When the New Year rolls around, many people start to consider their goals for the next 365 days. Of course, there are the classic resolutions: go to the gym, eat healthily, lose weight. But many people also take the opportunity to resolve to chase their dreams and start a new business.
Working toward starting a new business can be exciting and daunting. There’s so much to think about:
- What kind of product or service are you offering?
- What makes your offering unique?
- Who are your target customers or clients?
- How will you reach those customers?
In answering some of those questions, an important thing to consider:
What’s your business’s niche?
What is a Small Business Niche?
Before we get to deciding on the niche of your business, it’s worthwhile to take a step back and talk in broader terms.
A niche is used to describe a focused or specialized area of a wider market in business.
Finding a niche in a wide market allows your business to stand out against the competition. It also allows you to refine your marketing strategy.
Focusing on one specific niche of a broader market means that you can get more targeted with your business plan, create a marketing plan to reach your target audience, design more in-depth buyer’s personas, do specific market research, and more.
What’s an Example of a Business Niche?
The nice thing about choosing a niche for your business is that you have a lot of options. But it can take some creativity to settle on an idea you like. The best thing you can do is to take a look at your market, think about your target customers, and try to find a need that you can fill.
A good example of a company that found a need and filled it would be the company Diapers.com. They were an online company that delivered diapers to the doors of parents. They started in 2004 and grew wildly popular until Amazon bought them in 2010 for over $500 million.
Some other examples of niches within business are more customer-interest focused. Specific interest groups tend to buy themed products over normal products. Groups like:
- Pet owners
- Eco-friendly consumers
- LGBT+ people
- Gamers or tech-savvy consumers
What are the Characteristics of a Good Niche?
Since there are a lot of options out there for choosing a small business niche, it helps to know what to target. There are some signs that a niche will be better for your business than others.
When hunting for your niche, keep these things in mind:
- Your potential market could be fairly large, as long as they’re specific and interested.
- Your target customers should be easy to find, and easy to reach.
- The market you target should be neglected or underserved.
Any combination of the above can make for a winning niche, as long as you have a specific plan for how you’re going to approach your new business.
How Do I Find My Business Niche?
There’s no real formula for choosing a winning niche. You simply have to do a lot of research. Think of some of the characteristics and markets mentioned above and think about:
- Who do you want to reach?
- What service do you want to offer?
- Are you going to fill an underserved need?
- Are you going to offer a product or service specific to a group of consumers?
What Niches are Most Profitable?
A good rule of thumb for choosing a profitable niche is to choose an umbrella industry that’s been around for quite a while. Chances are, that industry isn’t going to disappear on you.
Here are some popular industries for choosing a niche:
Health and Wellness
The health niche is both huge and often overlooked. There are many sub-niches within the umbrella term of “health.” Just think about it – things like losing weight, building muscle, eating healthy, health for specific diets and body types, and more.
Example: To find a space in that niche, think about what you don’t see. For example, if you want to help people get healthy, think about people who have disabilities or restrictions. How could you help them get active and stay that way?
Online Businesses and Freelancing
Lots of people are leaning toward making their money online now. The appeal of working from home and being your own boss can be quite a draw for them.
There are lots of ways to make money online. From freelancing, e-commerce businesses, to blogging, Search Engine Optimization, social media marketing, and more.
Example: How can you appeal to people online? Think of the needs they have. What tools do they have? How can you expand on those tools, or offer something better? Can you make your service or tool more convenient? Less expensive? More useful?
Survival and Preparedness
If there’s a niche that’s broader than people think, and yet still underserved, it’s that of survival and preparedness. This niche focuses on how people can survive an apocalypse or war as long as they’re prepared. It encompasses things like defending their home, growing food, shelf-stable supplies, stockpiling, and more.
Example: How could you make a product that would attract preppers? It would have to be something useful. Could you make a good shelf-stable food? Or offer supplies that are useful, but easy to stockpile? Think utilitarian and space-conscious.
How Do I Target My Business Niche?
Once you’ve decided on your niche market, it’s time to do some more research. If you’re torn between some niches, you should also jump into research. The more you know about your niche, the better prepared you’ll be later.
As you decide on a niche and service, make sure you do market research to ensure you understand the size and scope of your target niche. Spend some time getting to know your target consumer – their needs, wants, thoughts, how they spend their days, etc. That will give you the basis to create a plan to target your market.
Then take some time to analyze the other businesses in your space – who may end up as your competitors. What are they doing well? How do they target their customers? What customers are left out? What channels do they use? Which do their consumers use?
Then, if you’re creating a website for your small business – and you really should – you can jump into keyword research. What terms are your consumers using to search for your service? What terms are your competitors targeting? How can you become a better resource and destination for your customers than your competitors?
What’s the Next Step?
Once you’ve decided on your niche and settled on a business idea, the next step is to use all that research you’ve done to build out a great business plan.
If you need help with creating a business plan, check out our 5 Step Guide to Writing a Business Plan to learn how you can put all this information to good use.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.