Starting a niche business is something many people have started considering in the past few years. As mainstream fields become more and more saturated with competition, new entrepreneurs will naturally be driven to set up their business in niche sectors where their resources are not wasted in competing with others.
Conventional wisdom tells us that competition is inherently good and helps businesses become leaner, more efficient, and stronger over a long period of time. Sadly, this piece of wisdom has turned out to be untrue.
Businesses in fields with a lot of competition soon end up in a situation where they spend a majority of their resources competing with each other. Instead of focusing their efforts on improving their own companies and growing the business, resources are allocated to get ahead of a competitor in the field. This zero-sum game leads to no real growth for any company involved in the competition.
This is niche businesses are becoming the norm. Think about it. According to DCA, If you want to open a restaurant on a street which has ten other South Indian restaurants, would you open a South Indian restaurant as well? No, that would mean you have to compete with ten other businesses. Instead, if you open a restaurant specializing in any other cuisine, you have no competition and a free pass to attract guests who wish to eat something besides South Indian food.
The logic behind starting a niche business is roughly the same. In this article, we discuss three important lessons for those starting a niche business.
Don’t Land Up in a Dead Field
There’s a difference between a niche and a dead field. A niche business has a small target audience but still large enough to sustain the business. A dead field is one which literally has too small an audience for the business to actually make money.
Motivated to avoid competition at all costs, many founders end up starting businesses in fields with a very small audience. Since the audience is too small, even a monopoly in such a field becomes futile.
Make Paid Search Marketing a Priority
Many people starting a niche business choose digital marketing to market their business, and rightly so. However, many founders are known to be hesitant in investing in paid marketing tactics.
A platform like Google AdWords, for instance, is a great option for a niche business. It quickly reaches the target audience and creates brand awareness amongst the audience. In a niche field, the audience tends to be very niche as well making the task of tailoring a marketing message much easier.
Even in a niche field, there is bound to be competition of some form or another. According to a survey conducted by a leading research firm DCA, the best thing someone starting a niche business can do is study the competition closely and come up with a strategy to overwhelm competing forces.
If there is no competition, entrepreneurs must make sure the field has a large enough audience to sustain a niche business.
In conclusion, this article covers three lessons anyone starting a niche business must remember.