Starting a Business: An Open Door for Anyone
Brenda R. Austin
Professor Michael Clark
Lithonia Campus
Business 100
November 2, 2011
Strayer University

Starting a Business: An Open Door for Anyone
Question 1: Identify at least three challenges when setting up a business. Explain why they are challenges:
Three challenges involved in starting a business are finding an idea or ideas, finance or funding, and finding committed people.
Finding an idea or ideas for a new business may not be as hard as it sounds or seems. Most of the time, the idea comes from inside you. There is a deep, nagging desire to see something accomplished or provided. This focus may start with a select group of people, as it did with “Urban Outfitters”, who began by targeting college students.
Finding financing or funding may prove to be a bit more challenging until you decide to do some serious research. You may find various opportunities to acquire the financing you need through investors from different business industries. There are investors searching for small businesses in which they can invest money, time, and/or resources.
Finding committed people who can see your vision for your business, and commit to working hard to meet the mission and goals for the business are valuable assets. These people may be family members, friends, classmates, or someone you met and connected with soon after sharing your vision. Urban Outfitters was started by Richard and Judy Hayne, and Richard’s old college roommate, Scott Belair. Roughly a year after the first store opened, Judy and Richard divorced and went separate ways; Scott Belair graduated from school and left the enterprise for Wall Street (Steve Jobs, 2011). Finding these great people does not mean they will stay with you forever, so choose wisely.
Question 2: Define what a "niche" product is. Give at least three examples of niche products: Niche is defined as a place or a position suitable or appropriate for a person or thing: i.e., to find one’s niche in the business world, or a distinct segment of a market. Finding your business niche is great, but can prove challenging because, usually, niche markets are difficult to serve because the numbers of customers are so small, too spread out, or are looking for something difficult to reproduce (Steve Jobs, 2011).
With a great niche you must have a great location. When Urban Outfitters’ first started, their niche was selling used goods to college students, in locations close to college campuses. As their business expanded, they started selling casual clothing, accessories, and housewares to the 18 – 30 age groups, and kept their locations close to college campuses. Urban Outfitters expanded the business by starting a line of stores called Anthropogie, which peddle a variety of upscale apparel and housewares to women 30 to 45. Continuing to advance into the Technology environment, Urban Outfitters and Anthropologie offer their customers hip and trendy apparel and home furnishings through retail locations, catalogs, and Web sites (Reference for Business - Encyclopedia of Business, 2011). Their niche has grown into a strong business market to be taken seriously.
Besides niche products like those sold by Urban Outfitters and Anthropologie, other niche products are coffee (Starbucks), iphones (Apple), and casual clothing for young urban Aftrican-Americans (FUBU).
Question 3: Explain why a niche company might have an advantage in a market. Would price necessarily be an advantage? Explain why or why not: When you have a common and strong niche that extends across racial, ethnic, and social barriers, you will continue to have an advantage in a market. This seems to be the case for Urban Outfitters, as their business continues to evolve with its market. There will always be consumers looking for something unique and different from mainstream retailers. Urban Outfitters has a vision for their consumers, so their consumers remain loyal. For a lot of Urban Outfitters’ consumers, paying more for unique and different clothing, housewares, and accessories is not an issue. Therefore, though Urban Outfitters may be considered pricey for some, others don’t agree, as Urban Outfitters’ sales remain steady.
Question 4: Identify and explain three reasons why customers would pay more for exclusivity. Exclusive items or products are limited to possession, control, or use by a single individual or group. Throughout the history of humanity, the upper classes have always been happy to pay more to have an item of clothing, art, automobile, piece of furniture, etc., that no one else or very few others own. Some people feel more powerful because they own something others don’t, or they own something before anyone else does.
Exclusive items are restricted in distribution, use, or appeal because of expense, so they are usually far more valuable as well. Another appeal is that exclusive products don’t usually lose value, instead their value increases as time goes by. Many exclusive items are handed-down from generation to generation, and can become known by the individual or group by whom they are owned.
Though purchasing exclusive products is not just for those who can afford it, businesses as Urban Outfitters tend to steadily move into the market of wealthier customers. The goal of businesses is to make money, so they place a lot of attention on meeting the needs of their exclusive customers. Urban Outfitters seems to be unique as an exclusive business in that it has maintained its original plan for selling unique items that are also affordable, and branching out to capture their more exclusive customers.
Question 5: Explain how a niche player "chips away" at a larger competitor's base. Give three examples of retailers who have done this. Niche players, like Urban Outfitters, must use well-structured plans to chip-away at larger competitors’ base. Urban Outfitters’ business model has two key features – lean inventories and high product turnover. As a result of its high product turnover rate, there are new products in Anthropologie and Urban Outfitters stores every few weeks instead of a matter of months, which is the standard for retailers like Gap. This gives customers a reason to visit these stores more often, as there are always new products to see. (Trefis, 2010) These strategies have helped the company during the recent economic slowdown. Between 2007 and 2009, the revenue per square foot for Urban Outfitters and Anthropologie stores remained relatively flat, whereas such metrics for competitors like Abercrombie & Fitch declined more significantly. In 2009, the revenue per square foot for Anthropologie stores stood at nearly $750, which was double that of Abercrombie & Fitch stores and around $300 higher than that for Banana Republic stores. (Trefis, 2010) Three retailers who seem to have used similar techniques are Gap Inc., Limited Brands Inc., and Pier 1 Imports Inc., as they are three of the few considered principal competitors.

References
Reference for Business - Encyclopedia of Business, 2. e. (2011, October 30). Urban Outfitters, Inc. Retrieved from Reference for Business: http://www.referenceforbusiness.com/history/UI-Vi/Urban-Outfitters-Inc.html
Steve Jobs, C. -A. (2011, November 2). Urban Outfitters Continuing Case Study. Strayer University - Blackboard . (Unknown, Ed.) Lithonia, GA, USA: Strayer University. Retrieved from Blackboard.
Trefis. (2010, June 15). Urban Outfitters: Lean Inventory and High Product Turnover Are Key. Retrieved October 30, 2011, from Seeking Alpha: http://seekingalpha.com/article/210169-urban-outfitters-lean-inventory-and-high-product-turnover...