June 4, 2020  
 
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Making Money in a Limited Market

Written by Jay Shapiro for Gaebler Ventures

There might be gold in them there hills but can you persuade your business bank manager to invest in your small specialist interest business. More to the point, will you make money?

Sometimes launching a business in a marketplace where a lot of competition exists can be daunting.
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That's why a good handful of newcomers to the world of being their own boss opt to attempt to corner the smaller niche areas. But is this the way to make money? Small or specialist interest groups, by nature of being small, don't represent a large audience, therefore potential client banks are likely to be on the small side too.

So is there any financial gain in appealing to the limited markets?

Actually, there is. If for example you are the only person in the world who manufactures something unique using a secret recipe and a material that can only be sourced in your back yard, then fair to say you've got the monopoly on the market. But is there actually market? Only if what you produce with your never-to-be-revealed and unfathomable recipe and rare material is something that people want.

This can work in a number of ways:

If the product you make is wanted by a lot of people then you're really on to something. The question is, can you produce enough of it to satisfy them all? Very likely not, if, as we are assuming for the sake of example, your material source is a limited one. However, even this may not be a bad thing as it can add a certain desirability to your product. Think of it this way, if diamonds were as commonplace as leaves they'd have no value.

If your product is therefore considered rare then the price you charge for it could represent some serious profits.

Now although are taught that meeting market demands is important, in the case of rare goods then an opposite effect takes place. The rarity of the commodity boosts and maintains its desirability. Highly sought after products or limited edition releases can command truly high prices.

Location Location Location!

Does location have a bearing on these limited market business options? Sometimes location can have a bearing, but these days, with internet's global reach at most people's disposal where you are situated physically may be less important. Of course it is still relevant when it comes to shipping goods worldwide and the costs of doing so can be considerable.

Another point to consider, if your business idea is somewhat idiosyncratic and would appeal to a specialist interest group is how potential investors would view it. Some lenders don't warm new ideas unless they are a new twist on the older tried and tested ones.

In such a case you need to put a really good projection in place. Taking a whacky concept along to your business bank manager is all well and good, but you need to back up the dream with realistic figures and persuade them that there really is a possibility of finding gold in them there hills, or at least that unique material in your back yard and only yours.

Sometimes less is more and limited markets can prove profitable for some, but it really has to be more judgment than luck with such ventures. The throw mud at the wall and see what sticks technique rarely works in any circumstances but it's less likely to in these instances.

Jay Shapiro is a freelance writer based in the UK. Jay has a particular interest in the emotive aspects of the entrepreneur's character. "Alongside the nuts and bolts of business, the character of the person is often the ingredient responsible for success."


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