I had sold my previous business and was looking to start a new one. I spent about 3 years searching for a business that could make money and have a good growth rate. This included going back to Ryerson to complete my MBA; I felt an MBA would give me a different point of view and help me evaluate my business opportunities.
My search included talking to many people in different industries, reading various business magazines, attending conventions and conferences, and helping people with their own ventures to gain exposure. I constantly spoke with business people to find out if they knew of opportunities that were missed. I travelled to other cities and countries to look at how business was conducted there; maybe an idea could be replicated in Canada.
A very important task I undertook was a self-analysis — what were my personal strengths and weaknesses, what resources did I have access to? How could I combine my strengths with my resources? Find what you are good at and do it! Take sales skills for example — everyone has to sell something in every job, but some people can sell anything.
I then tried a few different business ventures at the same time in order to test them. They all required a financial investment and some time and effort to determine which business had the best potential.
How did I find my niche?
I was lending my money on various mortgages and noticed lawyers and brokers were making very large amounts of money on unconventional mortgages such as equity only loans. Unfortunately, I was losing money on these same mortgages due to high fees paid to brokers and lawyers. The lawyers and brokers controlled the process and would provide as little information to me as possible. I was a pawn in their game!
The only way to make money in the lending industry was to differentiate my business and develop my own client base. I changed the game, learned the legal process and became a mortgage broker. Now my lending costs are lower, and I developed a strong niche in helping people in power of sale and foreclosure situations.
Overcome barriers to entry efficiently
Every business has barriers to entry — some are financial, regulatory, technological, patents or knowledge. My main barriers were getting financing and understanding the legal process. Determine what your barriers are and whether you can overcome them. I learned the legal process and invested more money. It can take years to overcome these obstacles, but remember, your competitors are up against the same challenges, so time is critical.
Fill a need in the market
The best way to create a successful business is to solve a problem. I obtained the legal knowledge and financial resources to create fast services that were cheaper than that of my competitors. Now, I provide free advice on power of sales and foreclosures. In today’s competitive market, identifying and expertly addressing an underserved niche is a valuable way to break through the pack.
Ron Alphonso (Retail Management ’81, Business Management ’84, MBA ’09) is a Toronto-based mortgage specialist.