Statistics tell us that as many new small businesses fail as succeed. But why do some fail where others succeed?
In the hope of gaining some insight into what separates the successful from the unsuccessful, we spoke to a new business owner who found the right combination for success and asked him to share his experiences with us. Perhaps the lessons he learned can be applied to your business.
In the early ‘90s, Bart Fitzpatrick was transferred by his employer from New Jersey to Chicago, where he joined a social club to meet people and to play sports. Seizing what he saw as an opportunity, he left the company that transferred him and he started his own small business--an adult sports league called Chicago Sports Monsters--in the spring of 1994. By the fall of 1996, he had built his sole proprietorship into an 11-sport league competing in all four seasons, servicing 2,000 participants, and generating revenues of $200,000, which he projects to more than double by 1998. Here's his story.
Recognizing an Opportunity
The adult sports club industry began in Chicago in 1988, when a national chain of sports leagues opened a local chapter. Although park districts and business associations had offered adult recreational activities, this new league created what Fitzpatrick calls “a paradigm shift of what was expected of adult sports leagues.” Within a short time, at least five competing leagues had sprouted up.
Despite the competition, Fitzpatrick still felt that the customer's needs were not being entirely met. While the new leagues, Fitzpatrick says, “did a lot of things very well, there were some things that were in need of improvement.” In particular, he felt that they didn't offer very good customer service.
He thought that he could improve on what was currently being offered by making sure that games were run on time, that playing fields were ready, that referees would show up, that rules would be followed, that troublemakers wouldn't be tolerated, and that legitimate participant complaints and suggestions would be listened to.
He also began to gain experience and insight about how these leagues worked from his participation on league teams. “As I got involved,” he says, “I became a team captain and would organize between two and four teams a season to play in the leagues, thus becoming very familiar with how things were done from a customer-supplier relationship.”
Analyzing the Risks
In addition to starting a new adult sports league, Fitzpatrick also considered a second new business option: becoming a bank purchasing consultant, which would draw on his experience in sales to financial institutions. He analyzes his choices this way:
“Both required approximately the same amount of money for startup costs, but I projected that the sports organization would provide a better possibility for providing a quicker positive return on the investment. I projected that the required initial incentive pricing to draw customers could be eliminated within the first two seasons and profitable status would result by not later than spring of ‘95 [within one year]. In addition, I gave myself three windows--six months, two years and five years--to examine the company's progress and to determine whether it was best to bail out, sell or continue on. Also, since the leagues would be run by me, it would afford me the opportunity to get a complete hands-on approach and get to know the customers personally, which would help future league return business and expansion.”
Meeting Reality
Emboldened by promises from lots of friends that they would join his new league and a belief that “I found great locations and felt that the company's structure would be noticeably superior to the competition,” Fitzpatrick raised the $15,000 startup costs by drawing from his savings and by borrowing from his parents, and opened his new league in the fall of 1994.
He was, he now says, “stunned” by the lack of interest. He had projected 1,000 participants in the fall season and 1,200 in the winter, but drew only 200 and 400. “It was a major disappointment,” he says, “but made me realize that it wasn't going to be nearly as easy as I thought.”
Rather than give up, Fitzpatrick chose to plow on. He decided to “continue to focus on providing a quality service, narrowing advertising outlets to where the return was highest, and establishing long-term relationships with location providers and customers alike.” In addition, he says, “I modified growth projections and goals for the company to numbers that were more in keeping with the reality that I was starting out fresh and that I had to rely only on myself to attract and keep customers.”
Clawing His Way Out
“It was a rough go for the first two seasons,” Fitzpatrick says, “since all my sales went into purchasing equipment and insurance.” He was also suffering from the fact that his league fees were artificially lowered in order to attract business.
But his fortunes gradually turned, his hard work began paying off, and he met his revised six-month targets. He decided at that point that his league had a chance to make it. By the second year, business had picked up, his participation levels were up over 1,000, and he was on his way.
Building on the Success
Now that his business was up and running successfully, he turned his attention to looking for additional revenue sources. He sees four possible growth areas:
- Local markets -- There is potential, he says, for further growth in his existing leagues, for expansion into the Chicago suburbs, and for service to niche markets, like the gay and lesbian community.
- League sponsorships -- With leagues full of 25-35 year-old professionals with disposable income, he believes that certain companies will be interested in paying to advertise to his customers.
- Merchandising -- For now, he gives away t-shirts bearing his copyrighted logo, a grinning alligator, but in the future he sees a potential for sales of shirts, shorts and hats bearing the logo.
- National markets -- In 1997, he expects to open Chicago Sports Monster chapters in two other cities, with a goal of 30 new chapters by 2000.
Analyzing His Success
Although each new business owner's experiences are different, there are qualities that successful owners tend to have in common. Some of the qualities that served Fitzpatrick well were:
- A keen eye -- Where others perhaps saw a crowded field of six or seven adult sports leagues, Fitzpatrick saw an opportunity for a league that took better care of its customers.
- Patience -- Where others might have jumped into the new business, Fitzpatrick analyzed his chances for success, considered other new business ideas, and waited a couple of years until he had gained sufficient industry knowledge.
- Perseverance -- Where others might have given up after his business's disappointing initial performance, Fitzpatrick instead defined his goals more realistically and stayed the course.
- Imagination -- Where others might have been satisfied with just meeting their goals, Fitzpatrick identified and explored new growth areas.
If there is a lesson to be learned from his experiences, maybe it's, as Fitzpatrick says, “to expect the unexpected and to be ready to hang in there, if you can, when things don't go exactly as you planned.”
