You have a killer product or service. If you are thinking the next step is to sell as many products to as many customers as possible, you are wrong. It’s a rookie mistake many entrepreneurs make. You need to identify your target market.
We share the story of how one entrepreneur saw a gap in the market, created a niche for himself and never looked back.
Lindokuhle Magubane started Expandable Projects, an earth-moving equipment maintenance company in 2013, but has come a long way from providing just repair services on mining and construction equipment. He is now part of an elite group of Volvo experts and provides a highly specialised service to a select few.
Here are lessons Magubane learned on his entrepreneurial journey:
Lesson 1: You can make a profit from a smaller target market
One of the myths surrounding niche markets is that they are too small to be profitable. (That’s) far from it. The truth is a highly defined target audience (market) will pay more for a specialised service. Think about how much more a cardiologist charges compared to a General Practitioner. Conglomerates target the masses, so there will always be a part of the market that is overlooked. That is why niche businesses like Expandable Projects thrive.
“As a teenager, I would help my dad repair old cars. While we were rebuilding his old tractor, my hobby grew into a passion and, soon, I knew I wanted to make a living from repairing heavy machinery. But I also wanted to run my own business,” said Lindokuhle.
“I knew I wanted to specialise in repairing and maintaining Volvo equipment, so catering to a wide range of companies did not work for me. In this way, I know my product, I understand my target market and I know my customers well,” he explained.
Niche businesses have the enviable opportunity to create and redefine their target market… stand out in the crowd
The most profitable niches are the ones where you are solving a problem for somebody. Once you figure out how to solve your client’s problem, the money will follow.
Lesson 2: Know your customer
There is a valuable lesson here for owners of niche businesses: focus on meeting your customers’ specific needs rather than attracting scores of customers to sell your product to.
These are the people larger companies have ignored, [it’s the] people who want to know that you pay attention to their frustrations and meet their needs.
Listening to your target market encourages brand loyalty and can propel your business forward. You can strategically position yourself as the go-to person in your field and thus gain credibility. It’s valuable advice for any startup or a business wanting to get noticed.
Lindokuhle noticed that being customer service-orientated was important for his target market – he created a unique maintenance plan for every client and his turnaround time was significantly lower than his competitors. This meant that his clients had peace of mind when their machinery was being repaired and they could focus on their core business instead. It’s the personal touch that endears him to his customers and keeps them coming back.
Lesson 3: Know your market
Niche businesses operate in a less competitive marketplace. That does not mean you can afford to be complacent. You need to know exactly what separates you from your competition because if you don’t, there’s a good chance your customers won’t either. This is where you step up, step out and make your mark.
This is a space for creativity: be open to experimentation which can lead to new avenues of opportunity for your business. If you can see the bigger picture, you can stay relevant and maximise your impact.
For Expandable Projects, this meant attending to scheduled maintenance and breakdowns, selling spare parts and partnering with other businesses to repair and maintain earthmoving equipment.
Lindokuhle also believed that there was more he could do to capitalise on his existing market and diversify, but felt that he needed some guidance. He applied to participate in the SAB Foundation Tholoana business development programme. This initiative supports over 150 high-potential entrepreneurs at any given time across SA. Lindokuhle received access to skills training, peer networks, brand development as well as an experienced business mentor.
The results are impressive. Since the beginning of this programme Expandable Projects has employed four new staff and diversified its product offering which has led to an increase in sales. He also secured a five-year subcontracting contract. Lindokuhle encourages other entrepreneurs to apply to support programmes such as Tholoana if they have a desire for growth.
Niche businesses have the enviable opportunity to create and redefine their target market, to be themselves and stand out in the crowd. Unlike larger companies, they can also cast their nets wider and watch their businesses grow.
Expandable Projects is a business that provides the following services: fault finding, repairs and general routine maintenance. It is on the SAB Tholoana Programme, which is facilitated by Fetola Business Growth Professionals. You can find Expandable Projects on Facebook and LinkedIn.
