrong tree and trying to create new social networks. But the problem is that the “new social networks” ship already sailed.
So what can you do? Are there still ways to benefit? The good news is, yes, there are. But instead of thinking you can create the next Facebook you should be thinking of how you can piggy back off the success of these giants. Enter the helpers – these are the ones that really stand to gain. For example, BufferApp, is a company created to help others tweet, post on Facebook and LinkedIn. They offer a simple and powerful way to help others benefit from the social networks. BufferApp is riding the crest of the social network wave, but they’re not fooling themselves into thinking they can create a whole new social network to make it happen.
What happens at the maturity stage? Well, at this stage you can find ways to improve and refine what’s already there. Think about the cell phone industry, for example. While the first cell phones were created in the 1940s, we all associate the 80s with those “first” ugly brick like phones.
Since then, cell phones have come on leaps and bounds. Who knew that the cell phone industry would take-off back in the 1980s? Well, Apple. We all know how Steve Jobs did it. Design, artfully crafted, top notch products that still let us talk over the phone, but hey… it feels so much better having those nice smooth, slick designs in your hands, with all the apps, and innovations. And that’s what you need to do – make the industry smarter, slicker and just, well, better. Think add-ons. Like the smart folks that realized that people couldn’t chat on their cell phones while driving and developed hands-free kits, you must find ways to improve the maturing industry.
But what on earth can you do if the industry you’re looking at is clearly in decline? Well, never fear! All is not lost. In this case what you need to do is think about reinvention. How can you make money by converting into the next big thing? Let’s look at DVD players for a moment. Who would have thought that DVD players would take-off, when VHS was still around? But they did.
And if reinvention doesn’t work, how can you make money by assisting those in the industry exit it swiftly? For example, you could offer services to help companies sell off stock quickly through eBay. There’s always an opportunity for an astute entrepreneur that looks hard for it. Jason Daley has a handy quick read with steps to take on how to reinvent a business that’s flagging. One to look at could be how companies like Atari died out and were overtaken by the likes of Playstation, Nintendo and Xbox.
So… the idea is clear, wherever the industry is, whatever phase it is experiencing, there is a good chance that you can extract some value. Introduction, growth, maturity or decline, they all bring opportunities for someone. The only remaining question is if you can become that someone.