We cover in an earlier post entitled "Avoid the “All Inclusive Breakfast Buffet” approach to Stressbusting™" the risks of being overwhelmed and over stretched by trying to adopt too many positive lifestyle changes at once.
The same risks apply to businesses which attempt to define their offerings too widely, often as a result of over ambition or a propensity to 'hedge bet' against part of their of offering not being taken up by the market.
But the benefits of a niche strategy, assuming of course the niche product,service or customer market is large enough to penetrate and sustain, can be numerous and include the following:-
1. It is more difficult to create a USP (unique selling point) in a generic business strategy, whereas a niche strategy by definition means the business has a more specific offering that is likely to be very valuable to a particular if smaller market segment, generating much goodwill and repeat business.
2. This day and age, even generic businesses have sub divided into specialist offerings. Take the legal profession as a simple example. Largely gone is the era when one lawyer attended to all a client's needs. 'Specialist departments' have instead popped up and clients are directed, as appropriate, to a Family Specialist, an Employment Specialist, a Commercial Specialist and so on, depending on their specific needs. The modern market has thus to some extent come to expect 'niche' of some sort.
3. Focusing on a niche market can generate substantial operating cost savings. Experts do not need to be hired in a number of different areas. Marketing can be more specific. Niche customers likely understand exactly the benefits of what is being offered in your sales brochure which is reflected in cost of sale.
4. It can be far easier to identify and contract with strategic partners in a niche environment as common values and objectives are naturally shared.
5. Compliance can be a far less onerous (and therefore costly) matter when focusing on one or two areas of operation than a wider cross spectrum.
6. A niche business can carry a higher funding and exit value (that is, valuation at point of sale or merger), with a smaller number of prospective funders or buyers potentially willing to pay or concede more in negotiations.
It is therefore important to establish as early as possible whether a niche model is preferable for a business to a generic format, and note the above constitute only a fraction of the type of considerations that could feed into such a vital umbrella review and decision making exercise.
If you can relate to the contents of this post and would like us to assist further or make an introduction to a specialist who might be able to as appropriate, feel free to reach out to us in confidence via our "Contact" page.
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