Who you are will determine your competitive advantage. Your personality will be your greatest differentiator as more startups are created and workers choose to grow their side jobs into full blown businesses.

You will attract and repel some people just by being yourself. Use that to build your company.

Small Business Labs has yet another insightful take on niche markets.

Customer are increasingly looking for good and services that meet their specific needs.  The Internet is allowing niche producers and customers to find one another more easily.  And technology is lowering the costs of serving niche markets.

Combined, these trends are making more and more niche markets economically viable.

And as costs to enter niche markets decrease so profits increase and the need to serve a larger market decreases as well. In other words, a business can do well with fewer customers.

For instance, as costs decrease to produce and distribute, say, high quality music, so music producers need fewer and fewer customers to make a substantial income. A small music producer with, say, 25,000 yearly sales of a $10 CD is bringing in $250K per year. If yearly costs are $15 – 25K per year that is a substantial profit with a very small following. Marketing for the music industry is being outsourced for a fraction of what it costs the big boys.

Some are rightfully concerned about competitive advantage in this increasing niche market; we have to think of this a different way. Your competitive advantage is likely to be a personality trait moreso than a traditional fiscal or technology advantage. As more people become entrepreneurs (and that is happening in droves) the real differentiator is simply your attractiveness to a particular group.