Boutique Businesses – What Are They?
Boutique businesses focus on premium and exclusive services or products that are quite the opposite of volume and scaling. They are often focused on excellence and specialising their offering to attract a very specific client type who is willing and able to pay for the exclusivity and refinement of the service or product.
In the UK a typical example would be exclusive fine dining restaurants with limited covers, celebrity chefs and extraordinary presentation of food. Each new restaurant extending their attention to detail and methods of preparation or delivery in an attempt to reach perfection (and full bookings for months in advance).
The word “boutique” means a business or establishment that is small and sophisticated or fashionable. Many high value brands manage to be internationally known yet still super exclusive. Hermes are famous for silk scarves and very expensive limited-edition leather handbags. They have a worldwide recognised brand and retain their exclusivity.
The key to being a boutique business is understanding your niche – who is your ideal client who is not only able to pay a premium, but also willing to. There are many people for whom a £400 lunch for 2 would be prohibitive but there are plenty of others who welcome the price tag as a status symbol.
Are these businesses worth more? Simply put, combining a niche with becoming premium and exclusive means that price is never an issue for these businesses. Becoming oversubscribed and having a waiting list for your product or service can add more prestige. Being able to price at a point where a business generates free flowing cash to re-invest in product development and to retain quality, highly skilled staff is a great place to be as a business owner.
As a boutique business you can focus on one or two key products or services and do them really well. One of the truths of running any business is doing the simple things well means you win. With scale and volume it’s a very different focus but doing the simple things well often gets lost in these types of business.
Regardless of what type of business you are building, succession and exit planning is easier if your business has a clear purpose, knows it ideal target client and understands the market it is serving. Not being clear leaves your business in NO MANS LAND which is very confusing not only for your customers but also for a potential buyer. It’s likely to make your business much harder to achieve a sale let alone at the price you want.