Why Starting a Business in a Niche Market Might Be Your Best Move
Targeting a niche market can help small businesses find success. Read on to learn why this approach works.
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Some people view starting a business like throwing a net into the ocean, hoping to get a ton of customers. And while that approach can work for some businesses, as a small business owner, there's something to be said for the niche market approach.
While it may seem counterintuitive to restrict the number of possible customers or clients that your products appeal to, there are some compelling reasons to go this route if you're planning to start your own business this year.
Benefits of targeting a niche market
Here are some of the best reasons to target a smaller audience with your business.
Less competition
The larger the market, the more you have to fight to make your business known, and the harder each sale might be. But the same is true for businesses that go the opposite direction: By limiting your market to a specific niche, you get to be the big fish in a small pond.
More effective marketing
Marketing campaigns that seek to appeal to everyone can end up backfiring, making them less effective. Conversely, marketing your products or services to people you know could genuinely use them results in a 40% increase in revenue, according to the latest research. So if your business is bringing in $10,000 a month before personalized marketing, that could increase to $14,000 by implementing this tactic.
Gaining real fans
If you can provide a product or service that caters to a specific audience, rather than being adaptable to many, you're more likely to gain an audience that truly appreciates what you provide. That goes a long way, and could even translate to more repeat customers.
Better profit margins
The more tailored the offering, the more people tend to be willing to pay. So if you have a physical product that requires investment on the back end, you can afford to charge a higher price, increasing your profit margin. After all, if the customer knows they aren't going to have to do leg work to make it fit their specific needs, you're saving them time and effort.
Remember: You can always expand your offerings later on to increase your business income. By targeting one niche at a time, though, you'll be better able to serve each niche market.
Other smart small business strategies to consider
Once you've picked your niche, there are more ways that you can perfect your business and boost sales -- try these.
Set sales goals
It can be easy to try to capture more customers by doing things like upping your marketing efforts, but without a concrete goal, you won't have a clear understanding of how effective that strategy actually is. Having goals can serve as motivation to push your business income further than you thought possible.
Consider establishing a customer loyalty program
If it works for your niche and business, consider offering return customers a way to save. This can help incentivize them to purchase from you more often. In fact, according to global management consulting firm McKinsey, top-performing loyalty programs can boost revenue by 15% to 25% per year.
Try a business credit card
If your business has expenses, a business credit card can be a useful tool. Not only can they allow you to invest in the materials you require to keep your business running, but they can also help you save on those costs via rewards and even establish business credit. And that can go a long way as your business continues to grow.
Building a successful small business is not easy. But if you make smart decisions on the back end to target a specific audience and look for opportunities to incentivize your customers to support you, you can make the journey that much easier.
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