Are you ready to go niche with your business?
Thursday, November 9, 2017/
Consumers are hyper aware of what they do and don’t want. They have become extremely educated and selective about their needs and desires. As a result, niche businesses are booming. These businesses recognise a trend or niche and then service it with razor sharp focus. Is your business in a position to do that?
Hopefully as a small business owner you’ve already worked out what it is you do; you’ve found a gap in the market you can fill with your products and services. However, is it possible for you to drill down even deeper and find a micro niche you can tap into that might enable you to develop a new business?
The rise of niche businesses is tied to the sophistication of an economy. A sophisticated economy is generally one that has attained population and income levels sufficient to support diverse discretionary spending patterns, and has high levels of cultural and educational awareness.
As an example, generally you will find a lot of cupcake shops in the trendier parts of big cities rather than in outer suburbs or regional outposts. Cupcakes are a spin-off niche from general cake and bakery stores. To survive and thrive, cupcake stores need to be in a market where plenty of people are willing to part with money for specialist or gourmet style food items. We probably take it for granted in rich Western cities that cupcake stores are indeed a going concern. That’s because our income levels are high enough and broadly enough distributed to support this kind of spending.
Obviously this is not limited to cupcakes. I use that example because the development of niche businesses is very visible in the food and beverage sector, from things like boutique micro-brewery beers through to ever more exotic versions of international cuisine. That’s because urban consumers have the money to spend on these things, especially younger ones who have the time and desire to get to micro breweries or Peruvian fusion restaurants. They have often developed the curiosity and desire to experience these things because they have consumed content that primes them for it. Organic grocers are in this category too (but probably not for much longer as organic goes mainstream).
The same principle can be applied to sectors like fashion and homewares. But beyond these consumable goods, professional service industries are also undergoing rapid micro niche segmentation. Digital tools are playing a big part in all this too, as it has become a lot cheaper and quicker to set up a micro business that might just concentrate on a very specific product. Buy a domain name, build a website, get some social channels up, and you’re pretty much set to go as long as you have something of value to give to your customer.
And that’s the catch. You need to identify not only a trend you can jump on or a pain point you can solve, but also how that becomes a model that works for the customer and your business. If you can’t work out how you’re going to monetise this niche you may as well just call it a hobby. Luckily, as I mentioned earlier, you can set up a business quickly and easily in order to test and iterate your model. Don’t let it drain your main business of resources but be mindful you’ll need to spend some time and money getting it going.
Take a calculated risk on what data you might see coming through in your main business. Is there an upward swing in spending on certain brands or products? Is there an operational strength in your business that could be put to use in a related field?
Keep it small and highly targeted. Keep it very niche. Then look for growth spots you can harness. Before long you may just have another business ticking along and bringing in some additional income.