Starting a Business: Can You Compete?
Picture a game of dodge ball. You, the new business owner, are Team New Business. Your competitors are Team Established Business. In your mind, both sides are equal. Both teams have the same number of players, and both teams have the same chances of winning the game. But in reality, you are playing against a team that is larger, stronger, and faster than you.
Worse still, the audience is cheering for Established business, not New Business. Welcome to the world of entrepreneurship. Most new businesses will face competition. Stores will compete against stores, websites will compete against websites and manufacturers will compete against have a recognizable brand name and loyal customers. They have relationships with suppliers. And they have experience.
To make a profit in a competitive market, you just have to play a smarter game. Look at large companies that operate online and in cities across the country. These companies meet the general needs of a huge percentage of the population - but they don't meet the specific needs of a particular group of Customers. In their efforts to sell anything and everything, they fail to provide for those customers who are looking for something unique, something not sold anywhere else.
Take large grocery store chains, for instance. These stores for specific items, the choices are limited. The large grocery store has twelve kinds of frozen peas, but do they stock any organic, fresh-from-the-farm peas? They sell twenty brands of prepackaged cookies, but do they sell homemade cookies made with fresh, preservative-free ingredients? In business, a niche is a specialized - and profitable - area of the market.
By capturing a niche market, you are providing your customers with a product or service they cannot receive anywhere else - ensuring your business a healthy profit by cutting out the competition. In the grocery store example above, a niche business would sell homemade cookies and organic peas, filling a gap in the market place. Customers looking for environmentally-friendly products and fresh ingredients would bypass the big established grocery store chain in favor of the niche grocery store.
Out of direct competition with the established business, the niche grocery store will survive and thrive. Apply the same principle to your own business. Instead of targeting an entire market, focus on serving a smaller these customers, you will make a profit. To find your niche, look to your large-scale competitors.
Which of their customers' needs are they meeting?
And which of their customers' needs are they failing to provide for?
To answer these questions, you will need to conduct market research. By gathering information on your competitors and your potential customers, you can see what the market offers, what the customers want, and the differences between the two. If you don't know what customers want, ask them. Email surveys to potential customers and talk to people in your neighborhood to find out what they need.
Do your neighbors dine at home because they want to avoid the unhealthy calorie counts of restaurant entrees? you could open a restaurant that offers healthy menus designed by a registered dietician. Is the online music community fed up with the lack of jazz records available in stores? You could start an online business that converts old jazz 455 to CDs and MP35. Finding a niche takes you out of direct competition with McDonald's and iTunes, giving your new business a better chance of making a profit.
Any new business is at a disadvantage. A business cannot succeed without customers, and customers are often wary of trusting a new business when established businesses are offering them everything they need. So instead of competing directly with the big companies and corporations, create a niche for yourself in the market. Operating a niche business will help deflect the blows dealt to you by Team Established Business, allowing your business to thrive -and earning you a few points in the dodge ball game of entrepreneurship.