It seemed like a great idea at the time. A Jersey City resident had an idea for a pet-sitting business. With the town’s large population of apartment residents and double-income families, he figured there would be a lot of dogs that needed watching during the day while their owners were out. So he set up a kennel equipped for that kind of short-term care. But when customers started coming in the door, it turned out most of them were seeking longer-term accommodations, which he could not provide.
By the time the business owner sought advice from Erich Peter, head trainer for UCEDC, a nonprofit economic development corporation based in Union County, it was too late and the business had to close its doors.
Peter says the business owner could have built a thriving concern if he had taken the time to do some simple market research such as interviewing potential customers about the kind of services they wanted. The pet sitting business is a case study of a business owner who failed to be properly skeptical of his initial idea.
“People get all revved up about an idea without taking the steps to look at it without bias,” Peter says. Peter is teaching a class on how people launching a business can avoid this mistake and others, and plan well for the first year of operation. Pet sitting was a good idea, but the business person misread the market. “Just because you like the idea and you think it’s very good, doesn’t mean there are a lot of people willing to buy the product or service at a price that makes it successful for you to form a business.”
The UCEDC will hold an entrepreneurship course on Tuesdays from 6 to 9 p.m. July 8 through August 19. The workshop will be held at Mercer County Community Connection in the Hamilton Square Shopping Center, and costs $225. For more information, visit www.ucedc.com or call 908-527-1166.
Peter knows what it’s like to struggle as a small business owner. He grew up in New Jersey, where his father was a mechanic and his mother was a part-time worker and stay-at-home mom. He studied accounting at Rutgers, earning his bachelor’s in 1990 and went to work in the financial and managerial side of the energy business. In 2002 he bought a printing company with a partner, but soon faced competition from Staples and FedEx, which had just entered the market.
Peter and his partner, realizing they would have to invest huge amounts of money to compete with their corporate rivals, decided to shut down the business after six years. He started work as an independent consultant, but was soon recruited by the UCEDC.
Peter has spent the years since then helping people who, much like himself, were bitten by the entrepreneurship bug. One of the most important lessons he teaches is that entrepreneurs must take a cold, hard, analytical look at their business plans.
For well-funded business launches, that means hiring someone to do extensive market research. But for many small businesses on shoestring budgets, that isn’t an option. In the course, Peter teaches people how to use resources like libraries to get important demographic data.
Other guerrilla market research tactics include conducting informal surveys and “secret shopping” the competition to see what strengths, weaknesses, and problems they have. It’s hard work, but it pays off. “A lot of people are so anxious to get started, they don’t do that market research before they get started,” Peter says. “It’s not easy.” It is a lot easier, however, than learning the hard way after.
Peter says he has seen a huge difference in the success rate of businesses that planned carefully before launching, and the ones that were started on a whim. “There’s always outliers — people who just hit a home run — but definitely, I see a lot of difference in the people who have put the time into it and done thorough research versus the people who didn’t. I should have done that when I started my own business,” he says.
Not all the stories Peter sees are doom-and-gloom. It is not always too late to correct mistakes. He is currently hiring one of his former students to do some floor and carpet work in his own home. “A student I had in one of my last classes owns a carpet and flooring company that had done well working out of their own house,” he says. “They decided to get a brick-and-mortar space as a retail shop, and there were more costs that came with that, which they didn’t calculate into the equation. They came to our class and made a lot of modifications to how they are getting their sales done and how they are managing expenses. Since then, they have kind of leveled off and are now growing revenues and becoming more efficient with what they have.”