Starting up a business can be a daunting task involving numerous steps while setting up.
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Moreover, just as is the case with any upcoming venture, success cannot immediately be guaranteed thus an individual needs to have the skill and knowledge of how he/she can reduce tricky elements involved in the setting up (Heidi, 2004).
Creating a new business always starts with an idea, which depending on how good it is determines the success or failure of the business once it commences (Chasten, 2004).
Business can be big for instance General Motors creating a Saturn division or small for instance a child selling lemonade. Setting up a new business is also one’s opportunity to learn how to survive in the world of commerce as well as identify existing and upcoming competitors (Norman, 2004). A few factors need to be considered when creating a new business, for instance, the prices of the products around the area where one is to set up the business, what weaknesses their potential competitors possess, transportation services, as well as the availability of raw materials (Chasten, 2004).
Urban Outfitters is one such business which took the factors into consideration, managed to get over obstacles and challenges associated with starting up a new business and are enjoying their success. Their original concept was that of a small shop having unique objects, which cannot be found anywhere else (Heidi, 2004).
Three Challenges when setting up a business and why they are challenges
As earlier mentioned, there are challenges faced by every new and upcoming business, for instance, the availability of raw materials and infrastructure. However, there are three challenges commonly faced when setting up a business. One of these challenges is the lack of sufficient income in that the individual or individuals wishing to set u a new business might not have sufficient income to cover the necessary costs (Heidi, 2004). The majority of new businesses usually rely on personal savings and since most individuals venturing into the world of business as newcomers do not have enough to invest, their businesses usually start on a very low peak (Norman, 2004).
Another challenge faced is that of having a small network of people to gain knowledge from.
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It has been observed that the best way to start up a new business is to work together with a group of competent, knowledgeable individuals who despite possessing different skills share a common vision (Norman, 2004). The final challenge of the three is the lack of experience on the entrepreneur’s side.
It takes more than finding a unique product or service to sell to customers and therefore starting up a new business requires the individual to be familiar with accounting, sales, and planning in order for the business to make profits (Heidi, 2004). However, most people wishing to create new businesses do not possess the necessary skills to effectively run a new business.
The above-mentioned three challenges can be considered as challenges because they are normally experienced by every new upcoming business, that is, there is not a single business, which does not experience the three challenges in the initial stages (Norman, 2004).
What are a niche product and three examples of a niche product?
A niche market can be defined as a small subset of a much larger market that is not served by mainstream providers. In other words, a niche market is a portion of a larger market that is focused and targetable (Chasten, 2004). Niche markets have proven difficult to serve since the number of clientele is too spread out and small. A niche product, on the other hand, can be defined as a product manufactured and marketed for specific uses in addition to being difficult to purchase from normal shops (Heidi, 2004). Three examples of niche products include Lexus, crutches, and cookies meant for diabetic individuals (Chasten, 2004).
Why a Niche Company might have an advantage in Market
A niche company might have an advantage in the market because there is little or no competition since it specializes in specified products having a small portion of loyal clientele (Norman, 2004). In addition, a niche company focuses all of its resources on a small market section making it sufficient, reliable, effective, and efficient as compared to the company catering for a large portion of the market.
Price would not necessarily be an advantage considering that the niche company deals with products and/or services not commonly found in ordinary shops (Chasten, 2004). This means that no matter what price is fixed on the product/service, the few loyal customers who have a need for it will still purchase it.
Three reasons why Customers would pay more for exclusivity
Customers would be willing to pay more for exclusivity because they feel secure and assured of not only the high quality of the product/service but also of its durability as compared to normal products/services (Heidi, 2004).
Customers would also pay more for exclusivity since the products/services are easily and conveniently obtainable. In addition, they are aware that the product/service cannot be found anywhere else having similar unique qualities and therefore they would be willing to pay more for exclusivity (Norman, 2004).
How a ‘niche player chips away at a large competitor’s base
A niche player can be said to chip away at a large competitor’s base when the former comes up with a better strategy to ensure customer satisfaction for instance refreshing products to every line of hardware that the niche player makes (Chasten, 2004). Three examples of retailers who have done this include Oracle Corporation which is a multinational computer technology corporation specializing in marketing and the development of enterprise software, Wal-Mart which runs a huge chain of discount department stores, and the Carrier which is a specialist holiday operator (Heidi, 2004).
Urban Outfitters’ growth has recently been consistent and impressive at times, taking the look and feel of a small niche shop. The company took conventional thinking that in order for them to be successful a unique idea must be mass-produced. This, together with their approach to the market, led to the company’s current success.
Chasten, I. (2004). Knowledge-based Marketing: The Twenty-first Century Competitive Edge. Sage.
Heidi, B. (2004). Urban Cowboy. Forbes 174, No. 9. pp. 154 – 162.
Norman, J. (2004). What No One ever tells you About Starting Your Own Business: Real-life Start-up Advice from 101 Successful Entrepreneurs. 2nd edition, revised. Kaplan Publishing.