Business Management, Niche markets
If you're specializing in one area, pursuing only a specific subgroup of the business, you're a niche marketer. You're looking to be the very best at a targeted skill that a certain segment market needs.
by Bruce Hackett
there are two types of people: generalists and specialists. Generalists choose to learn the basic skills necessary to succeed in a profession and continue to broaden their palettes by improving their talents and learning new skills, eventually becoming known as reliable resources for a wide range of skills required in that profession. Specialists, on the other hand, identify a specific subcategory within the profession that piques their interest, and then proceed to become extraordinarily proficient in that tightly focused arena.
It holds true with doctors (general practitioners versus optometrists, for example), and it holds true with teachers (multi-subject instructors versus, say, Russian history professors). It holds true with just about every profession you can think of …including painting contractors.
“Some people prefer the jack-of-all-trades approach,” says Doug Bowman, a professor of business at Emory University, “because they like the variety of work, and they like being known as someone who knows how to do a lot of tasks. Other people prefer to concentrate in one area that greatly interests them and become a master of one trade instead of ‘jack of all trades, master of none,’ as the cliché goes.”
In business parlance, if you’re specializing in one area, pursuing only a specific subgroup of the business, you’re a niche marketer. You’re not looking to be all things to all people; on the contrary, you’re looking to be among the very best at a targeted skill that a certain segment, or niche, of the market wants or needs.
The word “niche” is from the French word nichier, which means “to nest”; more to the point, a niche is “a place or position particularly suitable to the person or thing in it.” For the individual looking to identify an appropriate niche market in which to work, suitability is perhaps the most important criterion. Is the narrow market segment you’re considering sufficiently compelling to you to spend all day every day immersed in it?
“You really need to start with your own internal mental state,” according to Lynn Fife of Evergreen Technology, a renowned authority in the painting industry and author of several business-related books including Guaranteed Profit in the Painting Business. “You need to ask yourself, ‘Is this something I’m doing because everyone’s doing it, or because I really want to?’ You need to be very comfortable with the specialty you’re pursuing. You need to know it and understand it, but you also need to enjoy it.”
Niches exist in every type of business – manufacturing, service, retail, wholesale, across the entire industrial spectrum – but the phenomenon seems to be gaining in popularity. Gary Lord, who runs Prismatic Painting Studio in Cincinnati, OH, thinks it’s a direct reflection of what he calls “America’s fast food economy.”
“In Europe and elsewhere, the pace is more deliberate, more relaxed. In America, we want things fast. We’re niche marketers here because we find it can be more lucrative, and we can become successful more quickly. If I’m a liberal arts person, I have to know something about everything, and that’s hard because it takes a lot of time to gain the knowledge. To be able to do general painting, faux finishing, wallpapering, gilding, glazing and so forth, and do them all well, takes a lifetime of work. In a niche, you can focus on a specific area and become one of the best in that niche in maybe five or seven years.
“When I started out, people advised me to be a general painter, but I always wanted to be the artist. Eventually, I chose to focus on faux finishing and stenciling. A dozen years later, after building a strong reputation, I started broadening a bit to provide some other services as well. I think it’s harder to get a strong reputation in the broader market because there are so many more variables, too many things you can’t control. Ultimately, though, you get down to doing what you like best.” says Lord.
In the painting business, certain niche markets – concrete staining, sign painting, faux finishing, even subgroups within the faux-finishing niche — have proven to be both lucrative and popular. Experts agree, however, that the difference between success and failure for the niche marketer lies in the amount of preparation done and the degree of understanding of the niche.
The prospective niche marketer would be wise to take the time to thoroughly investigate the marketplace to determine if there is a sufficient customer base to sustain the business. “The most successful entrepreneurs,” said Industrial Psychologist Kathleen Gurney, “are those who know how to seek out and position their business in gaps, or niches, that haven’t already been filled or fully realized. This requires an honest self-appraisal of the business owner’s skills, desires, and understanding of the market and its potential.”
Fife says, “One of the most common mistakes made by niche businesses is failure to honestly assess the market. For example, there’s plenty of demand for faux finishing in the major metropolitan areas – Denver, Atlanta, St. Louis, Boston, Seattle – but if you plan on doing business in a smaller, more rural community, demand may not be high enough to keep you going. Your neighbor may want to use you, and your brother, but then what?”
To get a clear picture of the market, the competition, the suppliers, the products, the manufacturers, and the customer demographics, most experts agree you need to do market research. Professional market research firms can conduct studies for you and present you with the information you need, but the fee can be prohibitive for the small businessman.
“The less expensive method is to do the legwork yourself,” says Fife. You get a feel for the business by speaking to as many people as you can, and asking a lot of questions. If you learned of the niche through one man’s experiences, remember that’s only one opinion, one scenario. Get your information from as many sources as possible to get a clear picture of your options, and what products, suppliers, techniques, and price structures makes sense for you.”
