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Key Takeaways
- Look for what your competitors are ignoring.
- Consider how much money is being left on the table.
- Find the edge you need to seize the opportunity.
- Make a plan to grow your new category.
Industries that haven’t changed much in decades can feel like safe bets when you’re starting a business. But that isn’t always true.
A space that goes too long without experiencing disruption actually tends to be more difficult for newcomers because established companies dominate the field. They can afford to outbuy, undercut and push out newer and smaller players.
But just because something has been done one way for a long time doesn’t mean there isn’t a better approach. You can always do something no one else is doing, even in spaces that evolve slowly. Disrupt the market in a valuable way, and you create a compelling alternative for buyers. That’s how new categories are born.
I know this because that’s what my brother Todd and I did when we started Roof Maxx. Before then, residential roof restoration didn’t even exist as a category within the roofing industry. Today, we’re one of the world’s largest virtual home services companies.
Here are the principles that helped us stake out a fast-growing new niche in a notoriously slow industry, and how you can do the same.
Related: 5 Essentials for Creating a New Market Category
Look for what your competitors are ignoring
Startups can’t afford to beat the big players at their own game. Instead, look at what they aren’t doing. This can help you identify underserved niches in the industry and consider what new product or service might offer the most value to consumers.
Let’s consider residential roofing, where steep slope asphalt shingles make up 85% of the U.S. and Canadian markets. In the past, contractors repaired roofs more often. But today, most of them only sell replacements.
As this trend has developed, manufacturers have also steadily reduced the asphalt content in their shingles. This means new shingles dry out and fail faster than the ones produced a generation ago.
Right off the bat, we’ve got at least three areas it looks as though the industry might be ignoring: roofing materials besides asphalt shingles, the roof repairs no longer being offered to homeowners and the changes that have impacted shingle quality in recent years. Now we just need to find out which one makes the most sense to build a business around.
Consider how much money is being left on the table
Of course, industries sometimes ignore certain categories because they simply aren’t viable. So our next step should be to see whether each new category we’ve identified actually represents a legitimate business opportunity.
Focusing on materials other than asphalt shingles is probably a non-starter. Most people use asphalt shingles on their homes, so if we ignore asphalt, we’re losing 85% of our potential customers. We can cross that one off our list.
We also won’t have much luck if we try to disrupt shingle manufacturing. That’s because the lack of asphalt in new shingle construction stems from industry-wide factors like rising material costs and global supply chain issues. Those kinds of problems are usually beyond a startup’s power to solve.
That leaves us with the roof replacement issue. Specifically, if contractors are only offering roof replacements instead of repairs, there are probably plenty of homeowners looking for alternatives. After all, roof replacements are expensive, and it wastes money to get one before your shingles are really worn out. So if we can offer a cost-effective alternative for homes with decent shingles, we’ll have a product we can use as the foundation of our new category.
Related: 3 Crucial Lessons for Entrepreneurs Taking on Big and Complex Markets
Find the edge you need to seize the opportunity
Pinpointing an empty corner of the market and confirming that demand exists there are only preliminary steps. We still need a product or service that satisfies that demand.
If you’ve come this far with me, you’ve just experienced a condensed version of the journey Todd and I went on to identify the business case for Roof Maxx. We knew asphalt shingles were where most of the money in residential roofing was. We also knew there were homeowners across North America who didn’t want or need full roof replacements, especially not given the inferior quality of newer shingles. But we still needed something else to offer them.
Discovering the Roof Maxx product gave us the last piece of the puzzle. Here was an eco-friendly, plant-based solution that could help homeowners extend the lifespan of their current shingles by up to 15 years for a fraction of the cost of a full roof replacement. Not only could this save them money, but it also allowed them to keep the higher-quality shingles they already had instead of putting on new ones that wouldn’t last as long.
That product set us apart from everyone else in roofing at the time, because it let us offer unique value to a huge number of potential customers that no one else was even trying to help. This turned residential roof restoration from a mere business idea into a brand new category.
Make a plan to grow your new category
Creating your new category is just the start. You’ll need to expand it over time if you want to develop new revenue streams for your company and stay competitive.
That’s what we’ve been doing since Roof Maxx started. Through industry education and our growing dealer network, we’re bringing back a world where roofers offer different services based on their customers’ needs. Our vision is for every roofer to eventually need inspection, repair, replacement and rejuvenation departments. This will create opportunities for us to develop new products and services. And America’s homeowners deserve it.
We’ve already done it for roofing, but there are lots of other legacy industries out there waiting to be disrupted. Use the steps above to carve out your new category and discover the solution that will make you a leader within it.
Key Takeaways
- Look for what your competitors are ignoring.
- Consider how much money is being left on the table.
- Find the edge you need to seize the opportunity.
- Make a plan to grow your new category.
Industries that haven’t changed much in decades can feel like safe bets when you’re starting a business. But that isn’t always true.
A space that goes too long without experiencing disruption actually tends to be more difficult for newcomers because established companies dominate the field. They can afford to outbuy, undercut and push out newer and smaller players.
But just because something has been done one way for a long time doesn’t mean there isn’t a better approach. You can always do something no one else is doing, even in spaces that evolve slowly. Disrupt the market in a valuable way, and you create a compelling alternative for buyers. That’s how new categories are born.
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