Small business and the wonderful world of niches

One of the things Sears Roebuck became famous for is their Craftsmen tools, especially their socket wrenches, which are mechanical wrenches. Once, when I was buying one of these wrenches I was confronted with options of “Good,” “Better” and “Best,” a strategy for which Sears is also famous. When I asked about the difference between the Better and Best models I was told that the Best model had more notches, or teeth, inside the mechanism. This would allow for finer adjustments to be made when tightening a bolt or nut. Plus, in a tight situation, the extra notches make the Best model work, well, best.

For the past 30 years, the marketplace has increasingly become like that “Best” socket wrench; every year, it acquires more notches. Except in the case of the marketplace, notches are called niches (I prefer “nitch,” but some say “neesh” – tomato, tomahto). And just as increasing the notches in a mechanical wrench allows for finer adjustments, niches create finer and more elegant ways to serve customers, which they like – a lot.

As niches within industries have increased, so have entrepreneurial opportunities resulting in the most dramatic expansion of the small business sector in history. It’s difficult to say which one is the egg and which is the chicken: Are entrepreneurs taking advantage of niche opportunities as they present themselves, or are entrepreneurs carving out niches in the process of pushing the envelope of an industry? The answer is not either/or, it’s both/and.

Webster defines niche as, “a place or position perfectly suited for the person or thing in it.” If ever a concept was “perfectly suited” for something, it is the niche and a small business. Indeed, as one small business owner creates a new niche today, another is taking this practice to the next level by creating a niche within a niche. It’s a beautiful thing.

As I consider the direction of the marketplace in the future, I don’t see more mass marketing, mass media or mass distribution. I see more niches. Don’t worry; business models based on “mass” anything aren’t going away anytime soon. But they won’t grow like niches will. And that’s nothing but good news for small business and the reason why I’m so excited about the future of entrepreneurship in the 21st century. Because more niches means a healthier small business sector, which I happen to believe is also good for the world.

Recently, on my small business radio program, The Small Business Advocate Show, I talked with my friend and Brain Trust member, Rebecca Boenigk, about her company’s niche. Founded by her and her mother, Rebecca is president of Neutral Posture, which makes REALLY comfortable and ergonomically correct office chairs - the kind business people sit and work in all day. Rebecca says that her business is doing just fine in 2009 because her company fills a niche, instead of trying to be all things to all people. Take a few minutes to listen to what this niche expert has to say about how her 75-person American small business manufacturer is taking on this recession, as they simultaneously celebrate the company’s 20th anniversary. And be sure to leave your own thoughts.

4 Responses to “Small business and the wonderful world of niches”

  1. 5
    John Smith Says:

    Both optimists and pessimists contribute to our society. The optimist invents the airplane and the pessimist the parachute.Gil Stern

  2. 4
    Small business and the wonderful world of niches Says:

    [...] Click here to read more… [...]

  3. 3
    Prasad Thammineni Says:

    Great post! I like the wrench analogy. It captures the essence of how a small business can differentiate itself even in a crowded field.

    Your point about mass marketing or distribution reminds me of the Long Tail -

    With the Internet and distribution abilities provided by stores such as Amazon ZShops and Etsy, there are always opportunities for Small Businesses to sell their niche products and make money without the added expense of mass marketing and distribution.

  4. 2
    Patrick Says:

    Good article, Jim. Suggestion for a followup: how to market your niche business effectively. Clearly, large company strategies won’t work.

  5. 1
    Jared O'Toole Says:

    Finding your niche is very important. Trying to be everything to everyone means you have no direction. It’s hard to build something with no direction.

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