You know you want to.
You want to stop worrying what your boss thinks, make more money, be happier, forget about playing office politics, get more flexibility in your schedule and be your own boss.
But starting a business is scary and risky. At least that’s what everyone tells me. Maybe that was true for people a generation ago, but with the development of the internet connecting us to a worldwide market place those risks have been largely negated.
I’ve got an additional way you can ensure any business you start will be successful. Start a business that targets a specific niche. Whenever I get asked what types of businesses are most likely to work or what is the best business for a first time entrepreneur to start I always answer the same, niche businesses.
Businesses that only cater to a specific group of consumers are called niche businesses. They don’t try to be all things to all people. Rather they make products, offer services and sell information about narrowly focused topics. These kinds of businesses don’t sell clothes for the entire family. Instead they might just sell clothes for babies or for expectant moms. Niche businesses don’t sell general sporting equipment. Instead they offer products and clothing related to one hobby like golf or camping.
A lot of times entrepreneurs find it hard to think of products to sell. When you focus your efforts on a niche market, you get to know them really well. You know their age range, their likes and dislikes, how they spend their time and how much money they earn. Once you get to know them, creating products and services for them becomes much, much easier.
Niche companies have a natural advantage in the field of marketing. They focus on small markets with the understanding that this excludes a large number of consumers. However, that also makes the consumers within their market easier to locate and target. For example, a niche company like Curves can advertise to moms and retirees on daytime television when advertising rates are lower, while a general gym or fitness center may need to buy more expensive ads during prime time to attract men and women of all ages. By segmenting markets and focusing on select demographics, niche companies can reduce their marketing budgets.
One of the biggest worries new entrepreneurs have are high start-up costs. Developing products takes money and then you have to have even more money to advertise you product. If you’re not careful you could be out of money and out of business before you get your business very far off the ground.
That’s why niche marketing is so great. You don’t have to try to appeal to the mass market, so you don’t need a huge marketing budget. Since you know where you target audience shops and hangs out, you can place personalized advertisements in places that they are more likely to see them. As any successful marketer will tell you, the more targeted and personalized you can make your advertisements, the more likely you are to reach your audience and make sales.
Niche markets are great first businesses to start because creating products and services for a specific market is easier to do than other businesses. The most successful businesses develop product lines and offer services that cater to their audience’s needs. Every business devotes some of its budget to finding out what its audience base needs.
Niche companies are more likely to receive generous amounts of customer feedback from its loyal following. Often times they get more tweets sent about them, higher levels of reviews, more comments left for them and overall higher brand interaction. This makes it easier for niche businesses to produce products, offer more services, and manage public relations based on feedback they’ve gotten from customers. All of which makes your business run smoother with goods and services that are always bringing in cash.
Despite all these advantages some people are afraid to start a business based on a narrowly focused target audience. Simply because they believe that will limit how much money they can make. This is not true. Businesses that narrow their focus and limit their product/service lines to one area in particular develop a reputation for their goods and services. This often leads consumers to view them as leaders or experts in their field.
Businesses that are recognized this way have extremely loyal followings and higher lifetime values per customer. A great example of this is Starbucks. Rather than develop a chain of coffee shops that offer on-the-go breakfast treats, they decided to focus on high quality coffees and chic snacks. Because they target customers looking for quality over price they have developed a smaller, but higher net worth clientele that will pay virtually anything for their superior product line.
Another one of the advantages of a niche business is that there is significantly less competition. The more targeted your market is, the less companies there are going to be servicing them. Less competition in the marketplace means higher profit potential for you and an easier time finding customers.
If you came to me and asked what kind of business is most likely to succeed and had a high profit potential I would tell you it’s a niche business. Niche businesses have less risk, lower start-up costs, can work on smaller marketing budgets and can command higher prices for their goods and services. That’s everything you could want in a business.
Good luck!
Ethan Warrick
