Are you thinking of starting a new business? Have you recently started a new business? If you find yourself in such scenarios you will no doubt have many questions. The other day someone asked me if I could tell them about starting a business. I was somewhat taken aback by the lack of specificity. I had to ask them to specify what exactly since there are many things to cover on starting a business. In this article let us look at the subject of niching concerning new businesses. Should a new business be broad or niched? By the way, a niche is in the simplest of terms, a specialization. This means focusing on products or services that address certain specific target customers with a specific challenge.
Being Broad Reduces Risk And Provides More Strategic Options
Being broad has the benefit of spreading out risk. If one product or service does not sell, it can be cushioned by others that perform better. You can easily pivot to those or bring in new ones that sell. You can just focus on other stuff if your initial focuses fail. Niching, unfortunately, comes with a much higher risk. If what you are selling fails to sell well it means the whole business suffers. Imagine after branding and all, along the lines of niching, and things fail to take off. After all, niching thrives on those branding aspects to distinguish your brand. That would be a huge loss. This means you are under serious pressure to make sure everything works out.
The other risk element is that you might niche in an area that has very few prospects. In other cases, your prospects can be scattered making it difficult for you to reach them. Risk is also higher in niching because that might mean stiffer competition. Niches often have other players operating in that domain. They are usually knowledgeable, skilled, and even more resourced. This means you will have to work and spend more to appeal to people; your unique value proposition will have to be attractive. Getting customers might mean winning over other brands’ customers and that is not easy.
By being broad, you no doubt will have competitors, just like in niching. However, it usually takes lesser effort to win over other players’ customers. Being able to be broad or generalized means it is relatively easy to enter those spaces. Not much in terms of resources and expertise might be needed (the opposite for niching). In being broad you can simply include a product or service that lures people. Then once they are in your hands you can influence them to purchase other stuff you have on offer. This just goes to show that being broad gives more cards to play with. That also gives you room to come up with many flexible operational strategies.
Broadening First And Transitioning Into Niching
Being broad would seem the best thing to do at first. Then you closely gather data on how your products or services are performing. You can also engage your customers or potential customers with the aim of gathering market intelligence. In essence, you will be exploring first before you specialize. If you do this well you will know better how to niche in due course.
Starting by niching will only work if you have done comprehensive market research with factual information. Ultimately you can still use a blended approach somehow i.e. you can niche and also focus on other areas. For example, you can find a hardware business also selling livestock products. All things considered, it is best to start broad and niche later.
It reminds me of something I once saw being discussed somewhere. The general idea was that niching is overrated and almost a myth for new businesses. Someone even said that niching is just a glorified term or concept that only works for a few. The argument was that it is not practical to niche from day one. True enough many people attest to this. Countless people have tried to establish their niche from day one and could not find it. There might not even be enough information available to help you discover your niche.
At the end of the day, it is not an issue of either or. I have noticed that it depends on the context as with most binary questions. You have to appreciate the implications of either and consider your specific context. This brings to the fore the importance of using evidence-based approaches when dealing with starting and building a business. You can only know what best to do by collecting and analysing data. I do understand that some scenarios might force one to niche from the onset. Whichever the case might be, it would be best to zone into a niche gradually guided by concrete facts. What you think might be your niche might turn out not to be.
