For entrepreneurs and small business owners exploring the possibility of selling in the future, determining a business niche has never been so important. Without a business niche, even the very best products or services can fall on deaf ears, and defining your business before a sale can translate into increased worth and a smoother, more successful sale transaction.
In today’s fast-paced and often over congested market sectors, finding your place can be the difference between success and failure. Whilst many entrepreneurs know exactly what their market is before they even come to market, for others, it’s a journey of discovery as they grow their business.
To help find the right niche for your business, Gary Edwards, marketing manager at Company Valuation Services (CVS) gives his top tips that will ensure success.
Finding the right niche
Finding a good business niche will not only help you serve your target customers appropriately, but enable you to determine a reliable and robust strategy for growth and success. Your business niche assists you in present and future endeavours, particularly if you ever come to sell your business.
Recent statistics published in a briefing paper by the Department for Business, Energy and Industrial Strategy revealed that the number of UK businesses hit a record high during 2016. There are now 5.5 million businesses in the UK. That’s 23 per cent more than there was in 2010, which means competition is at its highest level.
Defining your business niche will go some way in separating you from your competitors. Demonstrating the value of your business will also come down to your place in the market. Specialising in a business niche ensures customer experience is high, the competition you face is limited, and the value of your business is an even more attractive prospect for potential buyers.
Determine your business niche
1) Understand what makes a good business
Understanding the key qualities of what makes a good niche is a great place to begin. Your niche should:
- Satisfy your growth objectives
- Be in demand
- Involve careful planning
- Be as individual as possible
- Have the capacity to evolve as your market does
2) Remember smaller is bigger
Harnessing a large proportion of a more specialist market often equates to more than grabbing a smaller share of a larger market. Focus on being more specific about your brand, its aim and its product or service range.
3) Identify your strengths and achievements
Gaining a more focused view of your target market isn’t just about defining your audience. Breaking down what you do best as a business is integral to determining your niche and the skills that will satisfy your specialist market. Past achievements will also help you to take a more calculated view of what you can offer to your audience.
4) Define your dream customer
Your business should revolve around one thing – satisfying your customer base. Getting to know your target customer is your golden ticket to a great customer experience, but doing this in as much detail as possible is vital. Many companies avoid overspecialising, however, by aiming to be ‘all things to all people’ you run the risk of confusing your target audience and exhausting yourself.
5) Evaluate, evaluate and evaluate
Once you have established what you can offer and to whom, return to what makes a good niche and evaluate the product or service using these criteria.
Once you have evaluated your proposal, it’s time to test your niche on your target market. Offer samples of your product or service and analyse its performance. Learn from any feedback you receive before launching or re-launching your new and improved niche business.
Finding your niche, whether you are a start-up or established business, will reflect on the overall value of your company. By following the advice above, you can find your niche, set your business up for success and make your business an attractive asset for a future buyer.
To help further, it is best to use a tool to value your business which is a step that many small business owners and managing directors take before finding their niche and increasing business value. You can find out your value by using a calculator here.