What to consider when choosing a niche franchise
It’s what typical entrepreneurial dreams are made up of – identifying a niche market opportunity in an industry that you’re familiar with and starting a business as a result.
The potential seems endless (and it probably is) but does that mean your market gap identification is profitable and sustainable? Not necessarily. It’s important to remember that as you explore your entrepreneurial prospects that many of today’s successful businesses were once considered niche but with expansion and meeting market demands they transformed into a mainstream system.
Sustaining a business that operates in a niche market can be difficult but it isn’t impossible. External factors – customer desires, market trends, economic shifts – all can impact your business, which will lead to business model revisions and adjustments. This is normal, expected practice and if you buy into a niche franchise business there are a few key points to consider.
What exactly is a niche business?
Well, let’s begin with pulling apart the term “niche”. A niche is a small space – in a business sense it refers to a distinct, specific segment of a market. You’re not going after the whole market, in this regard, just a particular part of it. Whether you operate a stationary business or a mobile coffee van, small business owners find that being recognized as a specialist, building a solid brand value and creating a unique customer experience are catalysts of success for niche business operators.
Is your niche business original or just new to a market?
If the business you’re considering buying is truly, undoubtedly unique that’s targeting an untapped market the success potential is certainly high. But so is the risk factor, too. You need to do your research on the market and speak to professionals on the ground and your business’s target audience. What if you find out that a particular trend yet to surface will affect the success of your niche business? It’s things like this that help to shape your understanding on the sustainability of the business and, of course, if it is worth committing to in the long term.
Think about your passion
While it’s great to talk about capitalising on a niche opportunity but are you even passionate about the work you’re going to do? If the answer is no, you should take more time to research businesses so you can find the right business that aligns with your personal needs and feeds your passion. Sooner rather than later you will regret the decision of joining (and buying) the business, your customers will see the resentment in your work and it will all be too late to reverse your move. So remember: take your time, find your passion and don’t be afraid to explore the things that can go wrong. Buying a business is a big decision – make it count.
Have a look at the market: what is everyone doing?
There is so much information at our finger tips today, albeit lots of useless information. But if you treat the internet, for example, as a meritocracy then you’ll target all of the relevant information you need to satisfy your research and avoid all of the nonsense. Google every single detail you want to know about, do some reading on the industry’s news, seek out analysis, read a professional blog or subscribe to a YouTube channel. Do whatever it is that you need to in your research phase so you quickly become knowledgeable in the field across all bases. What else can be done other than reading around? Give existing franchisees a ring and ask them questions you want to hear answers to. If you can get a good grasp on what the industry is doing now, what it’s going to be doing in the next year and where it might be in five years, you’ll be in sound shape to make a judgment call.