sufac.com

Competition is the most important factor in business. If you have a monopoly like Rockefeller did back in the day, you get rich. If you’re competing against everyone in your neighborhood, like some prostitute in Amsterdam, you’ll be fighting your entire life and never make too much.

Cupcakeries are popping up everywhere (check my Twitter list, there’s a couple good articles linked). It all started because people found out they could charge several dollars for a delicious cupcake made from a secret home recipe. And all of a sudden people are swarming in your store. BAM, instant success. But then what happens? A lot of other people decide that their secret recipe is better and that they wouldn’t mind charging $3/cupcake either. In the end they may go out of business, because you were their first. But it’ll be a fight and more will come after they leave.

Then take a look at OMI (check my Twitter for a linked article). First off you don’t even know what they do and they have a boring name, that’s a great quality in a company you want to invest in (Peter Lynch rule) because they’re most likely undervalued. So what do they do? They make air fresheners for smelly factories. They walk in get the factory manager to smell the air, go down 100 feet, spray some into the air and then they smell again. BAM, they sell to a customer and keep selling. They sell it for $50/gallon and it costs them $1/gallon.

They sell it for $50/gallon and it costs them $1/gallon. Sorry had to say it again.

Is OMI a harder business to get into? Of course, you have to have a good product and then get out there selling to businesses (when asked if it’s safe their salespeople will actually spray it into their eye, awesome). But what’s more worthwhile, a business that’s easy to set up and will have competitors coming after you? Or a business lining your pockets with gold in an industry that’s a bit too niche for most people?

Of course you need to enjoy what you do, but when it comes down to it running a business is running a business. It’s dealing with people, selling, putting out fires and working harder than everyone around you. So pick a business that’s resistant to competition. If you think of something and say “oh that’s way too hard” then you’re on the right track, because few will follow you.

Happy Business.
-Craig Sharkton