Small Business

One Tough Cookie of a Market


By Karen E. Klein Q: I have an idea for a gourmet cookie-dough company where I would sell the

dough in one-ounce disks and three-pound tubs. How do I research this industry? Outside of forming a corporation, how do I protect my idea so that I can talk about it to potential investors?

---- C.B., Philadelphia

A: Your idea is not exactly a new one. In fact, experts say, the market is

crowded with fresh and frozen cookie dough, from convenience products made by megacorporations like Pillsbury and Otis Spunkmeyer, to small, upscale

bakeries selling gourmet rolls of dough for $5 to $8 a batch over-the-counter.

How to find out what's out there? It's pretty simple. Start by looking

around and talking to people. For products that appeal to the home market,

check out supermarkets, grocery stores, and specialty-food outlets and

gourmet shops in your area. If you're thinking of selling wholesale to

bakers, talk to local bakery owners about what they buy now, whether they

make their own dough, and whether they would buy prepared dough and at what price.

Certainly, the Internet is a wonderful research tool, and you can start just

about anywhere and spend hours surfing through Web links to learn a lot about

any industry. You might try looking for companies that offer this product, so

you can see what they're selling, at what price, how they deliver the dough

(refrigerated or frozen), and where it's available. In addition to Pillsbury

and Spunkmeyer, Nestle and Rich Products offer cookie doughs. You could

also try generic keyword searches, such as "frozen dough."

"There's really nothing new left to do in this product category, unless you

have a very unique, different idea. The business is very, very sophisticated,

and there are a bunch of players involved already. One has even come up with

a special dough that makes the cookies bake up crunchy on the outside and

soft inside," says Ed Engoron, a food consultant whose Perspectives

Consulting Group is based in Los Angeles.

While you're researching, however, Engoron suggests that you look into related

products where the market isn't so saturated. Frozen or refrigerated dough

for muffins, cinnamon rolls, and other treats may appeal to the same market,

for instance, but the competition is less intense than in the cookie-dough business.

Before you spend any money protecting your idea, you'll need to have a good

sense of your expenses and whether this product is economically sound. How much

will your ingredients cost? Production? Packaging? Shipping? Work out some

rough scenarios where you sell 'X' amount of product, then figure your costs, gross, and net profits on that amount. Will you be able to make any money

doing this? How much will you have to sell to break even, then make a

profit? How long will that take?

If you still want to go forward after you've done your research and your

cost analysis, then you'll need to talk to an attorney who specializes in

intellectual property. Such a professional can help you protect your idea

before you approach potential investors to see if they are interested. Have a question about running your business? Ask our small-business experts. Send us an e-mail at smartanswers@businessweek.com, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.


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