3 Scenarios Your Business Doesn’t Need a Niche Market (or does it?)
For most small business, it is important to define a niche market, or some say target market. However, from time to time, I found businesses that never define a target market and still succeed. So below are some scenarios in my opinion you can get away without defining a niche market and still build a successful business.
High Demand, Low Competitions
There are occasions where high demand occurs for a particular products or service but no one has yet to serve this need. The business that decided to go into this sort of market can skyrocket in a relatively short amount of time. As an example, I have known personally a businessman who started a scrap metal business during the time when they were considered trash and no one wants anything to do with it. The business eventually cost next to nothing to build and the outcome is huge. It’s not long before the business becomes a multimillion dollar company.
Word of the wise, be careful with the danger of complacency. It is so easy for us to sit back, relax and enjoy our successes. Remember, just like any good business, a lot of people would want to piece for themselves. Before you know it, you will see competitions started to move in and your business no longer enjoy the easy success that comes with it when you first start it. Use this opportunity to build momentum for your business and grow it to something bigger.
You Sell Low End Products
By this, I don’t mean cheap. But consider this, which one is easier to sell: a cupcake, or a penthouse suite? The example sounds extreme, but you got the gist. Many people selling low end products tend to get immediate success. They are able to generate cash flow relatively quick compared to high end businesses. This is why sometimes if your dream is to start a financial investment firm, you need to factor in the time it will require for this kind of business to build momentum. And don’t feel sad when your neighbour make a killing selling cupcakes.
Selling low end products can be very beneficial and I would recommend that all business have some sort of a low end product to sell. This is for 2 reasons:
- Keep Cash Flowing: cash flow is the oxygen for your business. Without it, your business will run out of air and eventually die.
- Help you sell your higher end products: I constantly advised client in having an up-sell and down-sell strategy. No one takes comfort in parting with a large sum of money. So if you sell expensive products, low end products help build trust and relationship and convince your customers to get involved in bigger transactions.
This is all good, however overusing the low end selling strategy can sometimes put strain to your business Because this kind of model can only works through high volume success. More volume means more works and this can potentially hazardous for both your business and your life (health, family, etc). Eventually, all business should aim for a business that can run by itself or at least with minimum amount of the owner’s involvement. In addition to that, where there are competitions around doing the same thing, your best bet is to lower your price even more, making it more difficult to be profitable.
Piggy Backing Someone Else’s Business
Though you can argue that this is not the case of not having a niche market, the essence of this point is that you leverage other people’s successes to grow your business. This is the reason why franchisors charge a lot of money upfront before you can use their names. You save on the time and effort to establish yourself in the market. Other ways includes joint venturing, collaborative strategy, etc.
This approach also has its pitfall. Once we become complacent with this system, we are at the mercy of whoever we are piggy backing. If you are a franchisee for example, you have very little control on what the franchisor strategic direction that will determine the future of your business. I recently found some well known video stores are closed down because of franchisors make strategic decisions that bad for the business and doesn’t help them win the already saturated market. Hence they’re losing customers and eventually the business had to close.
In summary, this article is to say that IT IS indeed possible for you not to have a niche market for your business. However, there are only a few scenarios where this can happen. The mentality of business that you “Sell to everybody” is not applicable in most times. If you don’t define a target market, soon or later competitions will come in and take over your market. Because you don’t have any specialities, they will win.
Customers want to know that they are doing business with the right company that speaks to their needs. If they can’t see your business as specific to them, then it will all come down to the choice of which one cheaper.
Do you think there are other scenarios where your business doesn’t need to target a niche? Tell me your thought in the comment box below.