What do copywriter Laura Belgray, inventor Raquel Graham and game manufacturer Jessica Ochoa Hendrix have in common?
They all run tiny businesses that have broken the $1 million revenue mark in very narrow niches.
Belgray uses self-created PDF courses to teach people how to write “About Us” pages and professional bios for their websites. She markets her services via email and runs a mastermind group on copywriting from her site Talking Shrimp.
Graham, a former analyst at JPMorgan Chase, invented scarf alternative NEKZ wrap and now makes a living selling that and other creations—like jogging hats with built-in safety lights—on HSN and other platforms.
Educator Hendrix teamed up with two friends from science and academia to found Killer Snails, which makes educational games for children.
The moral of these stories? If you want to build a high-revenue small business, it helps to think small—very small.
In researching Tiny Business, Big Money (W.W. Norton, February 2022), I interviewed nearly 60 entrepreneurs and conducted an analysis of Census data in which I subtracted the average payroll (the biggest cost in many businesses) from the average revenue to see which ones had the most money left over to cover other costs or reinvest. These were businesses with 20 employees or less, and most had fewer than five employees.
Many of the businesses with the strongest financial potential were in niches that may not immediately leap to mind when thinking of the ideal business. For instance, some of the top niches for businesses with zero to four employees included breakfast cereal manufacturing (low-carb granola, anyone?), making sanitary napkins and tampons and wholesaling jewelry. Clearly, there are a lot of millionaires-next-door behind these businesses, quietly making a great living with very tiny teams.
The niches I found most promising were:
- Souped up service businesses, like the one run by photographer Jenna Kutcher, who also offers digital courses and podcasts and brings in advertising revenue as an Instagram influencer
- Financial services and technology
- Construction and real estate
One of the hottest areas is business-to-business e-commerce. For example, business owner Kelly Cudworth converted a brick-and-mortar office supply store to an e-commerce operation, which has less overhead. That allowed him to reinvest in the business so it could grow, and today it brings in $9.5 million a year with just two employees.
How to Find Your Niche
So how you do you pick your ideal niche? Simply following the money isn’t usually the best way—many of us are motivated by more than capital gain. The top business category for zero to four employees was tiny casinos, which is an extremely specialized niche that wouldn’t be a great fit for someone who lives in a state where this kind of operation is illegal, for example.
I found that many of the successful entrepreneurs discovered clues about their ideal niche in their personal or professional lives. Once they focused on what they enjoyed in these spheres—and where the demand for their skills or ideas were—the business ideas subsequently fell into place.
Take mother of four Nicole Brown who was running Mahogany Butterfly, an online community of content for Black women. When she had a premature baby and needed something to take her mind off the stress, she decided to bring her community-building skills to a new purpose-driven business. And so she founded Izzy & Liv, an e-commerce store that sells clothing and housewares with inspirational and empowering themes designed by and for women of color.
One big hit for Brown was the monthly Brown Sugar Box, a subscription product that includes themed T-shirts and accessories. Women began getting together to “unbox” their deliveries: “It was something completely organic,” she told me. Brown had built the business to $7 million in annual revenue, with 10 employees, when we last spoke.
Of course, no matter what idea you’d like to try, it’s a good idea to test it on a limited basis—perhaps as a side hustle—and, if it turns out you’re on to something, then double down your efforts. Along the way, you’ll be learning every day how to make it work—and that will be valuable when you decide to build your own tiny business that makes big money.
Excerpt adapted* from Tiny Business, Big Money: Strategies for Creating a High-Revenue Microbusiness by Elaine Pofeldt
“The number one strategy for profiting from a niche business isn’t what you think”
No matter what niche you choose for your small business, one of the most important keys to success is showing up—but staying inspired to do that is hard sometimes if you lead a busy life. To renew their commitment to the business every day, Vanessa Jeswani and Kish Vasnani, co-founders of the travel and tote bag company Nomad Lane, took a moment to think about the day’s goals and pump themselves up every morning as they were starting the business. “Our main goal was really to go to bed every night feeling we had accomplished something—a happy customer, a new sale, an Instagram influencer mention,” says Vasnani. “Every little victory or accomplishment we had, we celebrated in a big way.”
When the entrepreneurs both lived in New York City, they also attended as many entrepreneurial events as possible. One favorite was Founders Friday NYC, where they met many like-minded entrepreneurs. Surrounding themselves with entrepreneurial thinkers reminded them they were not alone when they hit inevitable setbacks, such as manufacturing errors—a problem many direct-to-consumer brands have faced.
“We watched and saw how they communicated and how they fixed the problem, so we can learn from them,” says Jeswani. There was another benefit, adds Vasnani: “We saw there were other people who had gone through worse. They were able to recover.” Once they relocated to Florida recently, they had to improvise when it came to meeting entrepreneurs. Vasnani reached out to fellow members of Entrepreneurs’ Organization and joined a cycling group made up of e-commerce business owners. He stays in on Friday nights to get up in time for the rides: 5:00 a.m. on Saturdays.
Staying motivated helped them make it through the pandemic, when sales of their travel bags fell off initially. They were able to pivot quickly into selling tote bags with many pockets—which their travel bags were known for. And even after Vanessa gave birth to their baby Enzo in May 2021, they were on their way to growing their business back to pre-pandemic size—about $3 million in annual revenue—the last time we spoke. As Jeswani puts it, “We had learned there are riches in niches.”
*Excerpted from Tiny Business, Big Money. Copyright (c) 2022 by Elaine Pofeldt. Used with permission of the publisher, The Countryman Press, a division of W. W. Norton & Company, Inc. All rights reserved.
Millie content is licensed from Meredith Corporation, publisher of Millie, Real Simple, InStyle and more.Elaine Pofeldt is an independent journalist who specializes in careers and entrepreneurship. She is the author of The Million-Dollar, One-Person Business, and her work has appeared in Fortune, Money, CNBC and more.