Finding Your Niche
Sometimes, discovering what your market needs are is as easy as taking a look around you.
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Q: I am currently vice president of three organizations but looking to step out and create something of my own. The population of the area where I live is only about 20,000 to 30,000, so I would need to build a business able to feed other markets outside this immediate area. How can I determine what market niche may be underserved in this area and/or the surrounding areas? I know there is a local company currently distributing nationwide ATV tires and rims that's been growing 116 percent per year. I have made a pass at buying this business, but the owner is not interested. I would like to hone in on something similar in nature. What do you recommend I do?
A: Many would-be entrepreneurs think too hard about finding the niches in their market, when often the answers are right under their noses. After all, who knows better what is lacking in the market than someone who lives and works there?
So take out a notepad and ask yourself, "Is there is a product or service that I wish we had here that doesn't exist?" Do this for both your personal and business lives, and list five answers for each category. Then ask your friends, family and business colleagues the same question. Look at the list and see if there's an obvious answer. Look for the answers that closely match your skill set, and make sure you have a desire to run this type of business.
Once you've narrowed down your choices, go back to your friends, family and colleagues. Don't spill your guts about wanting to start a business that will only cost X amount of dollars to open and will pay off handsomely within two years or so; instead, casually ask, "What would you think if there were a (fill in the blank) kind of business here? Would you go there? What would you pay? Obviously, you need to do more market research than that before you actually start, but it's a great exercise to get you moving in the right direction.
Another good way to discover what's lacking is to listen to yourself (or those friends, family and colleagues) the next time frustration hits. Frustration can be a great source of inspiration. I know of a business born out of frustration that grosses nearly $10 million today-and the business is less than 10 years old.
The business you mentioned is obviously doing well-that's a phenomenal growth rate. Just because the owners don't want to sell doesn't mean you're shut out of this industry. The success of this business-and its growth-indicates there is a thriving market there. Can your area sustain two of these types of businesses? Don't be afraid of a little competition-it's healthy. Very few businesses have no competition at all, even in small towns. You might want to seek out some ATV owners and see if they're satisfied with the service they currently receive. Would they like an alternative to this one shop in town? One that offers, perhaps, better service, more convenient hours, better pricing? The key to competing is going that extra yard-give consumers a reason to switch.
There will be more information on how to compete in a seemingly saturated market in the October 2001 issue of Entrepreneur magazine (look for the article titled "Space Available"), which you can find at bookstores and newsstands everywhere. Or log on to www.entrepreneur.comat the end of September, and click on the "magazine" tab to read the article online. Good luck.
Rieva Lesonsky is a small-business expert and a senior vice president and editorial director at Entrepreneur Media Inc.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.