Niche businesses (sometimes called micro businesses) use to be common but have faded as larger stores and grocery store chains have become go-tos for every possible item. Now, we even have Amazon delivering basics in a couple hours. But along with online convenience shopping, we’ve also seen the evolution and success of niche business.
When we say micro business we mean businesses that “cater to highly defined markets that are often over-looked, underserved or disenfranchised by larger competitors.” This type of small business can become successful by focusing on one type of item. Niche businesses (think craft beer companies, hat shops, highly-curated vintage fashion boutiques, yoga athleisure lines, locally sourced ice cream shops, floral shops, even food trucks) are entering the market place and dominating distinct spaces. What is most important for these businesses is perceived value, brand recognition and unique marketing.
Let’s look at the advantages of opening a micro business...
With a niche business or micro business you can concentrate on the one product/type of product and be uber focused.
Larger businesses have dozens of products and have to figure out how to sell them all. Niche businesses can be much more focused. They can really get to know the nuts and bolts of what makes their product great and from there determine how to sell their products well.
Niche businesses should have strong blogs and social media presences. By sharing expertise and showing how and why you choose your products, shop owners can become thought leaders in their field, gain consumer trust, prove the value of your products and ultimately drive sales. Instagram in particular is a great tool for the niche business.
By sharing interesting images of your process and engaging with individuals, you can intrigue potential customers, show them what your brand is about, showcase the uniqueness of your product(s) and ultimately drive sales!
As a micro business you have the opportunity to court a small target market and can more easily secure a loyal following.
Many consumers are happier to support unique, niche businesses and much elss happy when dealing with personality-less big box corporations. When addressing a niche target market, you have the opportunity to really connect with your audience with the right messaging. For the most part, micro business owners ARE their own target markets. They chose their business because they are passionate about it. This intimate knowledge of buyers and potential buyers will give you a leg up on the general businesses who are your competitors. Even if you aren't who you who you hope to sell to, a limited range of products makes researching potentially interested parties much more simple.
The start up cost for a micro business is much lower.
With a micro business you will often have a small staff who you can carefully hire. You simply won't need to start with a huge team to get things running. But bear in mind that as a small business, the people you choose to represent you and are even more important since they will likely be an integral part of your team and they are also likely to be visible to customers (many niche businesses, like Glossier and MailChimp, incorporate their team heavily in communications). Consider potential employees ethos and personality as much as their resume when hiring.
You also will likely need a smaller space so rent and utilities will be less of a burden. If you are not overwhelmed with inventory and many kinds of products, you can start small and scale up comfortably.
It is also possible to get special loans and grants for your niche small business from the government or from microfinance institutions.
But there are some down sides to having a niche business...
You will have less buying power.
Larger businesses are able to purchase products in such large bulk that they can get them at a much lower price and they can pass on those savings to customers while still maintaining a sizable profit margin. You will not have that luxury as a niche business.
Your location choices may be limited.
Bigger businesses have the money to get a larger location on a main street or in a mall because they have the extra capital. To compensate for this, niche businesses should ensure they have a strong digital presence and a user-friendly e-commerce shop.
Niche businesses have to get creative to get exposure.
A larger business is able to fund large scale marketing campaigns that a micro business cannot. Television ads and billboards will likely be out of the question for you. Embrace social media options and other unique avenues to get the word out.
Determined to get your niche business started now? Use this checklist to get things going.
Write a business plan
Think about what you want to sell
Determine how much capital you will need to run your business for 12 -24
Map out a Plan B for if you don’t hit your sales goals
Consider location options
Do you need a brick and mortar shop?
Do you want to be a mobile business?
Do you need an e-commerce shop?
Open a business bank account
Decide whether to apply for a business loan
Have your business support ready
Find a lawyer
Find an accountant to help with tax preparation and payroll
And any other licensing/certifications you need for your business
Get insurance for your business
Prepare to market your business
Create a logo
Build a website
Niche businesses are become more and more viable. So consider, what would you be uniquely equipped to sell? There might be a market waiting to be tapped that is truly aligned with what you’re into. What are your passions? What is your expertise? Explore your options and get the ball rolling with some concrete plans. Your niche business could be the next success story.