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Small Biz Adviser: Market research
begins with careful observation
Dear Small Biz Adviser
I am a wife, mother and 30 years old.
I am very determined but have a lack of encouragement from family
and friends. I have always wanted to be a small-business owner but
was afraid of failure. Now I am ready to step out and take a risk.
I want to open a variety hat store but I don't know how to get started.
Do I need to have a large amount of different types of hats and
see what sells or do I need to start off with a small amount of
different hats and see what sales result? The building I have been
looking at is in a shopping area for $600 a month; the mall rents
for $1,000 a month. How do I ask questions to other retailers without
them thinking that I will cut in on their business? Help.
Onitsha
Dear Onitsha:
When first reading your inquiry, my head
took a little spin. It wasn't the idea of starting the business
or that the whole world seems to be against your idea.
It was the idea of hats.
Let me explain. When I think of hats, I think
of old movies and the type of hats worn by Dick Tracy, William Powell
and all those Marlowe types from the films in the '30s, '40s and
'50s. I think of Myra Loy and Irene Dunne with those adornments
standing easily 14 inches or more above the head. They're still
higher than that today on stage shows in Las Vegas.
My daughters try to correct me. Today, they
tell me, all caps are called hats.
So even if the man on the street doesn't sport
a '40s-style fedora, more than likely he's got a hat. Men, women,
teenagers and children alike wear them -- baseball caps, sun visors,
cowboy hats and so much more.
Yes, Ty Cobb, they still wear caps. No, Spencer,
your type went out of style in the '50s only to be reserved for
costume parties, school plays and Broadway stage acts.
That's when I came back down to earth on this
inquiry, and was led to simply elaborate on the basic mechanics
related to market research, operating costs and financial projections.
Regarding the types of hats to sell, I suggest the following:
- Conduct research into the market demand for
hats of all types.
- Conduct a detailed observation of all the
types of hats worn by passersby in the areas where you consider
opening the business.
- Consider the potential in the geographic
area of your business for the sale of more non-traditional hat
sales.
Regarding market demand, I conducted a simple
search for hat stores on the Internet. The first site I entered
was Hat
World. All the major sports were listed, but I noticed one curious
item. The XFL, the latest addition to the world of professional
football, is already selling hats. They haven't even fielded teams
yet and the XFL
hats are already on the market.
A second logical choice to search on the Internet
was "hat manufacturers." They are located all over the world. Obviously,
you need to seek out distributors. You may have to begin your search
by casually asking who makes or distributes a particular cap you
are holding when visiting a potential competitor's shop. But beware
-- how many customers ask or even care where a cap came from?
The one reliable source is the business reference
section of a well stocked public library. Look for one at a nearby
university or large metropolitan area.
You mentioned two different locations are potential
sites for setting up shop. Here's what I would suggest: Get a pad
of paper lined with columns. Down the left, list all the types of
hats your mind can muster. Across the top, set up columns for all
the variables you can think of: time of day, the age, gender, and
ethnicity of the wearer, emblems on the hats, colors and so forth.
You want to make observations at least twice
for every day of the week at each of the two locations. You will
also want to make note of the time of year, weather and the impact
that may have on whether people are wearing hats, and seasonal events
that may or may not increase or decrease the number of passersby.
Finally, take into consideration the need to
stand out from your competitors. You are not introducing a new product
on the market. But when you open the store there is the need to
face the fact that competitors will know it. They want to keep their
customers. Simply offering a discount at grand opening will not
be enough. You will need to excel at customer service, which is
a benchmark of all successful, long-term competitors. Ultimately,
you must decide on strategies that will result in customers abandoning
the existing hat stores. That is no easy task, but I do have couple
of suggestions you may want to consider:
- If there are any entertainment industries
related to the stage and/or cinema, you may want to consider an
inventory of older, more traditional hats for rental or sale.
- Hat accessories do exist, but not all stores
have them. For example, are you familiar with the Perfect
Curve Hat Rack, bill-curve
units or cap
cleaners & deoderizers?
- In-store promotional events featuring local
sports celebrities or collectors (aficionados) of caps will certain
draw a crowd.
Finally, as for the lack of encouragement from
family and friends, I wouldn't look there first to decide whether
or not to further investigate the venture. I look to my soul.
Ask yourself: Am I mentally prepared to accept
the challenges, risks and potential monetary loss that can come
from failure? Why in heaven's name do I want to rely on myself,
not others, to provide for my professional and financial livelihood?
Do I have the resources available to me? Am I willing to say "no"
to this venture if the research indicates it is not wise? These
and so many others questions are the stuff that books are made of.
Deal with them first. Then, if your personal quest is satisfied
then proceed to investigate the market for your business venture.
I wish you well.
By the way, I still like to wear a Panama in
the sunny Florida summers. They are lightweight, block the sun and
feel very comfortable.
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