Are you a small business owner struggling to find your niche in today’s market?
Niching down can seem like you’re giving up market share, but oh, how wrong you are.
My name is AJ, and I recently scaled (and exited) my SEO agency with the help of niching down.
I’m happy to share my tips on how to do the same for your SMB.
Let’s find your niche!
Key Takeaways
- Take the time to find your business niche to set yourself up for long-term success.
- Do your market research and look for an underserved market that could benefit from your product or service.
- Make sure you have a large addressable market to ensure demand is high enough for success.
- The benefits of finding a niche market include reducing competition, establishing a customer base, lowering marketing costs, establishing expertise, and increasing profits.
What is a Business Niche?
A business niche is a focused, specialized section of the market. It may be defined by price point, location, demographic or product specialty.
When starting a business, niching allows entrepreneurs to focus their resources on a particular market area and create a unique product or service offering, giving them an advantage over competitors.
When a business focuses on a specific niche market, it often has more success than if it had tried to appeal to the broader market.
Think about it this way – it’s harder to create a product or service that appeals to everyone than to a specific group.
Broad Market Example: Selling Shoes
Niche Market Example: Selling Running Shoes
Ultra Niche Marketing Example: Selling Running Shoes for Wet Conditions
Benefits of Finding a Niche Market?
When you find a niche market, you gain a competitive edge. There are too many benefits of niche marketing to list. But If I had to, here are a few.
A Niche Helps Reduce Competition
By targeting a niche market, you reduce your competition.
This lets you focus on serving your specific customer base better than trying to appeal to everyone.
Your competition will be limited to other businesses targeting the same niche, which typically is a smaller pool of business owners.
A Niche Helps Establish a Customer Base
When you focus on a niche market, you can build up a loyal customer base faster.
You’re more likely to retain customers if they feel their needs are being met.
Moreover, a dedicated customer base will also be more likely to spread the word about your product or service.
A Niche Helps Lower Marketing Costs
By targeting niche markets, you can create more targeted marketing campaigns.
This means you don’t have to spend as much money reaching everyone but instead focus on those most likely to be interested in your product or service.
Your marketing efforts will also be more effective since they’re tailored to the target audience.
A Niche Helps Establish Expertise
By targeting a niche market, you establish yourself as an expert in the industry.
You can use this expertise to create content to help potential customers learn more about your product or service and why it’s better than the competition’s.
This will help build trust between you and your customers, making them more likely to purchase from you.
A Niche Can Increase Profits
By focusing on a niche market, you can increase your profits.
This is because you’ll be able to charge higher prices since there will be less competition and less price comparison.
You can also offer additional services or products that cater to your target audience, increasing profits.
A Niche Can Help You Get to Market Sooner
Focusing on a niche market makes it easier to get to market sooner.
This is because you can spend less time and money testing your product or service on a wide variety of people.
You can start selling it quickly since you already know your target customers.
A Niche Can Help You Get Revneue Quicker
By focusing on a niche market, you can bring in revenue quicker.
When you have a niche, your target audience will be more likely to purchase from you over your broad market competitor.
You’ll also have an easier time building relationships with customers since they already feel connected to your business.
How to Find a Niche
Finding a potential niche for your small business is integral to a startup.
Let’s break it down into smaller steps and help you find your niche business idea!
1. Start with a Business Idea
The first step is to come up with an idea. It can be something you’re passionate about or a product or service you think has potential in the marketplace.
Think about your skills and what kind of business could use them.
Your idea doesn’t have to be new! It can be an existing product or service tailored to a specific market.
E.G., remember my SEO agency? We did SEO (instead of all the digital marketing services under the sun). When people were looking for SEO, they bought from us because we were seen (and were) the trusted experts.
2. Determine Your Target Audience
Once you have a niche business idea, it’s time to determine your target audience. Who are the people that would buy your product or service?
Figuring out your target market can help you determine what product or service to offer and where to market it.
Using our example from above, if you have an idea for a product that would appeal to runners, you can narrow your target customers to people interested in running.
3. Find an Underserved Need
Now that you know your target audience and what they might need, it’s time to look for an underserved need in the marketplace.
Doing market research can help you determine what products or services are already available and any gaps in the market that can be filled.
Questions to consider:
- What product or service could you offer that would fill this need?
- What could you do better than your competitors?
- Whose needs are not being met currently?
- What changes could you make to existing products or services?
Try not to think too broadly – the more precise you can be about who you’re targeting and what they need, the better your chances of success.
