Category creation and niching down are decisions to give you a head start.
You won't be the only one, you might lead; take it being the first mover, the category creator, the challenger or just having others going into your space.
However, if you really want the best for your clients, you want competitors.
You only have so much
Besides getting specialized or choosing a niche, as an indie business you have limited capacity. Either as a solopreneur or small company, you only have some many hours and resources at your disposal, your services are customized (unique to each client) and need a high touch. So, the number of clients to serve is narrow (not necessarily a bad thing).
Why you need competitors
So you know it's something worth focusing on → There are others that see this niche as profitable. Good sign.
So your prospects can take a better-informed decision → They're presented with options to choose from.
You can get better faster → Experimentation and competences built and made by competitors will push you to gain different insights.
You can capture a premium price → Low-price competitors can take undesirable work/clients that are not the best fits for you (and you'll be able to charge a premium). Win-Win-Win.
Is there a "right number" of competitors?
In "The Business of Expertise", David C. Baker gives a guideline that a good number for a business in the professional services rests between 10 and 200 competitors. → It's something that's already working and lets you command a premium price.
"Competitors are not people trying to take opportunity away from you; they are evidence that clients are already buying the thing they sell. As per David Baker's numbers, look for at least 10 competitors." Philip Morgan.
One thing is for sure
There's no blue ocean
If you read about the blue ocean strategy, where you "find" an ocean with no competitors, it's not true. There's ALWAYS someone else competing for that thing in your prospect's head.
You will have competitors
Even if you're the first mover, there will ALWAYS be someone who'll try to use that created opportunity —sooner rather than later.
Competitors are there to better serve your market.