Two week ago, I talked about how buying a franchise can be a good option for those who want to start their own business. Not only are you buying into a brand, its quality reputation and a way of running the business, but you also receive the training and support to run the business.
However, these benefits come with a cost. Buying a franchise usually requires a significant cash investment and you also give up some independence, which may not jive with the reasons you decided to become your own boss in the first place.
Another option is to look for non-franchise opportunities to represent a manufacturer's company, such as leasing proprietary equipment that enables you to offer a product or service.
To succeed as a manufacturer's rep, look for an expanding market. Identify an opportunity that has substantial differentiation from competitors and protection for that exclusivity. Understand the costs of entry.
Look for professionalism in the people and company you plan to partner with and always interview people who have and have not been successful in the business. Learn early from their successes as well as their missteps.
One company that recently came to my attention performs the highly specialized service of treating human head lice. The company, Larada Sciences, is headed by investor and entrepreneur Larry Rigby, who works with me on the board of the Utah Technology Council. Disclosure: This is not one of the companies in my own investment portfolio.
The company's innovation is evolving the options for treatment of this pernicious problem, and its distribution model is creating a successful business opportunity for entrepreneurs. As an example of how this business model can work, let's take a deeper look:
* Expanding market. The Center for Disease Control estimates there are as many as 12 million head lice infestations each year in the United States and another 200 million cases worldwide. In addition, lice are genetically mutating to resist shampoo treatments that have been effective in the past. Mothers, who are generally the customers for lice treatments, are increasingly busy, which limits the amount of time they have to spend on getting rid of the lice, and they are trending toward chemical-free products, especially for their children.
* Competitive differentiation and exclusivity. I'm told the chief problem with treating lice is getting all the eggs and that shampoo treatments have never accomplished this well. The more thorough method is several sessions with the time-consuming and painful "louse comb."
However, Larada's new solution -- the LouseBuster -- is a disruption to the age-old "nitpicking" methods. It is a university-developed, patented, FDA-cleared medical device that uses no chemicals as it dehydrates lice and eggs in a controlled, 30-minute heated-air treatment. The company believes its patent provides business operators with a proprietary solution for years to come.
* Cost of entry. In contrast to an initial franchise fee, participants lease the LouseBuster for a monthly fee of $200 plus some minimal deposits and usage fees. Larada provides the required FDA certification training at no cost. While this business can be performed in a stationary location, it can also be a mobile business, providing treatments in the customer's home. This is another consideration that can minimize your costs.
* References. In the past year, more than 50 professionals have leased the LouseBuster. As with any company you represent, you should take the time to interview others about their experience and ask questions: What it is like to work with the company? What is the quality of equipment? Are they experiencing the market potential they had originally assumed? Has business grown as expected? What would they do differently if they were to begin their business again?
There are many other similar opportunities available if you are diligent in your research. Consider equipment that could easily expand your existing service offerings, such as massage equipment if you own a salon.
Look for innovations that you may already be interested in through a hobby, such as a quilting machine, silk-screening equipment or vinyl lettering, and find a way to leverage these options as a source of income.
Identify new innovations that are coming down in price such as digital or 3-D printing.
Finally, consider launching a venture like this as a sideline to ensure you have ample customers and revenue before you take the leap from a salaried position.
The potential for new business opportunities is all around you, whether you have what it takes to create an invention or not.
What other ideas have you found or considered? I welcome your thoughts.
Contact Alan Hall at @AskAlanEHall or via my personal website, www.AlanEHall.com.