Fulfilling an unmet need (or creating one)
People often need stuff they can’t get or can’t get affordably or conveniently. Sometimes, they don’t even know they need it or want it until you show them how much better their lives could be if they had it. Nobody really needed a camera built into a mobile phone, for example, but as soon as a mobile phone with a camera became available, everyone had to have one.
When you discover an unmet need or create one, you create a niche market that can be very lucrative. I once worked at Tower Paddle Boards, a direct-to-consumer paddleboard company. All the paddleboard brands in our industry sold to surf shops and outdoor retailers, so their products were pricey. But company founder Stephan Aarstol spotted an unmet need: affordable high-quality paddleboards. By selling direct to consumers, Tower Paddle Boards eliminated the retail markup and slashed prices without sacrificing quality. That’s how you create a niche.
Specializing to create a new market niche
You’ve probably heard the expression “A jack of all trades is a master of none.” You don’t see a lot of demand for a jack (or a Jill) of all trades or even a business that offers everything to everyone. Some of the big players offer all things, however, and are successful. At Walmart, for example, you can find a broad selection of products, have your vision tested, get your car repaired and your hair cut, and even have your taxes done. But even many of the big players have a niche; Walmart competes on convenience and price.
When you’re building and launching a new brand, you’re not a big player, so don’t try to be or offer everything to everyone. Eventually, you may want to reach a broader market, but start small by focusing on the needs and desires of a small segment of your market. This advice applies whether you’re creating a business, product, service, or personal brand.
Offering something unique
Niche markets are often the products of inspiration. An idea pops into your head about something unique or a twist on something that’s been around for years. A case in point is the skin-care industry. Recently, this well-entrenched industry has been rocked by products with natural ingredients. Phthalates and parabens are out; fruits, veggies, and botanicals are in. The shift in demand for natural skin-care products created an opening in a very crowded market, allowing small business to make a big mark.
You can’t force an idea to pop into your head, but you can create fertile ground from which unique ideas are more likely to sprout. Here are a couple methods to try:
Immerse yourself in the industry or the market you’re passionate about. The more information and insight you have, the more material your subconscious mind has to work with to generate ideas.
Tune in to the news, and be sensitive to growing trends. Ideas for natural skin-care products, for example, came from concerns about potentially harmful chemicals in foods and other products.
Broaden your interests; expand your mind. Ideas for unique businesses, products, and services are often the product of diversity or convergence — viewing something from a different perspective or looking at two distinct industries or markets side by side.
Formalizing Your Brand As a Business … If You Haven’t Already
When you’re building and launching a brand, you’re typically building and launching a business — a complex topic that I don’t want to subject you to. But you do need to know the basics so that you start your brand/business on the right foot, avoid legal and tax issues, and ensure that your brand and other intellectual property is protected.
In this section, I explain the basics of incorporating and registering your business, and I touch on the topic of protecting your brand and other intellectual property (a topic you can find more about in Chapter 19).
Incorporating your business
Incorporating your business is the process of establishing it as an entity separate from you as a person. As a corporation, your business gains certain benefits, including legal protections and potential tax benefits. From a branding perspective, incorporating your business may help build trust and credibility among prospective customers and clients.
When incorporating a business, you decide how to structure it — as a partnership, limited liability company (LLC), C corporation, or S corporation. If you are your business (you’re self-employed), your business is considered to be a sole proprietorship, and you stand to miss out on the benefits provided to corporations.
In the following sections, I weigh the pros and cons of each type of business entity.
Sole proprietorship
A sole proprietorship is the fastest, easiest, and cheapest business structure to set up, requiring no time, effort, or money. You just start doing business, and your business is considered to be a sole proprietorship. With a sole proprietorship, you have complete control of all business decisions, and you report your income (and are taxed) as an individual taxpayer. Those are the benefits. These are the potential drawbacks:
Unlimited personal liability: This one’s the biggie. Nothing separates you from your business, so you’re personally responsible whenever something bad happens. If your business fails or someone wins a lawsuit against your business, you can lose everything, including your home and personal possessions.
Difficulty raising money to grow your business: You can’t sell stock in the business, and banks will be reluctant to loan you money.
Increased burden of running the business: With total control comes total responsibility, which can leave you feeling the heat when problems arise.
As a sole proprietor, you’re not required to name the business after yourself. You can register your business under a doing business as (DBA) name. As a DBA, you gain no legal protection, but you appear to the world to be more of a business entity. See “Registering your business” later in this chapter for details.
https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online.