Interior decorator and small-business owner Deborah Wiener, 46,
has carved out a special place in her Silver Spring, Maryland,
market. She doesn't just help clients pick out colorful fabrics
and comfy furniture--Wiener's work is much more specific and
detailed than that. The entrepreneur's 4-year-old niche
company, Designing Solutions LLC, specializes in creating
family-friendly interiors for her clients' homes. This includes
helping customers choose furniture that can stand the wear and tear
of active children, stain-resistant fabrics, and lamps and
accessories that are less prone to breakage.
Before launching Designing Solutions, Wiener did her homework to
see if there was really a need for the niche enterprise she was
contemplating. An interior designer by trade, she took various
friends and acquaintances with children out to lunch in groups of
three and four. She asked them what they thought of local interior
decorators, and most said they were too "fancy," offering
suggestions not practical enough for people with kids.
Wiener also began writing columns for and advertising in local
publications, churches and synagogues to promote her skills. The
mother of two boys, ages 14 and 9, discovered through her research
and marketing that there was an unfulfilled need in her community
for an interior decorator who under-stood the needs of clients with
kids running amok through their homes. This niche business, which
projects more than $2 million in sales this year and has four
design consultants, was born in 2001 in Wiener's home.
Getting Started
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Niche businesses like Wiener's--which offer a product or
service focusing on one specific aspect or customer base within an
industry--are growing at a rate of 20 percent to 25 percent per
year, according to Ira Davidson, director of the Small Business
Development Center at Pace University in New York City. Some
popular niches these days include specialized pet products, beauty
salons/spas, travel agencies, back-office services,
technical/online support and business coaching.
"Niche startups are good in that they offer you a chance to
focus all your branding and marketing in one area and expand on
those core customers as you grow your company," says Davidson.
"After all, when you try to be everything to everybody, you
wind up being nothing to anybody--and that's the problem with
ventures that are too broad."
In addition, the advantage of starting a niche business is the
ease of identifying your potential customer base, since you are
targeting only certain buyers. In fact, niche ventures have a 25
percent better chance of surviving over 10 years than more general
types of companies, says Jennifer Sander, a small-business
consultant in Granite Bay, California, and co-author of Niche
and Get Rich.
Obtaining financing for niche ventures can also be easier.
Compared to more general businesses, there is less competition to
deal with, which makes you a more attractive candidate when seeking
capital investors, says psychologist Larina Kase, president of
Performance
and Success Coaching LLC, a Philadelphia consulting firm that
works with small businesses nationwide.
"As long as you have your research done and have checked
out the competition, niche companies with detailed business plans
can be very attractive to investors," agrees Tony Warren,
venture partner in Adams Capital Management, a Pittsburgh firm that
has invested in 30 companies nationwide. Warren is also a professor
of entrepreneurship at Pennsylvania State University in University
Park.
Before you approach lenders or private investors for capital,
research your market to determine if your business idea will
develop into a viable niche enterprise. Examine your
competitors' earnings, if that information is available online
or in libraries, Davidson says. If competitors are
well-established, they won't see your startup as a threat. In
most cases, you can pick their brains for information on how the
market is performing, what they charge and if there is room in the
niche for a new business like yours.
Speaking of competitors, the number of those offering similar
products or services will help you figure out if your niche is too
narrow--or too broad and not even a niche anymore. There is no rule
of thumb since each industry is different, but you should find at
least a couple of competitors who do something similar to what you
are proposing in your market, says Terry Neese, a small-business
expert and president of Women Impacting Public Policy, a national
advocacy group based in Washington, DC.
"You don't want to be so niched that you're the
only one out there, and no one quite understands what you're
talking about," Neese says. "On the other hand, you
don't want to be one of dozens, because then the niche is too
saturated."
Go through last year's telephone book in your market and
contact competitors in your niche to see if they are still in
business, says Gene Fairbrother, lead business consultant in Dallas
for the National
Association for the Self-Employed and president of MBA
Consulting Inc. Look for at least a 50 percent survival rate within
a 50-mile radius. If your business has national appeal, do the same
thing with telephone books in three to five other comparable
markets, he adds.
"A good survival rate could indicate that your idea has
lasting potential and is not too faddish, which is a danger for
overly trendy niche businesses," Fairbrother says.
You should also interview potential customers. This is important
because your clients are very defined and somewhat limited, and you
want to make sure they have a real desire for what you're
offering.
"You can't market to the world with a niche business,
so you want to make sure you are meeting the needs of your
particular clientele," Fairbrother says. "Without that,
you are working in the dark."
Finding out your customers' needs can be done in a variety
of ways. Conduct customer focus groups with five to 10 people,
ultimately talking to about 100 individuals, who can tell you what
kinds of products or services they want, how they want them
delivered, what's missing from what is already available and
how much they are willing to pay, Kase says. Next, create a survey.
A trade or professional association in your field may be able to
sell you a list of individuals or companies you can interview,
either locally, nationally or both. Expect a 10 percent response
rate--which translates into 10 completed surveys for every 100 sent
out, Fairbrother says. You can also query potential customers at
trade-association or group meetings devoted to your niche.
"If you are selling products just for birds, ask your local
pet shop for the name of a local bird-lover's group,"
Fairbrother says. "Ask these people what products they need
most and how yours can fit in. Go one step further and attend trade
shows for bird-lovers, and talk to the masses."
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