How To Avoid Unprofitable Niche Markets
The tech-support business is a good example. It seems there would be a high demand for technical services, yet suspiciously few people are basing their businesses on it. Much of the reason is that the field requires dealing with so many unique situations that it's hard to streamline operations and clients usually don't understand what they're asking for, so they expect everything to be cheap and fast. Needless to say, these are things you'd want to know before entering the market.
Here are some other points to consider before you test the waters in a new niche.
The Products
What will your profit margin be? If you're producing the product, can you really make enough by yourself to earn a decent profit or will you have to hire help? It's vital to check this if you're planning on starting a service business or selling your time in some way. For instance, if you want to teach a class, make sure you know how long will it take you to prepare for that class and, if necessary, travel to the students' location.
The Suppliers
Can you find suppliers easily? Are the suppliers reliable? How much will you be required to buy in one order? If you run an online-only business, will the supplier work with you even though you don't have a phyisical store location? If you're planning on importing products, have you checked that there aren't any regulations that will stop you or taxes that will squash your profit margin?
The Market
Are you sure there's really a demand for the product or are you trying to push through with an idea because it sounds like fun? (Nothing wrong with the latter, but it may turn into a hobby rather than a business). Will people pay for your product or service? People may want what you have to offer, but not want it badly enough to pay a price you can profit from. There may even be another business providing it for free as an incentive for their customers. Also consider if there might be social biases against the business. Not every neighborhood welcomes every type of business ("massage parlours" come to mind).
The Paperwork
Check the legalities. Do you need any licenses that are expensive or hard to qualify for? If you do, the good news is that if you're willing and able to jump through the hoops, the niche may be yours for the taking. Also remember to check if your location is zoned for the type of business you want to start.
Ask The Horse
One of the best ways to get a sense of whether or not you're headed in the wrong direction is to talk with people in that field. Interview the owners of similar businesses about problems they have. Instead of asking directly about the niche you think you've discovered (and giving the competition ideas), stick to more general questions. For example, you might say you're thinking of offering support services to people in a particular industry. In fact, you may even come across another niche by doing this.
Take some time to fully explore any new niches you want to get into and you may save yourself month's of trouble down the road.
Related Tags: market research, niche market, start up business
Finding a hungry niche market is just one way to position your business for maximum sales from minimum marketing. Learn more about business planning, marketing, and management from an introvert's point of view at www.selfemployedintroverts.com
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