By 2003, our product commoditized and margins started shrinking fast. All of a sudden the used laptop business turned into the used VCR business. New laptops were cheap and our margins went from 60-70% to 5-10%. Our world was changing and we needed to pivot fast. We had to lay off our entire staff, sell our office building (yea, we bought our own office building) and start over...but not from scratch.
During the good times, we would always throw new ideas around. If we agreed that an idea was solid, we would build it out and let it sit on the back burner. When the time came, we were able to jump into a new project that was already setup and ready to go. We just needed to start executing.
Fast forward to today. Our website (services, subscriptions, advertising) currently does about $400k annually (up from $250k last year) with a substantial profit margin, zero debt and miles of growth in front of it. It has been WAY harder this time around, but we are building something much more substantial.
While my business partner and I whole-heartily believe we are about to enter a hockey stick phase of growth, we do have a couple of ideas built out and simmering on the back burner...just in case.
tl;dr I have been bootstrapping and making my living online since 1999.
If domain knowledge is the main barrier to entry, the competitive advantage is not the fact that it's a niche, but the fact that you know something that your competitors don't about that niche.