Finding Your Perfect Small Business Niche
Do you know what the two most popular new UK high-street shop set-ups are right now in 2019? I bet you cannot guess. Well, here they are:
- Tattoo shops
- e-cigarette/ vape stores
When you think about it you may not be so surprised at this news. Research coming via Bloomberg.com has shown a 79% rise in new tattoo shops setting up over the past six years. This is across the world and not just in the UK and US.
Why are these businesses so popular right now?
Business experts believe that the rise in popularity of these two hot niches is down to two things:
- The market for tattoos and vapes are growing
- You cannot get a tattoo online
It makes sense that tattoo parlours are much less vulnerable to sales competition from an online source simply because it is impossible to get a real tattoo through the internet.
However, what about vape shops? Yes, you can buy vapes online, but the growing trend for e-cigarettes and the desire from the customer to ‘try before you buy’ has seen customers being driven over the doorsteps of physical bricks and mortar vape shops to sample the different flavours on offer.
How does this help me find my niche business?
Well, unless you are planning to open your own e-cigarette shop or tattoo parlour you may not think that this information will be of use to you. However, you can use these examples to make you think about hitting a niche market where you can make some serious profit.
How? By providing products to these business owners or selling associated products for either of these two markets or business niches.
We are not suggesting that everyone reading this article starts up their own tattoo or e-cigarette related business, but instead look around for opportunities where you could position yourself to supply products to already established and popular businesses.
Tattoo business niche example
While the e-cigarette business is already pretty competitive online, the tattoo supply marketplace still offers opportunities. With a little bit of research, you could find your own niche. Let’s take the tattoo industry as an example here.
Have you noticed that just about everyone under the age of 40 has a tattoo these days? From huge and quite beautiful works of art to a tiny little butterfly on an ankle, tattoos are everywhere!
Even if you have no desire to learn the skills of inking for yourself, you can look at setting up a business where you can source and supply your local tattoo shops with a special ‘after-care’ cream for example.
You could look at riding the wave of popularity for tattoos by selling related products. For example, there will be a large market of people that are seriously thinking about having a tattoo but want to try out some different ideas, designs or styles before they commit to a permanent ink tattoo.
You could sell items such as:
- Pre-tattoo preparation skin creams/exfoliants/hair remover
- Temporary tattoos
- Henna Tattoo kits
- Tattoo sleeves
The idea here is to look at the wider picture. There can be all sorts of different niche business opportunities behind the scenes that feed into high street shops and other industries. Tattoos and e-cigarettes are just two markets that are still growing and have a strong place on the high-street.
There is a lot of potential for you to develop a new business idea and find your niche. You just need to do a bit of digging around to uncover some golden opportunities.
Tips on finding your perfect niche
Let’s take a look at some top tips to help you find an idea for a niche business that you can be passionate about and be driven to see succeed.
1: Find your passion
Make a list of what you are passionate about. Some ideas may pop out at you from your list and this can be good because if you actually enjoy these things it will make you excited to get to work on your new business.
Being passionate about your business will keep you keen to put your time and energy into building and growing it in the long term.
2: Research, research, and research some more
No matter what business you are thinking about starting, you will need to do some careful research to make sure that there is an eager market for what you want to sell.
Every single business on the planet would have done their marketing research to determine and define their target audience, understand their customer’s needs, and be confident that they can provide an answer or solution for their problems.
You can do your own market research or you can employ an agency or freelancer to do this for you. Either way, your market research is an important step to take before you jump in with both feet.
3: Become the master of your own universe
Many entrepreneurs go into business trying to please everyone. This can be a big mistake to make simply because making your business too broad and general will mean that you will be going up against a lot more competition.
If you can make yourself a specialist in your own niche then you will stand out from the crowd. Yes, you will be promoting yourself to a smaller audience, but it may just be a big enough marketplace for you to make a good living from.
4: Seek out your competition
Discovering your direct competition and finding out who you are up against can be a very useful tool for your success.
- Look at what they are good at and what makes their business successful
- Mimic what they do well and do it better
- Learn from the mistakes they made so that you don’t make the same ones
- Find a product or service that your competition doesn’t offer and make sure your customers know what it is
5: Get involved in business networking
This is an especially important step if you are going into a B2B field where you will be supplying other business owners directly.
Attend trade shows that are related to your niche industry. If you are supplying physical shops in your local area, look out for local business networking groups to join – or look at setting up a business networking group of your own.
Use social media to build your brand. Set up a Linked-In account for your business and connect with others in your industry that could provide you with some useful contacts.
6: Build a professional business
Starting up your business as a sole trader may be the easiest option open to you in the beginning. However, there are pros and cons to being self-employed. Which option is better for you will depend on your chosen industry and whether you are planning to deal directly with the public or you plan to run a B2B business.
It will pay to look closely at the main differences between being a sole trader or forming a Limited Company for your business. However, there are a lot of advantages to forming your own company. These include:
- Building a professional image: Customers and B2B clients will have more faith and trust in your business if you are officially registered as a Limited Company.
- B2B trading: Some companies will only do business with a registered Limited Company.
- Business tax: The biggest advantage of being a Limited Company is that you are more likely to pay less tax than as a self-employed sole trader.
- NIC contributions: As a Limited Company director, you can take a small salary and draw a dividend. Limited Company dividends are taxed separately, and are not subject to NICs.
- Separate entity: Your limited company is a separate entity from you. This means your own personal assets and finances will not be lost should your business fail.
- Limited Liability: You will have the reassurance of ‘limited liability’ so will not be personally liable for any financial losses made by your business.
- Easier financing: Limited Companies can find it easier to secure business loans and financing than a sole trader.
- Protected business name: Registering your business name with Companies House as a Limited Company means your business name is protected and no one else can trade under your name.
- Issuing shares: You can raise money to grow your business through selling shares in your Limited Company.
A lot of new business owners believe that setting up as a sole trader is cheaper than forming a Limited Company. However, you can form your own Limited Company with us for a remarkably low cost, so the cost of setting up your own professional business is actually quite minimal.
Take a look at our range of Company Formations Packages and you will see that we have a perfect solution to fit your needs and business goals for now and for the future.
If you are not sure what type of company formation is right for you, do not hesitate to contact our friendly team of formations experts. We can talk you through your best options so that you can go ahead with setting up your niche business with great confidence.
Good luck with your niche business. We wish you every success!