One of the first and most fundamental principles of business is that you need to find a niche in which to operate. Though you might have some crossover with other companies, you need to be able to separate out and show what is different about your business.
But is there such a thing as too niche?
What Do Your Customers Expect?
With businesses focusing on incredibly narrow niches, it’s even more important to know that there is a need for that service or product. In other words, is that niche market big enough for your company or do you need to branch out?
There are some great examples of incredibly niche businesses from those who supply medical refrigerators like Ethicheck Ltd to those who offer bags made from crisp packets. But what all of these niche businesses show is that even though the market is quite small, there is a strong demand for the product from their customers.
The point of many niche businesses is to expand their customer’s expectations and tap into an idea that they didn’t know they needed. Eco-friendly products are rapidly using this method to produce everything from organic straws made from reeds to biodegradable glitter. This sort of niche brings a larger area of business to a smaller idea but it works really well for many businesses.
Is There Room to Expand Later?
The major risk with a niche business is that it will fall out of favour and ultimately fail. Trend-based businesses often fall foul of this issue because fashion is ever-changing and everyone wants the new thing. Remember back in 2016 when cereal cafes suddenly appeared everywhere? Yeah, didn’t last long, did it?!
The problem with a niche like this is that if the customer base dries up, there isn’t much room to pivot. The novelty might be exciting for a while but unless you are ahead of the fashion and ready to expand or pivot, you could end up with a failed business. This is why it is so important to leave yourself room to manoeuvre in business. If you can expand into other products or services, you can expand your niche and give your business a greater chance to thrive. This is the kind of thinking that can allow any business to thrive.
A niche might be fundamental to your business but that doesn’t mean that you have to be faithful to it no matter what. Listening to your customers might reveal that where you were positioning yourself isn’t actually what they want. Moving on and figuring out a new approach should always be on your radar, no matter how successful you think you are right now.
So, to answer the question, yes, there is such a thing as too niche but that doesn’t mean the end for your business. Identifying trends and customer needs is a vital part of any business at any stage of development so if your niche isn’t working for you right now, look for ways to expand it or pivot into something else.