Niche companies: strategies that succeed

Although the concept of a niche company is fairly recent, the ‘niche’ strategy has been present since businesses were first established. Today, companies are specializing in something in particular and finding their niche to attract a certain clientele. Increasingly, we will hear more about niche businesses and how much value they bring. Whether they are a small mom and pop shop, or a global corporation, here is how niche businesses work and how profitable they can be.

Finding New Solutions

When trying to establish a new venture, it is common knowledge to avoid ‘diving into a crowded pool.’ And yet, it is very complicated to identify a certain customer demand not being met, and then creating a new product or service to satisfy that need.

Today in business, the most accepted definition of a niche company is “a small but profitable segment of a market suitable for focused attention by a marketer” (1). A market niche doesn’t exist by itself. It is created by identifying needs or wants that are not being addressed by competitors. Finding a niche is therefore the most complicated part, but it is the obvious key to success.

When operating in a niche sector, businesses don’t only need to be innovative, they need to be able to predict the future and anticipate customer behavioral patterns. They need to be ahead of their time in order to provide that right service or product at the perfect time to non-stop customers that are always changing their opinions and desires. If you manage to do that, success is not only an option for you, it is a reality.

Facebook, the iPhone, Uber, AirBnB, etc., these common household names are the perfect examples of success stories in which the companies found the right niche at the right time. Today many companies that are succeeding are doing so because of the niche or the multi-niche industry they chose to enter. And, let’s be honest, it’s working quite well for them.

A company called BlueVine helps small businesses streamline their cash flow. That is by definition a niche company that succeeded because of a new emerging need. The company helps to free up the cash trapped in invoices by giving customers an advance on the amount due. It’s revolutionary in the sense that there is no paperwork and no obligation (as well as no hidden fees).

Business owners using BlueVine can now access the capital they need at the time they need it. Since its inception in 2014, the company has possessed millions of transactions and keeps growing. The company’s specific focus allows it to be top of the class and to play in the major leagues, because they succeeded in identifying that portion of a market.

“I’d argue that nobody’s doing what we’re doing. A mortgage is not the same as a student or auto loan. These are different financing structures based on different factors,” (2) says Eval Lifshitz, founder of BlueVine. “Commercial financing is the same, with different verticals and niches. We’re disrupting a specific niche, invoice financing. Nobody, at least in the US is doing what we are. Other companies might be similar but the overlap isn’t that great. Our competition is the offline world, we’re the first doing it online on this scale,” Lifshitz said.

Duff and Phelps, a U.S.-based leading advisory firm in the field of corporate finance and valuation services, founded during the Great Depression, is now expanding globally in a really specific multi-niche market within corporate finance.

Duff and Phelps was able to acquire almost a century of experience and knowledge in the valuation and corporate finance area and is now specializing in addressing the more specific requests of its clients. The company has created an army of managing directors capable of bringing expertise-based solutions in several fields like financial reporting, tax services, real estate and many more. That multi-niche perspective has allowed Duff and Phelps to have a strong independence and to become the ‘go to firm’ for some of the most successful companies on the planet seeking top expertise in financial services including regulatory transparency improvement.

“That is the front end of our internal processes,” says Robert A Bartell, Managing Director for Duff and Phelps in Chicago (3). “Pulling from our many subject matter experts, we are able to work with different scenarios: do we need our IP expert involved, our real estate expert, our ‘going private’ expert? The matter in which we are involved will be upfront from the beginning,” he added. This past year, Duff and Phelps was able to complete two crucial acquisitions of Kinetic Partners and American Appraisals, giving the company even more of an opportunity to be the most specialized advising firm within the corporate finance world.

A company called OpenLegacy specializes in addressing a very specific problem, enabling enterprises to quickly extend legacy systems, such as the “IBM i” and mainframes to the web, mobile and cloud. “OpenLegacy grew from the frustration of trying to solve a countless number of legacy modernization business problems with the tools at hand; tools that solved a technical problem but not necessarily the fundamental business problem,” explains Romi Stein, OpenLegacy CEO. “A different and new approach was necessary, a solution that looked at the problem from an end-user/business owner perspective. A solution that was quick to use, easy to learn, and flexible in its usage,” he added.

Within that niche industry, OpenLegacy is revolutionizing the market by offering its partners and customers a certain power that was never in their possession before. The young company keeps growing by extending the life and value of its clients’ legacy in cloud integration, web enablement. Today, that specific niche seems to be limitless.

Focusing on a specific, smaller market can be very lucrative and these companies are just some of the proof.  According to Steve Jobs, “Innovation distinguishes between a leader and a follower,” and the niche companies have understood it very well. “It’s not about money. It’s about the people you have, how you’re led, and how much you get it” (4).

  • Business Dictionary
  • Can BlueVine solve cash flow problems for good, Startuphook, May 19th 2015
  • Duff and Phelps puts professional values first in valuation and restructuring practices, Daily CSR, December 12th 2015
  • Steve Jobs, Walter Isaacson, 2011
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