Why define your small business niche
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There are about 7.5 million small businesses in Kenya across the Micro, Small and Medium Enterprises (MSMEs) categories. To be successful, however, one must identify a rewarding small business niche to focus on, with competition very intense in a sector where most enterprises operate in the informal sector.

This informal setup is evident in the fact that fewer than 2 million small businesses are registered. While this limits access to essential resources such as credit and business development opportunities, it does not dampen the ferocity of competition in the sector.

With an approximate contribution of 40 percent of the national GDP, there is plenty of money to be made running a successful small business in Kenya.

The best way to win against such competition is by focusing on a niche you can excel in.

What is a business niche?

A niche market is a specific segment of the larger market that can be defined by its unique needs, preferences, or identity that makes it different from the market at large.

A business or market includes a small, differentiated area of a big market, in which participants are better able to articulate the needs, dynamics, and forces within the segment, and to better respond to those needs and dynamics.

Niches are the opposite of the “jack of all trades, master of none” mindset. They allow you to focus on a small market area and therefore make it easier for you to master it. The financial rewards of niching down can be humongous.

Benefits of small business niche

The benefits of choosing a small business niche extend beyond just the finances. We have already published a guide to picking the best small business niche for you.

Below, we explore the benefits of niching down, and why you should do this now.

1. Your marketing strategy becomes more focused

Focusing on a specific market niche makes your marketing more coherent, targeted, and, therefore, very effective.

Why define your small business niche

You can optimize every business marketing action towards a single direction and goal, allowing you to draw in potential prospects easily.

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This approach can make you an authority in the niche quicker than a generalist business.

Furthermore, your business will easily have essential marketing assets that appeal to a wider audience at half the budget of a generalist business.

Beyond your business-instigated marketing efforts, it is easier and more fruitful for customers and colleagues to recommend your niche business that a generalist enterprise. This ease will likely produce wildfire reach and bring in significant business.

2. Easy to appeal to your customer’s emotions

Research shows that the parts of the brain used when evaluating brands are the ones that deal with emotions and other personal experiences rather than those used to process the actual information.

Psychology also posits that people often make emotional decisions and then use logical reasoning to justify the emotional decision.

Thus, it pays for your small business to connect with customers and prospects innately. This is difficult when you try dealing in everything. Instead, your business should target and embrace the emotions of your customers, and niching down helps you understand customers well enough to make this possible.

3. Opportunities for faster, long-term business growth

When you’re planning your overall business strategy and marketing plan, you don’t have to target a single niche. However, if you do choose to go for more than one, make sure you have the resources to do it.

You will need to have multiple streams of marketing and multiple campaigns going on concurrently. These must have different messages, different styles, and different strategies. 

This way, you segment your marketing campaign and budget, target and potentially appeal to more diverse prospects, and enjoy the benefits of contained diversification.

The approach is more rewarding that the generic marketing used by non-niche businesses, and can be effective in delivering greater exponential growth than blanket, generic marketing.

4. Easy to find your ideal customer

Many small businesses don’t define their ideal customer. For many, you don’t have to be picky when just trying to get customers in the door. 

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The downside, however, is that chasing down everyone likely leaves you with nothing to show for it. 

Instead, focus on a niche and then define your ideal customers from that niche. 

This will likely make you enjoy working with this client type, while niching down lets you go hard at your ideal client. Finally, knowing your ideal customer also helps you easily identify quality prospects from your niche market.

5. Hone your skills to become an expert in your niche

When you do one thing (or a few), it is easy to do it well. And customers, particularly those who are willing to pay the most money, will always choose the expert over a generalist. As a consequence, your unit price will also increase accordingly.

But the biggest win is in enhanced customer satisfaction and increased efficiency in your business.

It’s difficult to become an expert in every single part of an industry. However, it’s fairly easy to become an expert in a specific market niche.

When you take your work to this next level, the work also becomes more interesting and exciting for you. You can spend your time learning more and more about the niche that you already enjoy.

One advantage of gaining the “expert status” in a niche market is the shortening of your sales cycle. 

By solving a particular burning need for your customers, you are more likely to sell faster in future compared to someone just starting out. Or those working on numerous niches. As such, potential clients either view your business as the solution to their problem or trust you to achieve a specific result.

6. Increased focus reduces overwhelm and burnout

Sure, you could try to help everyone within your industry. You might even manage to succeed in getting a lot of clients through the door. But then what?

When you try to do too much, you spread yourself thin. That’s how burnout happens.

You can avoid burnout and overwhelm by really defining what you specifically want to do. Who do you most want to help? How are you best equipped to serve those people? If you have a business that sells products instead of services, which is the product you most believe in?

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In business, we are often told to “think big” but actually it can be better to think small. You can always grow when your time and energy allow. If you know your niche, then you can grow in the right way, at the right time.

7. More collaboration, less competition

All businesses are very competitive, but competition intensifies if the businesses in question operate within the same industry. However, this isn’t the case where effective niching down applies.

As a general rule, the more expansive your area of focus, the businesses you must compete against. On multiple fronts. All the time. This is different from niching, in which the business niches actually encourage collaboration over competition. 

While two florists would typically be in a cutthroat race for customers, a wedding florist can easily co-exist and collaborate with a funeral florist. They can even engage in cross-selling each other’s products.

Similarly, where two digital marketing agencies would compete, a social media agency will happily collaborate with a content agency. 

And the outcome of this realignment is massive.

The niche-centric collaboration means marketing budgets are utilized more effectively. Similarly, the agencies can easily be a source of new business for the other, something that would never happen in a generalist situation.

The case for niching down

To enjoy these and more benefits of choosing a definite small business niche, check out our previous article on how to select the perfect niche for you.

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About the author

Vani has a keen interest in investments, entrepreneurship, and small businesses.

Vani Ongaya

Vani has a keen interest in investments, entrepreneurship, and small businesses.