What is a trend company? Well it's just what the name implies. A company that is following a current trend or something that has become popular.
Many reading this will want to hit the back button and read another article. You may be thinking, why avoid these companies? They are great for making money. I agree, but I have learned through personal experience that these trends never last.
Rise and Fall
A trend business rises to popularity very quickly and sometimes is surrounded by controversy. When controversy comes around often struggles accompany it.
I owned and operated a tanning business. This industry was booming as the younger generations craved their bronzed look. However, there were organizations that sought tougher regulation and restriction of this industry. This ultimately led to our closing and the closing of several other local salons. Controversy can also mean an increase in business too so you must approach these ventures with caution and look at the long term.
Similarly a trend that becomes popular quickly may not stick around as long as you planned and this may affect your ability to recuperate your investment. In our area poker tournaments seemed to be the new hit thing. This was brought on by the rising popularity of the World Poker Tour and its covering being shown on ESPN and other networks.
Many small locations opened that offered clubs and tournaments for members. These places were outfitted with food and drink, they had elaborate tables with lighting and even television sets to show the tournaments on the cable and satellite networks. This seemingly large investment was short lived as all of these locations closed within a year or two of opening.
Use for Your Own Good
There are other ways to ride these trends without getting involved in their demise. You can use some of these companies as a form of networking to potential customers. You can sponsor them or advertise in their store and allow them to do the same. You can trade services and give those to your customers.
This will create and unofficial partnership with these companies and can take advantage of the trend to boost your sales. Also, you may consider investing in them a small portion. If you do this I would stipulate the terms of payment very carefully. Make sure your investment will be one of the first items paid back in case they suffer the same fate as the poor poker tournament houses.
Roll with the Punches
If something you are passionate about becomes the new trend however, you may chose to join the fight. I believe that the passion and knowledge of a truly dedicated hobbyist can carry a startup above and beyond the others who are simply looking to get rich quick off of a new trend.
I have a friend who was always passionate about skateboarding and snowboarding. He opened a small shop in a little town and expected a modest living from this. However, a few years after his shop opened snowboarding became the new thing. He took advantage of this and quickly expanded using his knowledge and experience to out-shine all of the other little shops that opened soon after. Fast forward to today, and he owns several location and even franchises. Snowboarding is an Olympic sport and he is on top of the world.
I am not saying not to try; I am just saying to be careful and cautious in what you do. If something is becoming so popular that you are thinking of offering your services in that industry then chances are someone else is too. So be careful and think of ways to beat the competition.