By Paul Oberschneider
Entrepreneurs today face a market that is more fast-paced than ever before, and with more than 600,000 new businesses starting in the UK alone every year, it pays to look for markets with freedom to create.
Mr. Blue Sky…
One day, I sat looking at a big world map on the desk in my office in Oxford. I flipped open the map at the page showing Africa and pointed at a spot. My finger landed on a lake in Ghana, specifically on Lake Bosumtwi. Near the lake stands a tropical city of 1.7 million people called Kumasi. It’s famous for its flowers and plants and has a high school, university, and teaching hospital. For people who know the city, it’s in decay. At least that’s what Wikipedia said about it last time I looked.
With a little more browsing online I quickly found out that if you happen to be an expat looking for a night out in Kumasi, you will have your choice of pizza, Indian food or even an El Gaucho restaurant. Being a lover of Tex-Mex food, I was curious if you could get tacos or a burrito there. Nope. No Mexican burritos. So if you’re aching for Mexican food in this 100-degree tropical city, you’re going to be disappointed. You might have to go somewhere else.
It’s what I like to call a blue-sky market.
Back in 1991 when I went to central and Eastern Europe it was the same. There was an opportunity to create businesses in an uncontested market, and that’s the kind or markets we look for. Of course travelling across the globe is not for everyone, and markets like these are increasnly hard to find, but we can expand our market share where we are as well.
The time is now…
Like all opportunities in uncontested space or emerging markets, the window will close quickly. If I do the same research in a few years’ time there may be a number of great Tex-Mex outlets competing for my custom, but for a while at least, an entrepreneur will have blue sky and be the only game in town. That makes all the difference before the wall of liquidity and banking comes rolling in.
I picked Tacos in Kumasi almost at random, but in fact, there are opportunities like this across the entire entrepreneurial landscape. It’s a particular moment in time in a particular location that could be the ideal start of a business.
1. Competition, competition, competition…location, location, location
When you’re thinking about a business or sector to launch in, look for a market or opportunity where competition is lacking. Opening a quick service food business in one of London’s hottest sectors means trying to muscle your way into a crowded market. There are thousands of guys doing the same thing. You are not going to solve anyone’s problem by launching another fast food chain.
I look for blue sky. I look for that African market where little competition exists. Blue sky is a market or opportunity where you are free to create and explore before everyone else catches up. It’s where there is little competition and pricing is still inelastic – in economics, this means demand doesn’t fall regardless of a rise in price.
2. Hot markets might look tempting at first…
Hot markets always look promising and often seem easy to enter. Most people want to be where the action is. I look at the crowdfunding and peer-to-peer lending market today, and yes, it’s tempting. Or Internet marketing. Yes, it’s hot out there, and Internet entrepreneurship appears to be growing. Fast food is crazy. But too many all competing for the same sites, and restaurant property rent is way above where it should be.
A hot market is both crowded and competitive. Remember, by the time the market is sizzling hot, the tide has already risen and taken people to the top. The trick is to create and explore before everyone else knows the territory.
3. Top tip for start-up success.
But even in those crowded sectors you can expand the boundary. Look at what Pret has done to the lunch-time quick service food sector, or what Transferwise has done to global peer-to-peer money transfers. Both were hot contested spaces with low margins but they grew their market by extending the customer boundary. Decide where you are and what’s missing near you. What are people lacking? What can be improved? What’s coming? If you are alone, you will either be rewarded almost immediately, or at least you will find out how stupid your idea is pretty quickly. Neither are bad results.
I would be happy to bet that today, you will have far more success opening a cool, fast food taco stand in Ghana than struggling to stand out from the crowd in London or New York. You will be alone, and you will be different – that is a great advantage.
About The Author
Paul Oberschneider is a seasoned start-up entrepreneur and property financier who has personally built businesses worth over 200 million. Since 1992, he helped start a bank credit department, founded a mortgage company, and built the largest single-branded real estate company across five countries in Central Europe. He also developed a portfolio of shopping centers and hypermarkets in Eastern Europe, constructing over two million square feet of retail space.
Paul retired, aged 49, before the financial crisis of 2008. Over the last two years, he’s grown a chain of nineteen fast food restaurants in London and is involved in the Oxford entrepreneur community, where he serves as a mentor for start-ups and is a speaker and has now authored a new business start-up book called Why Sell Tacos in Africa
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