Starting a small business is never easy – no matter what industry you’re in or how much money you have to invest in it. However, this can be made even more difficult for those looking to sell their products or services in a niche market.
Depending on what you’re looking to sell, the market can either be saturated or can be small. For the latter, you might face a little competition, but this could result in less interest in your product as it’s not something that customers are inspired by.
However, if you’re entering a saturated market, as a small business you must uncover two main issues:
- Whether the product or service already exists.
- Whether there are big players in the industry which hold a large portion of the market, making it difficult for small startups to compete.
Despite the possible competition in the market, one of the most common paths to success for small businesses across the globe is establishing a dominant position within a niche market. This is because it’s still less condensed than a market that’s producing products or services which have little differentiators between them.
It’s also important to recognize that although there are one or several big companies in the industry, there are always segments within it that have potential. Not everyone will have their needs met by what already exists – which is where your product or service can penetrate the market.
Pay attention to the demand within the market. Is it something that has the capacity to grow? Or is it a one-time product that will only capture the attention of consumers for a short amount of time?
Through market research (such as conducting questionnaires) you’ll get a good idea about how successful your product could be or whether there are tweaks that you have to make before creating and signing off the final design.
An Extraordinary and Innovative Idea
During your concept stage, you need to consider why and how your product or service stands out from the crowd. This could be anything from the price to the features that it offers. Ideally, you want to be the only small business offering what you’re selling. As aforementioned, the trick to doing this is by looking for unmet needs.
By comparing and contrasting what’s already available within the niche business market, you’ll get a better idea of how your business will fit into it and the potential that it has for success at the launch and in the future.
Define Your Knowledge Base
When entering a niche market, you need to ensure that you have an extensive and broad range of knowledge about it. Without this, you might find that you’re lacking the skill to successfully market or launch your product, underplaying the strengths of your business.
Just like Rome, a small business isn’t built in a day. It takes time and motivation to create – with much of the time spent on getting to know your niche and the products or services that are similar.
In order to pitch your ideas to investors and market it effectively to consumers later down the line, you need to be an expert in the field and have collated the relevant data showcasing the potential of what you have to offer. Without these figures, your investors or customers might consider you to be inexperienced and not ready to enter the market.
Create A Detailed Small Business Plan
By researching the market you want to enter, you can begin to create a comprehensive business plan. Within this, it will detail the finances that you require, your goals for future growth, how you will manufacture your products, etc. A vital step to take for any entrepreneur, this can be adapted throughout the course of the build of your business and used as a resource when making crucial moves that will impact its future.
Decide How You Will Fund Your Niche Business
This might seem like an obvious one and something that you have read about many times in terms of small businesses. But when it comes to a small business in a niche market, there are other things that you have to consider in terms of how you’re receiving funding.
For many small businesses, no matter what the market, small business loans are the way forward. By researching the best small business loans for your requirements, it will be evident as to which is the most appropriate for you.
It’s crucial that you know that despite a large number of options out there that will lend to many small businesses if they consider you to be at high risk due to the nature of the products or services that you’re selling, they might be less likely to approve your loan.
This is why it’s important to compare and contrast different loan providers, discovering how much they will lend you and what rates they are offering. It’s a good idea to do this early on in the process, to give you the peace of mind that you have the funding you require for prototype development, distribution, etc.
However, small business loans aren’t the only way that you can get funding for your niche business. You can also crowdfund and seek angel investors among other options. Although the latter is very risky with niche businesses, it could be a viable choice if you’ve found an investor that shares your creative vision and that sees the potential in what you’re selling.
Invest, Invest, Invest
Once you have completed market research, tested your product and received funding, it’s time to invest in manufacturing, distribution and office premises. As your niche business starts to grow, you will have to find methods of handling the ever-changing capacity.
In terms of office premises, you will have to consider the space you require to facilitate your staff, the location you need to be in and the amount that you can spend. Even though you’re currently a small business, as mentioned above, you could have the potential to grow – meaning that you’ll need premises that have the functionality to handle more staff as time goes on.
By finding a reliable and reputable manufacturer and distributor, you’ll have a product that’s of high quality and space that can handle the demand. When making your final decision about these two key processes, you’ll need to consider the agreements they have in place, their location and the number of staff that they have.
Although many small startups opt for distributors or manufacturers that are located in a different country due to the low cost, you need to weigh up the pros and cons of making this move. For example, despite the lower price, you might find that the quality is less or that the distribution process isn’t as streamlined as you require.
By visiting different manufacturers and distributors in the early stages, it will become clear as to which is suitable for you. When you’ve selected them, you should ensure that you keep a good relationship with them and that they communicate with you frequently, updating you on the logistics.
Refine Your Marketing Practices
Marketing is a difficult enough process for small businesses – never mind a niche business that needs to find ways to stand out and appeal to consumers. Consumer awareness for niche businesses can be low, especially if you’ve created an extraordinary product that people haven’t really considered purchasing before.
Therefore, it’s important that you have refined your marketing plan and processes before you launch your product or service. Your success or failure hinges on making connections with customers and making them realize what the need is for what you’re selling.
If you’re planning on opening a coffee shop, for example, it’s clear what the consumer needs are and how you will market and advertise it. But for a business that’s selling less well-known products or services, you need to be clever with your marketing and advertising practices.
Establishing leads and building a relationship with your customers, your marketing needs to be effective from the get-go. Which is why it’s important that you think about the amount of money you have for advertising and are sensible in the way that you market it.
By mastering the above six concepts, your niche small business will enjoy a powerful competitive advantage and success within the market. And although it might not be a straightforward or quick process to start with, but creating an innovative product, you can reap the benefits that many entrepreneurs within the niche market have before you.
A learning curve that will help you to shape the future of your business, many entrepreneurs within the niche market will adapt with the trends, consumer needs and the growth of the business as a whole over time. Although success might currently seem out of reach, if you’ve prepared correctly, invested smartly and continue to monitor the market, there’s no reason why you too can’t be successful within your industry.