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Last time, we looked at why niching is important to your business.
Too often, people I’m working with simply don’t have a niche. Especially if they’re new to business; they’ve often not even thought of it.
But once they realise the power of a nice, the obvious question follows: “So how do I decide on one?”
Finding a niche is often something which happens by chance. Sometimes you find one – almost accidentally – in midst of pursuing an alternative objective. You have a product, and realise “this is perfect for XYZ.”
However, many businesses will already have an existing product or service yet seek a more defined target market to sell or promote their creation with greater success.
As you know, the quality of the product is always important – but this search for a niche market also has an incredibly powerful impact. Providing a niche product or communicating with a niche market will most often have a far greater response from your customer. As a bonus, competition is less prominent in a smaller market while the product or service will usually require a lot less explaining to the market being targeted.
So, how does a business even define or locate a niche market?
Defining a Niche
Sometimes, your product or service has quite a tangible difference from others – and this can give you a clear start at a niche. But, this is not always the case. Niching a product can mean focusing on a specific location, age, interest or even price. In this sense, the product is not always different, but instead, it is sold to a specific subgroup in the market.
For example, in the case of tour companies in a popular destination, some operators choose to focus on a specific age group, budget or activity. On the other hand, compact cameras like GoPro are marketed toward outdoor adventures and sports-minded individuals rather than wedding or portrait photographers.
Moral of the story: for every product or service, there is always a niche and with this in mind, here are five simple steps which can help you get started on finding the right niche for your product or service:
5 Steps to Getting Started in a Niche
What are your interests?
It may seem a little straight forward but asking the most obvious questions is one of the easiest ways to establish a niche. What are your interests? How do you spend your free time? If money were not an issue, what would you like to be doing?
When you identify a problem in a market, there is also an opportunity to provide a solution. Asking your target market relevant questions about existing products or services is a great place to start with these questions. Furthermore, there are now endless resources which can help you extract this information such as online forums, Google trends or even a Facebook poll among friends.
Research and find weakness
Before entering any market, you should research the competition and know precisely which products or services you are likely to be up against. Spreadsheets and notebooks are your friend for this process which should be approached as a means of increasing the chance of success just as much as reducing any risk of failure.
Know the Stats
Cash flow and profits are obviously central to success, but you should seek to understand the projected profits before committing to a particular niche. After all, what good is a niche if there is no room for making enough money?
Test the Product
Launching a product without testing is one of the biggest mistakes made by new businesses. Once a niche has been established, the business should seek to test the product before announcing an official launch.
How to Start a Niche
Unfortunately, there is no set path to decide on a niche. No proven path to take.
However, most successful entrepreneurs suggest you should pursue your interests. Focus on ideas that you’re passionate about.
Partly this is because you know the market and the customer better. But mostly, that’s because you’re likely to work harder and less likely to give up when it gets too tough.
At this point, considerable research should be carried out to determine the extent and standard of competition in the market. If a niche looks like there are too many competitors, it is often better to focus somewhere else … but if there aren’t enough, also check why? Are there enough paying customers?