Reducing new business failure rate through hyper-niching
Choosing the life of an entrepreneur is not the easiest path to take. In short, the buck will always stop with you, and generating cash every single day becomes the biggest worry of all. If you don’t make a sale, you can’t pay any employees, suppliers, rent, bills. Your own needs come very low at the bottom of a very long list.
However, that has never stopped what is an insatiable hunger felt by thousands of people every year who take the plunge and set up their own business. On average 20 per cent of new businesses fail within the first year, and if you don’t want to be one of the one in five, the following advice about creating a niche should considerably increase your chances of success.
What is a niche business?
A niche business allows you to focus on a specific segment of a particular marketplace. That niche can be segmented down into interest groups, age and gender, geographical location, characteristics and personality… In fact, the more you dig down into a niche the better.
For example, you might be offering swimming lessons in Cambridgeshire. Narrowing this down you could be offering lessons to wealthy stay at home mums of children under the age of five within the Cambridgeshire area. Imagine that mum as a real person Where does she live? Where does she shop? What clothes does she like to wear? Where does she go on holiday? Who is she married to? Did she work before having children? What does she read? What websites does she subscribe to? What does she struggle with? What are her pain points?
The idea is, that the more you know about this fictional person’s life, the more you can tailor and target your product and marketing campaign, which in turn will give you the opportunity to get the best possible return on advertising spend and overall investment.
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Creating a more authoritative voice
Restricting your target market may initially seem in direct contradiction to what business should be, which is growing and scaling. However, a shift in mindset will actually make you understand how it will actually benefit you.
First and foremost it is quicker and simpler to become a voice of authority in that particular market. You can showcase testimonials from existing customers, and because the audience you are talking to recognize their own struggles and pain points, the emotional empathy is much greater among a much wider proportion of the audience.
Many businesses these days are virtual online businesses, which actually gives you a global market place within which to niche down to your target audience. Whether they are in Birmingham UK or Birmingham Alabama, if you are offering an online counselling service for men aged between 50 to 50 years of age who are recovering alcoholics, then your services can be accessed from anywhere.
Even physical businesses can benefit in the long term. Your Cambridge swimming lessons, for example, can be rolled out through systemizing and teaching your approach, and creating a network. Developing a niche marketing campaign that can be replicated across a larger region is the very definition of scaling a successful business.
Crafting hyper targeted marketing campaigns
Once you know who your ideal customer is, what they read, what interests them, it takes away so much of the guess work when formatting an ad campaign. Social media enables you to pinpoint so many specific behaviours within an audience profile that you can significantly increase the overall return on investment of any advertising campaign.
Consequently, you avoid the ‘scatter gun’ approach of many marketing strategies, which attempts to speak to a wider, more disparate group of people. Instead, you can focus your marketing efforts on channels and messages that resonate with your niche audience. This increases the effectiveness of your marketing campaigns and maximizes your return on investment.
