Savvy strat­egy for bet­ting on a fad also considers its end

Daily Local News (West Chester, PA) - - BUSINESS - By Joyce M. Rosenberg

NEW YORK >> When a prod­uct is hot, it can look like a sure­fire bet for an en­trepreneur tempted to jump on the trend. A savvy strat­egy, though, takes into ac­count what to do when the fad goes pfffft.

Com­pa­nies of all sizes try to take ad­van­tage of fads — it’s what big toy and Hal­loween cos­tume makers do when a movie like “Star Wars” or “Frozen” comes out. But a craze can come to a sud­den end when some­thing else grabs the at­ten­tion of fickle con­sumers or a bet­ter prod­uct takes its place.

Small busi­ness own­ers need to think not only about how to sell a hot prod­uct, but how they’ll han­dle the like­li­hood of a lim­ited shelf life.

“Don’t as­sume your fad is go­ing to have rev­enue be­yond a pretty short time,” says Mary Gale, a lec­turer in en­trepreneur­ship at Bab­son Col­lege. “Plan for the demise of that busi­ness and don’t fool your­self about when it’s go­ing to be.”

A look at the strate­gies of four small busi­nesses:

Ready to pivot

The pop­u­lar­ity of Minecraft in­spired Lind­sey Han­d­ley to cre­ate soft­ware and af­ter­school pro­grams to teach chil­dren com­puter skills us­ing the video game. Her com­pany, ThoughtSTEM, be­gan de­vel­op­ing its prod­ucts in 2014.

Minecraft is still sell­ing well seven years af­ter its re­lease, but Han­d­ley’s com­pany cre­ated its pri­mary soft­ware prod­uct, LearnToMod, with the un­der­stand­ing that it may run its course. The soft­ware’s func­tions can be eas­ily adapted for an­other video game.

“It makes us feel a lot safer know­ing if we need to pivot one day be­cause all the kids stop play­ing Minecraft, we can pivot and it will be OK,” says Han­d­ley, whose com­pany is based in San Diego.

ThoughtSTEM is on the look­out for new games that might suc­ceed Minecraft, but has al­ready turned down adapt­ing its soft­ware for sev­eral of them.

“By the time Minecraft starts los­ing pop­u­lar­ity, those games will be lose pop­u­lar­ity too,” Han­d­ley says.

Look­ing for ways to stand out

Cafes sell­ing bub­ble tea, a bev­er­age pop­u­lar in Tai­wan, have pro­lif­er­ated across the U.S. as well, some in­de­pen­dently owned and oth­ers part of fran­chise chains. When Mathew Wong and his busi­ness part­ners opened Tea and Milk in New York last year, they knew it was risky.

“For a long time, there was a new one open­ing up ev­ery day,” Wong says.

The part­ners de­vel­oped a strat­egy they hope makes their shop stand out and al­low it to thrive even if the pop­u­lar­ity of bub­ble tea wanes. They make the bub­ble tea, which gets its name from the tapi­oca pearls in the bev­er­age, from scratch. They also ad­ver­tise it as health­ier than com­peti­tors’ of­fer­ings made from fac­tory-pro­duced pow­dered tea and milk.

They also are mar­ket­ing to a di­verse range of cus­tomers. The store is lo­cated in As­to­ria, a mul­ti­cul­tural neigh­bor­hood, and the part­ners take their tea to flea mar­kets and fes­ti­vals around the city to in­tro­duce it to new cus­tomers.

Milk and Tea is also stocked with other pop­u­lar foods like de­signer dough­nuts. If bub­ble tea starts to fade, “we’ll do more re­search on what we can do (to sur­vive),” Wong says.

Cup­cakes as events

While cup­cakes are still rel­a­tively pop­u­lar, they’re avail­able many places — from cup­cake-only sell­ers to tra­di­tional bak­eries to su­per­mar­kets. The craze has cooled from its peak, and the Crumbs chain went into bank­ruptcy in 2014 be­fore be­ing re­vived by an in­vestor.

With that in mind, Bar­bara Hart con­sid­ered how to be dis­tinc­tive be­fore she started her cup­cake com­pany late last year and de­signed a prod­uct that could be cus­tom­ized. At Cre­ate Your Cup­cake, cus­tomers can pick fla­vors for all the com­po­nents: the cake that has a hol­low cen­ter, a fill­ing, ic­ing and top­pings.

Hart be­lieves that by of­fer­ing a do-it-your­self-cup­cake, she’s mak­ing the prod­uct more likely to sur­vive if the fad fiz­zles. She pro­motes the cup­cake as more than a sweet, more like an event. Be­sides sell­ing them in her Sandy Springs, Ge­or­gia, bak­ery and on­line, she caters par­ties where adults and chil­dren get to cre­ate their own cup­cakes.

Hart is also able to turn out quiches and other notsweet foods.

De­spite the name, “We’re not locked into some­thing that could be a fad,” she says.

Flatlin­ing fad

Five years ago, Jerry Lee be­gan mak­ing cus­tom leather smart­phone cases, fo­cus­ing all his ef­forts on the Ap­ple iPhone, “sim­ply be­cause it was the coolest gad­get in town.”

Lee, owner of Story Leather in Wal­nut, Cal­i­for­nia, pro­duced a new style of case for ev­ery ver­sion of the iPhone, and sales rose 100 per­cent from one year to the next. But two years ago, when the iPhone 6 was re­leased, rev­enue started slow­ing as other phones with the An­droid op­er­at­ing sys­tem started get­ting more buzz; Lee’s year-overyear gains fell to 50 per­cent.

“I started wor­ry­ing, should we base our busi­ness pri­mar­ily on peo­ple buy­ing iPhone cases?” Lee says.

His so­lu­tion has been to di­ver­sify, mak­ing wal­lets, card hold­ers and other leather goods. Rev­enue is up about 50 per­cent from last year, with Lee’s newer prod­ucts mak­ing up for the weaker iPhone case sales. Cus­tomers of­ten want a wal­let to match a smart­phone case.

With­out the change in strat­egy, “I would be in trou­ble,” Lee says.

THE AS­SO­CI­ATED PRESS

Mathew Wong poses for a por­trait at Tea and Milk, a bub­ble tea shop he co-owns in the As­to­ria neigh­bor­hood in the Queens bor­ough of New York.

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