Runners, for example, may need a particular type of shoe that isn’t currently available. In our example above, it was running shoes for wet conditions.
4. Use a Customer Discovery Questionnaire
Now that you know your target audience and their needs, it’s time to use a customer discovery questionnaire.
This questionnaire will help you further refine your niche.
Questions to include:
- What type of running do you traditionally do?
- What products or services are you currently using?
- What do you like/dislike about the product/service?
Using a questionnaire might help you find that runners need a shoe specifically designed for running in wet or muddy conditions.
5. Prototype Your Business Model
Now it’s time to prototype your business model.
Start by creating a preliminary version of your product or service and testing it with potential customers.
This will help you get feedback on what works and what doesn’t so you can tweak the final product accordingly.
Keep track of customer preferences to continue improving your product or service over time.
For example, you might test out a prototype shoe with runners and gather data on which features they prefer most.
You’ll need to reach statistical significance at this stage. Don’t just get feedback from two people and try and make adjustments. Shoot for 30-50 (ideally).
6. Create a One Page Business Plan
Once you’ve tested your prototype and have data about customer preferences, it’s time to create a one-page business plan.
A one-page business plan is a simple document that outlines the steps needed to launch your small business.
It should include information about your target audience, unique selling proposition, marketing plan, and financial projections.
This will help keep you focused on key goals, objectives, and strategies as your business progresses.
7. Create a Landing Page
Once you have a one-page business plan, it’s time to create a landing page.
A landing page is the first step in building an online presence for your business.
It should include information about your product or service and how it can help potential customers.
You can use this page to capture leads and build an email list of interested customers, which you can use for marketing purposes.
8. Use Pre-Sales to Guauge Interest
Another way to gauge interest in your product or service is to use pre-sales.
Pre-sales allow customers to purchase the product or service before it’s available on the market.
A loyal customer base can be created by offering pre-sales since customers who take this chance will likely continue buying your product or service.
This can help you understand how many people are interested in what you offer and if there’s enough demand for it before even creating the product itself.
Finding a Business Niche Tips
Now that you have a better idea of your niche market, it’s time to start dominating it.
You’re Not Niching Down Enough
When you first begin niching down, typically, I see business owners NOT niching down enough.
They use excuses like “the market isn’t big enough” or “we’re already known as X, Y, Z.”
Often, these folks are still going after too large of a market.
Find Easily Identifiable Customers
Start by finding easily identifiable customers willing to buy from you.
These people share similar interests, values, and needs with those in your target market.
If you niche down too much, the customers become harder and harder to distinguish.
Find Easily Accessible Customers
Find customers who are easily accessible. This could be people in your local community, on social media, or at industry events.
Easily accessible customers will likely find and engage with your product or service.
Find an Underserved Market
Look for an underserved market that could benefit from your product or service.
This could be a niche within a niche.
Typically, these markets are easier to spot once you’ve been working with your customers for some time.
Start Small, But Have a Larger Market Potential
Make sure that your product or service has a large addressable market (contrary to what I initially said).
This is key to ensuring you have enough demand to be successful.
Example: Running shoes have a large addressable market, but running shoes for wet conditions geared towards women are much smaller.
You can start by offering a niche product, and then (after gaining traction) start offering broader products. Start small, then grow big.
Find Something Working Elsewhere
Find something already working in another market and use it as a model for your own.
This could be in terms of pricing, marketing strategies, or even product features.
It’s essential to stand out from the competition by being innovative with your product or service.
What Are Some Niche Market Examples?
Here are some examples of niche markets.
Rankings.io
Rankings.io is a search engine optimization (SEO) company that focuses on helping personal injury lawyers improve their rankings on Google and other search engines.
Since they only work with personal injury lawyers, they can offer specialized SEO services that cater specifically to this niche.
Crumbl Cookies
Crumbl Cookies is a cookie delivery business focusing on gourmet, customizable cookies.
This is a niche business since it offers a unique take on something already widely available by only focusing on cookies.
Tomboy X
Tomboy X is a clothing company that specializes in casual gender-neutral fashion.
This business provides an underserved niche since it caters to women looking for comfortable and stylish clothing.
Now You Decide
Now that you have a better idea of how to find your business niche, it’s time to put the knowledge into action.
Take some time to think about what type of product or service you can offer and who would be interested in it.
By doing so, you’ll be able to start building a successful and profitable business.
If there is anything that we missed, please let us know in the comments below. Good luck!