If your new business is going to be operating in a competitive marketplace, it’s crucial that you find a way to differentiate your business from all the competitors out there.
In short, why should customers choose your products or services over what’s already available?
If you can’t answer that question, then you need to read on to find out why it’s essential startups and small businesses find a niche, and how you can spot a potentially profitable gap in the market.
Why finding your niche is so important for startups
Competitive pricing and an excellent level of customer service are both great ways to keep your customers coming back to you, but they might not be enough to draw people in on their own. The most effective way of getting customers through the door in the first place is to spot a gap in the market and fill it.
If you can provide consumers with something they can’t get elsewhere, or offer a significant improvement on what’s already available, your business will soon make a name for itself.
The best way to do this is to focus on a niche and do it so well that you’re the best on the market.
While it may seem like you’re limiting your potential for growth by concentrating on a niche rather than the market as a whole, the contrary is actually true.
Some of the biggest companies in the world have expanded from a niche that they made their own; Apple started off with the Macintosh desktop computer and now dominate the smartphone, laptop, and tablet spaces. Their success was a direct result of the fact they gained a reputation and fierce brand loyalty in one niche that they could easily transfer to other sectors when they chose to expand.
Finding your niche in the marketplace could, therefore, be the most important thing you do in business. But how do you do it?
How to find your niche
The easiest way is to start a business in a sector you’re already familiar with. If you’re part of the target market you’re looking to sell to, you’re in the perfect position spot a gap in the marketplace. If you do, then you know there’s space for success in that niche.
In the digital age, you have access to potential customers all around the world thanks to the internet. The further you narrow down your niche, the better chance you’ll have of being the very best in the world at it, meaning you could make sales to people in every corner of the globe through an online store or a seller’s page on sites like Amazon and eBay.
According to a recent article from Entrepreneur, niche micro-companies are set to gain more and more of the market share in the future. These small, specialised businesses can often outperform bigger companies who spread their focus over hundreds or even thousands of niches by focusing all of their attention on one.
In your search for business success, you could therefore be better off aiming to be a David rather than a Goliath — while your competition tries to be a jack of all trades, you can quickly rise to the top of your niche by being the master of one.
How a successful niche helps you to grow your business
As an example, when we set up our clothing store in Glasgow, we focused on urban streetwear. We would never have been able to compete on price or service with international brands like Topman and H&M, so we had to find another way into the men’s clothing market.
After gaining a loyal customer base, doors opened for us to expand into related markets. When we became aware that a lot of our customers were part of the Glasgow street art scene, we experimented with stocking spray paint.
A few years later, Banksy came along and the scene exploded. By this time, we’d already gained a reputation as the place to go in Glasgow for spray paint, so we’ve ended up having great success in that niche as well, both offline and on.
Spray paint saw another rise in popularity when upcycling — taking old, worn out pieces of furniture, sprucing them up, and turning them into something new — became a craze in the interior design world.
Because of the reputation we’d built up over the years, people from this scene came to us when looking for their spray paint. Between these customers and the graffiti artists, we now sell thousands of cans a month.
My advice for any business with an already-established reputation is to consider expanding into a related niche that your target audience is also likely to be interested in.
For example, if you sell artisan coffee online, consider expanding into teas as well. Continue in this manner from one niche to the next, and you’ll soon have a seriously successful business.
Listening to your customers will help you find new niches
Make sure to always listen to your customers to learn what other products they’d be interested in buying. For example, if you’re always being asked about products that you don’t already stock, then you should consider entering that market.
A few years ago our customers were always asking if we sold shaving products such as beard oil, shaving kits, and open razors. We did our research and stocked up on some up-and-coming shaving products, and this is now a consistent earner for us in-store and online.
Whether you’re just starting out on your journey as a business owner or have an already-established brand, the best way to stand out from the competition is to find a gap in the market and fill it. Hopefully the experiences and advice I’ve shared here will help you get there as fast as possible
About the author
This article was been written exclusively for ByteStart by Leslie Docherty, who is the store owner of popular Glasgow-based streetwear retailer Fat Buddha.
More help on starting a business
ByteStart is packed with help and tips on all aspects of starting and running a small business. Check out some of our most popular guides;
- 5 things you must do when you go self employed
- 10 advantages running your business as a limited company has over being a sole trader
- How to set up a limited company
- How to choose the best online accounting software for your business
- 15 Questions to ask when hiring an accountant for your new business
Funding your business
- How to maximise your chances of securing a small business loan
- A Guide to ‘Alternative Finance’ – the new funding options for startups and small businesses
- Finding finance for your new business – funding advice for start-ups
- How peer-to-peer lending offers businesses a new funding option
- What to do when the bank says “NO”!