What’s a Niche Business?
“Put all your eggs in one basket and then watch that basket very carefully” – Is a popular idiom that was refurbished and used by the popular investor Warren Buffet. It is hard for most people to do this because of the risks involved. However, with focus and the urge to go beyond the limits, anyone can do it without much risk.
If planning to start a niche business, you must be willing to concentrate “all your eggs” in one basket. By using the term ‘all your eggs’, I refer to pulling all your resources together to ensure that you run a successful business.
Niche Businesses as an Industry
A niche business is as a small segment of market that targets a particular group of people with a specific interest, desire or passion. The aim of a niche business is to satisfy specific needs, price range, demographics and production quality intended for that particular group of people.
It is the complete opposite of a shopping mall where one can find all sorts of products and services. With a niche business, a customer is definitely going to find specific or related products and services. For instance, a beauty store can be considered a niche business because it sells products or services related to beauty.
Niche businesses as an industry have managed to be more popular than other forms of businesses because they provide exceptional opportunity for the owner to establish better relationship with their customers, resulting in higher consumer loyalty and potentially long-term consumer.
Niche Products and Services
These are products and services that enable a niche business owner to satisfy his/her chosen market where others cannot. To simplify this, niche products and services are things that your targeted people would want to buy to answer their specific problem.
In some cases, niche products and services can be narrowed down into a micro-niche. For instance, if you are a fashion business, you can break down your business to women’s wear, men’s wear or children’s wear. These are more detailed categories in the fashion business.
The same applies to service providers. If you are a hairdresser, you can also be a cosmetologist or a barber. Micro-niche is a common term that you will come across several times as you continue to learn more about niche marketing.
Tips on How to Find the Right Niche
The first step when planning a business is to determine a target group of people and reasons they would buy from you. It seems a simple task, but you should be in a position to understand the products or services you will be selling and to whom.
If you are not sure about what involves a niche business, then you should revisit your business plan. The following are tips to help you identify what your business has to offer, your target market, and how to build a niche from there.
Unique product or service: If you are going to start a niche business, you will need a unique product or service because you want to be the only one selling that particular product or service. You should come up with a product or service near the borders of unsatisfied needs. For instance, you may want to concentrate on creating hand-made fabrics or outfits, which most costume clothes stores or large retailers don’t supply.
An already available niche: Niche markets are small markets with many players. Therefore, when finding the right niche, remember to choose a niche that is already available before you find yourself out of the game. For instance, if you are planning to start a pet-food related business, you need to research carefully the size and competition of that market to find out if there is room for a new business.
Choose wanted products or services: You may be having magnificent products or services, but if no one wants to purchase them, all your efforts will be in vain. For instance, if no one is selling any type of street food along your block, it does not mean it is a good idea because of health-related risks involved.
Additionally, the niche market of people likely to enjoy street food is smaller around your block compared to other places. This means that there must be significant demand for your product or service for your business to be profitable.
No matter what product or service you want to sell, the most important thing is that you satisfy your target market in order to make the business profitable. You can also choose to go with franchising, which has more benefits than risks.
Benefits of Owning a Franchise
As an entrepreneur, you already know the definition of a franchise. However, if you are a potential entrepreneur, here is the definition. A franchise is defined as a right granted to a person or group of people to market certain goods or services of a particular company within a specific location or territory.
There are many types of franchises, although the most popular ones are fast-food related such as Domino Pizza, Subway, and McDonald’s. However, before you choose to go with franchising, you need to understand the following benefits.
Name recognition: This is an obvious benefit business owners get from franchises. Usually, startup businesses take years to establish their brands because they are not guaranteed that customers will recognize them as giant players in the marketplace. With franchises, new businesses benefit from instant name recognition. However, this can be tricky, especially if the business is new in a certain area.
Proven strategy: While most new businesses struggle to create a reliable and lucrative business plan, franchises have proven to be profitable over the years. However, even with such a benefit, it is important to do your homework carefully. Find out how potential is the franchise you want to get involved with before buying one.
Help for businesspersons: If you get involved with a certain franchise, it will help with starting up and running your business afterwards. The franchise will provide you with all the requirements you need, and management and marketing strategies.
Purchasing power and profits: Owning a franchise brings along the purchasing power of the original company. In addition, profits made from a franchise business are huge.
How to Determine Whether Owning a Franchise Is Right for You
Purchasing a franchise offers several benefits to the new owner, although it does not mean they are better options for everyone. While most people wish to own a franchise, others reject the option of owning such type of a business because of the factors involved in franchising.
For starters, franchisors will never allow you to get involved in most business decisions, which limit you from having important input that may potentially improve the franchise. Besides, franchises are also expensive to buy and most of them require scheduled payments that would affect your profits.
Ask yourself if you want to go through the training process or participate in occasional training processes in the future. If you are not aware, franchisors also limit you by restricting your business vendors, and contacts you can utilize. In addition, if a franchisor fails, you also go the same way.