Overcoming The Challenges Of Starting A Niche-Based Business


Chris Burres, Owner of SES Research Inc. One of my great joys is supporting entrepreneurs with my products.

Most conventional wisdom tells us that new businesses can achieve early success by limiting their focus to a narrow field. Even the richest entrepreneurs started in a niche market and worked their way outward.

However, there are several challenges to operating in a niche field I’d like to address. As someone who operates a health-based business that sells specialized supplements, I’ve seen first-hand how hard it is to tap into wider audiences and get your business off the ground.

So in this article, I will discuss some challenges of operating a niche business and solutions to overcome them.

Challenges Of A Niche Business

Fragmented markets. Smaller markets with less competition may seem easier to scale, but they can be equally difficult to penetrate. First, if there is established competition, that means you’re competing for a smaller piece of the pie than you would in a broader market. Secondly, making your brand sticky through SEO, word-of-mouth advertising and social media is difficult if there aren’t enough people to spread your brand’s message.

Smaller growth potential. Perhaps the biggest issue with a niche market is that market sizes are capped by how narrowly you focus your products or services. This could leave you in a perpetual startup loop or barely scraping together enough cash to get by. Most importantly, however, this will cap your earning potential not too far down the road.

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Maintaining long-term growth. Specialized or niche businesses ultimately face two issues when it comes to growth: time and market size. Once you reach full market potential, you will struggle to find new customers and rely on existing ones. Depending on your business, you may even struggle to keep existing customers if your products are not designed for long-term use.

Competing with innovation. Finally, when you sell specialized products, you are essentially betting on your product as the best solution available. But what happens if a new or better product comes along and displaces yours? You might not have other products or income streams to rely on. More importantly, what if your product becomes outdated in its field? Think about the countless internet companies and so many others which have come and gone in the blink of an eye.

So, what’s the solution to staying agile and overcoming these challenges?

Solving Niche Business Challenges

Focus on specialization. It may seem counterintuitive, but specialization is your company’s best tool for success. Create the best product for your given industry, whether it’s a website that can automate bill payments or a product that helps you lose weight.

Ideally, you want to position your company as a valuable resource for solving your customer’s needs, even if they are very specific. Making your products indispensable to your customers will establish greater brand loyalty and a higher customer lifetime value (CLV) over time.

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Focusing on a specialized product allows you to iterate and come up with new solutions or advancements if a new or better product comes along to compete with you.

Establish your brand, then expand. Don’t let your market size cap your growth. Lots of businesses have started in niche spaces and then worked their way outwards. The key is establishing a sticky brand with your customers and then expanding to new fields, services or product lines.

I recommend building your brand with your specialized products and a thought leadership campaign via guest posting, blogging, authorship or even podcasting. Team up with influencers and other thought leaders to generate buzz around your personal and business brand.

Once you cultivate enough brand loyalty, you will have enough of an advantage to enter more competitive fields without starting from the bottom.

Bootstrap your way to success. Take advantage of the low cost and overhead it takes to operate a niche business and bootstrap for as long as possible to avoid taking on excess debt or relying on additional streams for cash flow.

Once your steady cash flow and brand are established, then you can consider taking on riskier financial projects to scale your business via a loan or third-party investor.

Lean into personalized marketing. One advantage of marketing to a small market is that you often get to communicate with customers directly, and it’s cheaper to scale personalized marketing ads. So take advantage of this to create personalized messaging throughout the buyer’s journey to nurture leads.

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Use this opportunity to also acquire direct consumer feedback, including how your products improved their lives or made them feel. For example, I like to fine-tune my messaging to direct pain points I gather from my customers, whether it’s my product’s impact on their sleep, energy, etc.

Communicate over the right channels. Lastly, research your competition and market to understand where people are finding your products or brand. Test out email, SEO and PPC campaigns to see which channels drive the highest traffic and engagement.

One part of SEO I love when targeting small keywords is the ROI you can gain from ranking on the first page for a keyword with approximately 50 searches monthly, where one sale will bring you hundreds in revenue.

Beyond organic SEO, I also recommend researching online communities to see where your customers aggregate. For example, popular social media sites are home to tens of thousands of micro-communities full of people looking for products that will help solve everyday issues in their lives.

Using these strategies to overcome initial challenges and scale your business can ensure you have enough room to transition to different markets and capitalize on your brand loyalty.


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