One of the reasons many people are yet to start their home based business is they aren't sure is their idea will work. Some might have a list of niche small business ideas but not sure which one has the best chances of success. It's quite normal to want to reduce the risks involved in starting a business.
However, keeping your ideas on hold until you're sure could mean a missed opportunity. If you have a list of niche business ideas but still not sure which one to start, this guide will help you get started. It outlines the key factors you should consider before starting your new niche business.
The market size and competition
Niche markets consist of a small group within a larger market. Your business will only serve a percentage of this small group. Now, when considering the market size, you must be able to identify your desired customer profile.
That is, which people within your target market do you wish to work with. After identifying your desired customer, you should now consider how easy it will be to acquire them as your business' clients.
The customer acquisition process will involve identifying where your ideal customer is and marketing your business to them. If you find that customer acquisition is difficult and expensive, then the niche business idea might not be the best.
Many people fear competition. However, if you're getting into a niche business, a little competition might be necessary. Already existing businesses in your niche is an indication that there's money to be made there.
However, when assessing your competition, you should also be realistic when determining if you can beat them. Some of the ways to know if you can beat your competition are:
1. Your competitors aren't huge already established brands.
2. You have a unique selling point that gives you leverage over your competitors.
Ease of starting and running the niche small business
Many of the best niche small businesses are one man operations. Many start as sole proprietorship businesses where there aren't many startup requirements. If starting the business requires more than just your skills, your product or service; it means that you'll need to invest more capital to hire additional skills. This significantly increases startup costs which will slow down the business' growth.
Starting your niche small business is usually the easy part. Running it daily until it's successful is not so easy. Many small businesses fail because their owners didn't account for the costs and labor needed to run the business on a daily basis until it turns a profit. In most cases, the owners run out of startup capital before the business breaks even.
When assessing your niche small business ideas, give priority to those which don't demand huge running costs. Some of the features of businesses that are easy to start and run include the following:
- Low startup capital requirements
- The business turns a profit within a few days or weeks
- You can easily operate the business on your own
- You can outsource or automate some tasks as the business grows
Flexibility of the business idea
Existing or rising demand for a product or service is the main reason why small niche businesses are established. However, many of these businesses cease to exist when the demand dies out or shifts to a new product or service.
If you want to be truly successful, your small business idea should be able to evolve to cater for the changing demands in the market. Rather than build an entirely new business, your small niche business idea should be flexible such that your business can offer a specific product or service to your target market when they need it.
This way, your business is able to grow by satisfying the needs of already existing customers rather than venturing into entirely new markets. This will save you the cost of acquiring new customers and, will help to enhance customer loyalty to your business.
Some of the ways to identify whether your niche business idea is flexible include:
- Your target market has other needs which can be satisfied a product or service closely related to what you currently offer. For example, if your small business currently offers web design services for people who create and sell information products, other related products your business can offer include copy writing services for their information products.
- The business idea provides the opportunity to partner with other businesses. Your business idea is only great to the point where it can satisfy your target audience's needs. If the needs aren't met, your customer will move to your competition.
However, if your business idea accommodates teaming up with other businesses even if they're your competition, you will be able to retain your current customers, sell to your partner's customers and still make profit.
3 examples of niche small business ideas
Digital product creation
Many of the niche businesses are based on the time for money model where you're paid for the amount of time you spend on the job. Digital product creation moves away from this model where you're paid for your product which can be sold regardless of whether you're working or not. A digital product can take various forms including ebooks and software.
If you have a skill, freelancing can make a great niche business to start from home. Almost every skill can be sold on a freelance basis. There are millions of freelancers to compete with. Therefore, to stand out, you'll need to focus on a specific niche market that's willing to pay for your service. For example, if you're a technical writer, you can focus on the glass products manufacturers niche rather than write for every other company that needs technical writers.
If you have expert knowledge people are seeking, you can start a consulting business. Like with the previous two business ideas, finding a small niche to work in will increase your chances of success.
Having the right niche small business idea can mean the difference between starting a successful business or not. If you have a list of business ideas you want to try out, running each through the checklist discussed above will give you a better picture about which will work or not.