Understanding market research. Plus: Boards for beginners.
I have three retail stores and would like to open three more in larger markets. My database includes more than 10,000 clients, but they seem as different as soup and nuts. What market research will help me choose other locations?
Aitkens Pewter, New Brunswick, Canada
If you sell kosher baby food or grizzly bear traps, defining your customer base is a cinch. If your product has broad appeal, however, all that buyers have in common may be you.
But if the customers in your hand don't tell you much, you can learn a lot from those waiting in the bush. Conduct a field study of potential locations, staking out a likely street at different hours on different days. Waylay 20 passersby and ask them about the site, recommends Chris Ohlinger, CEO of Service Industry Research Systems in Highland Heights, Ky. If fewer than 30% say they are satisfied with existing competitors, that's good. If at least 30% say they would shop at your store, that's better.
Tony Hartl plays anthropologist when he scouts new locations for his Dallas-based Planet Tan. The CEO, who has opened eight successful tanning salons since 1995, focuses on areas with at least 100,000 residents in a three- to five-mile radius. After scouring demographic data (offered by most market research firms), he visits the neighborhood to make sure the buildings are well maintained and asks locals about their interest in venturing beyond the pale. Still, "after looking at all the numbers, it really comes down to intuition," Hartl says. When you're home, in other words, you know it.
Making Your Mark
I have an idea for an incredible ad campaign. How do I protect the catch phrase?
Sales Producers Inc., Los Angeles
A slogan can be a valuable bit of intellectual property: Someone out there is probably kicking himself right now for not cementing the rights to "Got milk?" Phrases are itty-bitty things and so require a trademark rather than a copyright. You can file for one on the website of the United States Patent and Trademark Office. (First, search the site to make sure someone hasn't beaten you to the punch line.) The cost is at least $335, but you don't need a lawyer. Trademarks generally take three months to process. They last for 10 years, as long as you file an "affidavit of use" five years after the registration date. Keep in mind that trademarks don't trigger a siren every time someone purloins your idea. It's up to you to perform weekly Net sweeps: If you catch people using your catch phrase, send a letter asking them to cease and desist. If they won't, consider hiring a trademark attorney to file a lawsuit. That gets pricey, but some words are worth it.
Boards for Beginners
When and how should start-ups find and compensate board members without breaking the bank?
Rory J. Cutaia
Telx, New York City
Like parents, boards offer experience and guidance. Also like parents, they're good to have from the get-go. And if you start foraging for members while still developing your product or service, you can leverage their collective gravitas to impress investors.
Unless you're well connected, luring attractive members can be tough. But bag a trophy director up front and others may follow. "You have to be completely intrepid," says Scott Painter, the founder and former CEO of CarsDirect.com. Painter proved his own stoutness of heart after reading the retirement letter of United Airlines CEO Jerry Greenwald in an in-flight magazine. Using the seat-back phone, he called Greenwald's office and asked if he could stop by in a couple of hours. Much to Painter's surprise, Greenwald agreed. And he agreed again -- this time to join the board -- after hearing the entrepreneur's pitch. He was one of nine stars in a constellation that came to include Bill Gross of Idealab and Roger Penske of UnitedAuto Group.
For compensation, offer each director a small percentage of your company's stock or profits (about one-half percent). Before you do, perform background checks on all potential members. As the headlines remind us, some directors end up doing more ill than good. Like parents.
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