Niche Businesses Survive the Recession

Some are thriving

So much changed during the recession–many small businesses closed and never re-opened. But some hung on and are coming back stronger than ever. Two examples show how perseverance and strong business acumen helped two fledgling enterprises to profitability. Both are niche service providers who would normally have the odds against them: a concierge service and a food delivery service.

What began as running errands for neighbors turned into a full time business. Over a period of four years, the owner expanded the service from two to seven part-time employees who pick up children after school, shop for groceries, pick up dry cleaning, walk pets, and stand in for absent receptionists. Now averaging 10 appointments a day, the business is expected to surge with the approaching holidays.

At one level, the is an interesting comment on the state of the local economy. With unemployment numbers still running slightly above the national average, there is still a level of disposable income that drives what might otherwise be called a luxury service. Or is it more a reflection of the need to have a two-income household and the services are a necessary part of the formula?

If the mention of a restaurant delivery service sounds like a college student’s get-rich-quick scheme that is doomed to failure, think again. A local business contracts with local restaurants to deliver food and gets paid a commission based on the cost of the order. Customers, including businesses ordering meals for employees, pay a flat fee for delivery. It started in one community and over a period of three years expanded to two adjacent communities. The expansion accompanied several good decisions that eliminated unnecessary expenses and strengthened the bottom line:  investing in custom order-taking software that didn’t require a monthly fee; scaling back marketing that wasn’t generating new business; and centralizing administrative operations in one location. Orders range from 150 to 300 per day and after tax revenue is now over $1 million.

The restaurant customers have wisely decided to stick to doing what they do best and not try to get into the delivery business. At the same time, the takeout orders represent additional customers who don’t consume the overhead goods and services of the brick and mortar eatery. With 120 restaurants subscribing to the service, there’s probably not going to be any competition any time soon, either.

Both of these small business owners identified a niche business in the services sector.  Though personal contacts and good decisions, both have expanded and continue to attract new customers.


  
  

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