What are the advantages of running a niche business?

Oct 9, 2023

According to data from Companies House, 222,068 new companies were set up in the UK within the first 12 weeks of 2023, a year-on-year rise of 8.2%. The question remains: “how unique are these businesses?”

What is a niche business?

As the name suggests, a niche business aims for a specific target audience. One example of this is TomboyX, a clothing business specifically marketing to members of the
LGBTQIA+ community. Or Lush, which prides itself on ethically sourced cosmetics. Rather than cater to a generalised audience, niche businesses offer goods and services to specific groups of people with certain values.

What are the advantages?

Although starting a niche business comes with a set of challenges, it also has a wealth of advantages.

Less competition

The more specialised your goods or services, the less likely you are to encounter an identical business. While others may have similar ideas, you won’t be up against myriad businesses selling the same product to the same people.

If you’re considering opening a coffee shop appealing to ‘coffee aficionados’, we’re sorry, but that’s not rare. But if you were to open an online coffee shop focusing on strictly vegan and ethical customers, you might have slightly more edge.

Word of mouth

Due to the nature of niche audiences, word spreads quickly if you’re successful – the smaller the demographic, the more connected they’ll be. If you connect with your audience and they value your services, you’ll gain more credibility over time.

Setting the price

When offering niche goods or services, you have more wiggle room to set the market price. You won’t have the pressure of price matching or staying as competitive. And, if you can connect with your desired customers in the right way, they’ll likely be willing to pay more for a product that’s suited to them.


Do you have any tips for setting up a niche business? We’d love to hear your thoughts over on our LinkedIn page!


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