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Business Rx: A start-up's trade show dilemma

Monday, April 26, 2010; 36

The Washington region is a hub for trade shows, conventions and consumer shows that run the gamut, from the government technology industry to orthodontics to autos. When should a young company make sure it has a presence in an industry's top show, and are trade shows a good investment of marketing dollars?

THE PROBLEM

Nicholas Rapagnani and his business partner, Suyan Hu, have a start-up with a very specific target market -- small print houses that coordinate printings and mailings. Rapagnani spent five years in the print/mail industry and knows that many of the smaller shops don't have the resources to offer their customers some of the services of larger print houses. Rapagnani and Hu developed software packages for small print/mail houses for e-billing and automation of managing and processing client files. They are working to get their new company, MainLine Automation (http://www.mlstatements.com), off the ground and line up clients.

THE PITCH

The print/mail industry's largest trade show is taking place in mid-May -- sure to be swarming with potential clients.

Nicholas Rapagnani:

"We want to go to the convention and set up a booth and try to meet people in the industry. We don't want to let this opportunity pass us by -- we'd have to wait a full year for the next convention. We're hoping if we get a couple clients, that will more than pay for our investment in the booth and get us started in the industry. We're going to try to make it work."

THE FEEDBACK

Asher Epstein, managing director, Dingman Center for Entrepreneurship:

"I think the risk is particularly high for an early-stage company to make an investment in exhibiting at a major trade show when it is still fleshing out the business model and value proposition.

"I definitely encourage Nicholas and Suyan to attend the trade show, network, make contacts and learn as much about the industry as they can. To invest in a booth and exhibit, they're talking about spending a huge amount of marketing dollars for the year in a one- or two-day event. I'm cautioning against pursuing that path because I don't quite think the value proposition is refined enough to generate the type of return that they expect.

"There's a valuable lesson here -- everybody wants to figure out how to get more customers. Getting attention is part of the process, but getting paying customers is a whole different challenge. Trade shows bring a lot more people into the funnel, but you don't want to drive them there without a clearly mapped-out plan of how you'll convert them to customers."

ENTREPRENEUR REACTION

Nicholas Rapagnani

"The advice was well taken, but we decided to put down a deposit on a booth -- we think it's worth the risk. There will be more than 10,000 people at the show, so it will give us a great chance to network. Attracting customers relies on us showing them the technology, and we can't really do that by just walking around and handing out our business cards. In general, our operating costs are pretty low because we're a technology company, so this is a big chunk of our seed money.

"Between now and the trade show in mid-May, we're trying to get companies to pilot the software and provide testimonials."

Looking for some advice on a new business, or need held fixing an existing one? Capital Business and the experts at the University of Maryland's Dingman Center for Entrepreneurship at the Robert H. Smith School of Business are ready to assist. Contact us as capbiznews@washpost.com.

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