Joanne Day, who runs a decorative painting studio and workshop called Day Studio, Inc. in San Francisco, adds, “The ones who successfully carve out a niche market stay current. They keep a keen eye on what’s going on out there, what’s happening in the world, what’s new. They identify a trend, a need, in the marketplace and then do what it takes to meet that need. The key is to get into the game before everybody else beats you to it.”
In some niches, it may not be necessary to be the first, or among the first, to meet the needs of the niche in question. However, you will need to devote the necessary time and effort in training and practicing your niche’s skills in order to reach the level of excellence that will make you in demand.
Spending the time to learn and continually improve the skills required in a particular niche is essential, believes Ray Sandor, founder of Faux Effects, Inc. of Vero Beach, FL. “There are things a lot of people can’t do, and if you devote the time to practice and hone these special techniques and processes, people will seek you out. There’s a growing demand for high-quality work, and that business is yours for the taking if you make the necessary time investment.”
Mike Hoppe, son of Robert Hoppe of Hoppe Brothers & Sons, a highly regarded family painting company based in Yorba Linda, CA, said, “My dad’s philosophy was simple. He didn’t want to be just a regular painter. He got into doing these furniture finishes other painters shy away from. He educated himself on how to do those, and soon he was in such demand he had more work than he could handle.”
Before entering a niche market, you need to thoroughly analyze what your business expenses will be, particularly overhead costs. Your budget should include estimates for staffing, equipment, fees and permits, insurance, and marketing, to name the more obvious areas. “Once you discover your costs,” says Fife, “you need to ask yourself, ‘Can I price my services at a level that will allow me to be profitable?’ It’s a good idea to start small. If you plan huge and invest huge and then discover your market is actually smaller than anticipated, you’re bound to fail.”
Some entrepreneurs make the mistake of investing in too much top-of-the-line equipment up front. “Don’t overdo it,” says Fife. “Look at what you own already, and see if it can be adapted for use in your niche business. You don’t have to buy every single tool you might conceivably need. If your business takes off, you can always upgrade and expand later on.”
Lord firmly believes that marketing and advertising are the keys to being successful in a niche market. “People need to know who you are and what you do, that you’re available, that you’re very good, and that you have a price point they’ll want to purchase at. You need to get your name out there. You need to go to home shows, offer your services at discount to the local library or school, and contact newspapers or magazines. I still do that, and I’ve been in my niche for 25 years.”
There are even niches within niches. For example, the current rage in interior design is the use of faux finishes, from simple ragrolling and sponging techniques to more intricate skills such as Venetian plastering and muraling. Providing faux finishing services is indeed a popular and potentially lucrative niche, but some people narrow their focus even further and concentrate solely on, say, gold leafing, or exclusively stucco work. According to Sandor, “There are people I know making $1,000 a day doing nothing but a specific English type of painted borders. Builders here in Vero Beach build these upscale homes, and contractors do most of the work, but when it comes to some of the elaborate decorative painting, they import these specialists from the West Coast.”
Ultimately, the success of a niche market business hinges on the ability to differentiate your firm’s products or services from those of the competition. Customers will seek you out if you can offer something different, or unusual, or unavailable elsewhere.
In the niche market of concrete renewal, restoration and beautification, Crossfield Products Corp.’s Miracote Division has been a leader for several decades. The California-based company sells decorative and protective overlayment products and systems that can make existing concrete applications look like original stained or stamped concrete. The demand for creative concrete applications – solid colors, large designs, checkerboard patterns, unusual textures — has grown significantly in recent years, according to Ronald Borum, their Corporate Vice President.
“This is a niche market that has existed for years, but it’s getting broader now,” he said. “Theme parks were one of the first places you saw the use of decorative or protective concrete overlays. Now we’re seeing them in upscale shopping malls, hotel lobbies and grounds, high-end restaurants, even city parks and playgrounds. It can be a little pricey, so it’s mostly in the private sector, but the public sector is catching on to the fact that it offers much lower maintenance costs in the long run than other materials.
“The real niche here is in coming up with a truly unique architectural look, both in creativity and application. This is a system that is designed to achieve a custom look. The methods may be similar from job to job — as are the pigments, accents, techniques, and polymer formulations — but the end result is a unique piece of art on the floor, which is what makes it interesting and attractive to our customers.”
Crossfield Products is not the only manufacturer in this niche, Borum notes, “and we weren’t even the first, but we’re one of the more advanced in the development of the application technique. We were the first to develop a polymer cementitious overlay that protects against oxidation, carbon migration and other processes that degrade the integrity of concrete.”
Lastly, your chances of success in niche marketing will be better if you make it a priority to continually evolve as market conditions dictate. If a new, better product line emerges that clearly outshines your product, consider changing. If customers demand an unfamiliar technique or application, learn it. If you find you’re not as profitable as you once were, review your business plan step by step. Evaluate your estimates by comparing them against actual costs when the job is completed so your next estimate is based more on facts than “swags” (scientific wild-ass guesses).
In short, keep your finger on the pulse of the industry in general and your business in particular. Start small, know your market, offer something different and adapt to change, and you’re likely to have a thriving, prosperous niche market business.