By far, the hardest part after picking a niche for your business is understanding it.
Too many business owners dive into operations before comprehending their niche’s needs and target audience.
According to a report by Zendesk, 91% of customers will choose a small business if it’s convenient.
So, how can your niche business offer convenience if you don’t know what customers need and don’t need?
In this article, you’ll uncover 10 steps to research your desired business niche. Read on to discover how to understand your niche to ensure your business’s long-term survival.
Let’s dive in…
What is a business niche?
Simply put, a business niche is a specialized market within a much bigger market.
E.g.: if you’re in the deodorant market, selling organic men’s deodorant is a niche within the broader market of deodorants.
Niches are important for businesses as they create a loyal customer base and a steady income stream. Also, you won’t be in direct competition with the existing heavyweights of the market.
How to identify a potential niche for your business
Identifying a niche for your potential business comes down to your Unique Selling Proposition (USP). A niche is a hole in the market where your USP is valued and appreciated. To start your niche discovery journey:
- Identify your personal expertise and marketable skills.
- Create a list of niche ideas that would fit your skills.
- Research the niche (explored below).
- Estimate the niche’s profitability.
- Survey potential customers about your niche idea.
- Cater your USP to suit the unique demands of the niche.
10 steps to research the niche for your potential business
By now, you’ve picked a niche that you’re not only passionate about, but also skilled in. Let’s take a deeper look at how to research your preferred niche and develop a desirable USP.
SECURITY WARNING: DO NOT perform market research without network encryption. Ensure you have a VPN on your computer to protect your personal data. Leaked company data can ruin the reputation of your niche business.
#1. Define your niche
A huge part of filling gaps in a market is to understand your niche inside and out. Do a deep dive into your niche and narrow down your areas of interest.
E.g.: If you’re pursuing the gardening industry, identify all the niches within gardening that you have interest in (garden tools, fertilizers, clothing, etc.).
This gives you an understanding of any unserved needs within the niche market that you can serve.
#2. Outline your goals and limitations
If you’re looking for a profitable niche, most options will fall into two categories:
— money or passion.
At this point in your niche journey, it’s your choice between the two. Do you want to pursue your interests or maximize profits?
E.g.: If you’re passionate about pet-care, you might want to create the next pet-care social media. However, pet grooming products might be more profitable, even if you’re less interested in it.
#3. Use an SEO tool to analyze the competition
Use an SEO tool to analyze your competitors’ audience, performance, and profitability.
Analyzing their website and services also gives you an idea of your competitor’s USP. With this knowledge at hand, you can offer even better services.
Don’t be discouraged by a powerful competitor — every market leader has blind-spots where your USP can fill in the gaps.
#4. Perform niche-focused keyword research
With your new SEO tool, perform some routine keyword research. This way, you can see exactly what users in your niche are searching for.
Popular keywords can even hint at unfulfilled niches where you can offer your services.
E.g.: You’re doing keyword research on yoga mats. You might find the common keyphrase: “sweatproof yoga mats” — a possible gap in the market!
#5. Examine industry trends
Your business is likely to fail if you have no deeper understanding of the trends that dominate the market your niche lies in.
Keep up to date with:
- Large industry publications;
- Industry-related news;
- Social media groups and channels;
- Industry forums;
- Niche-focused blog posts.
Trends often repeat themselves. Be aware of the fluctuations within your industry to strengthen your niche business.
#6. Understand your target audience
Even within niches, there can be vastly divided target audiences. Your job now is to find your audience, and serve their exact needs.
Research the demographics, common behaviors and pain points of your audience. Profitable niche businesses capitalize on these preferences and offer remedies for pain points.
Gather these powerful insights from SEO tools, interviews, surveys, and general market research.
#7. Estimate resources required
Let’s pretend you’re into SCUBA diving. Producing specialty equipment like oxygen tanks and mouthpieces is expensive. There are much less overhead costs if you sold wetsuits.
Identify all of the costs of production and operation within your chosen niche. Then you can roughly estimate the capital you’ll need to start your niche business.
Some industries may have less obvious costs like:
- Expensive permits;
- Yearly membership fees;
- Requirement of an office or storefront;
- Specialty equipment and tools;
- Compliance with national or international regulations.
#8. Network with other niche or industry leaders
Some industry knowledge can only be gained through years of work within specific niches. Seeing as you’re new to the niche, seek some knowledge from the veterans of the industry.
Reach out to industry professionals via:
- Social media;
- Seminars;
- Workshops;
- Product launches.
The advice you gather from these individuals is vital. It might even be the most valuable asset to the long-term survival of your niche business.
#9. Assess long-term sustainability
Part of owning any business requires one eye on the long-term, and one on the short. If you want your niche business to stand the test of time, there are a few things to consider.
You’ll want to assess long-term factors like:
- How old the niche/industry is;
- Scalability of your business model;
- Evolving consumer trends and preferences;
- Sustainability of the niche;
- Possible disruptions to business continuity.
#10. Create a business plan
By now, you should know your niche and industry like the back of your hand. The only logical next step is to create your business plan.
Using all of the insights and knowledge you’ve gained so far, alter your business plan to better suit your niche.
Formulate your market strategy, financial projections and operating plan. Once you’ve created a rock-solid business plan, you’re ready to start dominating your desired niche.
Final thoughts…
Operating a business in a specific niche can be a demanding job. Without appropriate prior research, your business might fail to fulfill your target audience’s needs.
Yet, if you stay up to date on industry trends and thoroughly understand your target audience, your niche business will flourish.
