Business Development - "Niche-ing"

"Pile it high and sell it cheap" may be a successful strategy for the likes of Tesco, but rarely works in the long term for the smaller business. 

Why?  Because at small business level, there will always be someone who undercuts you.  With Ebay there are hundreds if not thousands of people, often students or pensioners, whose sole aim to earn a little pocket money, so they don't have the same overheads as a "proper" business yet are quite capable of taking your customers.  You are not immune if you are offering a service rather than a product - there will always be others willing to offer their services at low rates (maybe working in the black economy) and there will always be consumers looking for what they think is a bargain.

If your business strategy is solely based on low pricing, at best, you'll end up a busy fool - working far too hard for little reward, or at worst, your business (sadly like the majority of new business start-ups) will end in failure.

So what is the answer?  Well, drawing from my experience of working with the smallest of businesses for the past twenty five years, I have identified that the most successful small businesses are those that either offer an exceptional service or product - if you like a "niche".

It is a very common misconception that most people care only about price.  That may be true when comparing the price of commodities like tins of beans or a loaf of bread.  As soon as you enter a "niche" market, price is no longer as important.  If price was the only important factor, no-one would buy Rolex watches, Rolls Royce cars or Gucci handbags! 

Just think about it.  Would you prefer to sell 100 widgets at £10 each or 50 widgets at £20 each?  You could make just as much, if not more, money, for half as much work.  Think about the time saving in having to deal with the administration, packing and despatch of just 50 widgets rather than 100. 

So how can you enter or create a "niche" market?  You don't need a unique product or service.  Almost any product or service can be "niche-d".  Think about your product or service and then think about how you can make or do it differently.  Think about your customers and then think about how you can target a specific type of customer. 

As an example, take decorating.  A fairly basic trade you would assume, so what can you to "niche" it?  Well, what if the proprietor is female or the firm has female workers?  You could market the feminine angle - i.e. some people may prefer women in their house rather than men, some people may think that women would do a tidier job with better attention to detail.  Regardless of the accuracy of such opinions, there will be some people who would pay a premium to have their decorating done by a female decorator.  If this applies to you, market it as a benefit.

Again, taking the same decorating trade, what if you're not female?  Well how about concentrating on doing an exceptional job, ensuring your customers aren't just happy, they are delighted with you, i.e. turning up on time, workmanship, use of quality materials, etc - you'll get more recommendations from happy customers.  Once you start getting referrals, you are worth more money.  Your "niche" is your quality of service!

At the end of the day, all you need to do is sell or do something different, or in a different way, and you have a "niche".  When you have a niche, you are able to charge premium rates. 

Differentiate yourself from your competitors and price doesn't matter as much.