Enter an existing industry or create a new one!

Would be entrepreneurs contemplating starting up a business has two options. They can enter an existing industry or create an entirely new industry.

There are considerable benefits of entering an existing industry. Firstly, one can find out or visit firms already operating in the industry. The prices they charge for whatever goods or services are usually easily obtainable. Information regarding the size of their operations, the amount of space they occupy and the number of people they employ could be found without great difficulty. Just visit their outlets if they service consumers directly or contact them for prices for other goods or services. Furthermore, it is not difficult to know roughly how profitable the business is or not profitable at all. From the internet, it is easy to know how competitive the nature of the industry is and who the market leader is.

From these information, one can work out the details of investments needed to operate a similar business. Find out the weaknesses of firms operating in the industry and focus on gaining an edge over them in those areas. Do your financial projections and if they prove viable, go for it.

Creating an entirely new industry is a different ballgame altogether. The enormous successes of companies like Amazon, Facebook, Paypal and Ebay serve to attract many would be entrepreneurs to go for this option.

However, while creating an entirely new industry sounds attractive, it is not without pitfalls. For a start, one is entering an area of unknown unknowns. It is unlike entering an existing industry where one faces known unknowns.  Working with unknown unknowns meant not knowing what to expect. On the other hand, this can be turned into an advantage as having no rules to follow. It can therefore be a game changer and bring about substantial benefits.

Amazon didn’t invent the books retail industry when it offered them online at the beginning. It became a serious competitor in the industry when it started offering ebooks at its website. However the way Amazon conducts its business is so different that it  deserves the accolade of creating a new industry.

The Amazon example provides a good insight in the creation of new industries. Instead of creating new industries per se, one can substantially change the way the business is run in traditional or existing industries.

 

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