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Page 94 GO IT ALONE!
Similarly, Michael Loeb’s decision at the Synapse Group to offer a flat rate for access to credit card statements (detailed in Chapter 10) immediately reinvented the decision for the credit card operator, as compared with more typical requests, to pay owners a percentage of the money earned or generated. The success of Emoonlighter (now Guru.com) accelerated when its pricing system focused on charging professionals a percentage of their fees for completed assignments instead of charging corporations for participating in the marketplace. This pricing mechanism encouraged corporations to test using the marketplace without risk, because they only incurred costs after a professional successfully completed a specific assignment. This certainly suggests that you may want to focus on a business that has trouble attracting customers because of pricing uncertainty. The goal is to create a pricing system that makes sense to the customer and permits a far easier yes than what already exists. Of course, to create a winning business it’s not enough to simply establish a fixed fee. This may be a quick route to losing your shirt. You need to find a way to limit your risk or perform sufficient tests so that you know that you will make money on these fixed-fee activities, at least in the majority of cases.
Look for Opportunities Deemed Too Small by Large Companies Most large companies won’t pursue new initiatives unless they have the chance to make a meaningful contribution to the bottom line. As a consequence, billion-dollar firms may identify and choose not to pursue million dollar prospects. A June 2004 Business Week cover story on the 100 best small companies noted, for example, that “In the drive to market, some opportunities are always left behind. These tasty scraps are meat and potatoes for some Hot Growth companies.” How do you find out about these abandoned opportunities? If you have an expertise in a specific industry, a careful reading of the trade press is one likely source of information.
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GO IT ALONE! Copyright 2004 by Bruce Judson. Reprinted by permission of HarperCollins Publishers. All rights reserved.
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