4 Steps to Find Your Online Business Niche
The US Small Business Administration Office of Advocacy notes that in 2018, about 30.2 million small businesses exist in America alone. While not every one of them is a niche business, quite a lot of the more recent startups tend to go in that direction.
The low startup cost, combined with the relative ease of marketing, means that there are fewer barriers to enter the market. That being said, if you don’t want to end up fueling the statistic of how many businesses don’t survive their first year, you should carefully choose your niche.
Let’s discuss how to do exactly that.
Marketing to an individual
Before we go any further, let’s take a minute to define niche business. Simply put, a niche business is one which focuses on a specific product within a market subset. Here are some examples to give you a better idea of what we are talking about:
- Specialty chocolates
- All kinds of organic, sugar-free and lactose-free products
- Dog food delivery service on a monthly subscription basis
- All kinds of pet clothing accessories
- All kinds of standard products created in a non-standard way (e.g. “organic” straws instead of plastic ones)
- Motivational guides for introverts…
You get the point. A product or service that targets people (or businesses) with one common characteristic.
Off course, selling anything requires a certain level of exposure. Niche businesses heavily rely on marketing to get the word out about their product or service to their specific customer type. This specificity is a double-edged sword.
On the positive side, it doesn’t take that much work to research and build a marketing strategy for basically one customer persona. On top of that, if you have an innovative solution, you probably won’t have to deal with a harsh competitor climate early on.
The obvious drawback of marketing to an individual is that there isn’t always much room for growth. That means you will often have to think ahead of how you can expand into other niches and build a fully-fledged business by not staying a single product company.
But those are sweet worries of an already established niche business, let’s see how to start that journey.
Finding your online business niche in 4 easy steps
So how do you find a niche to build a business? It’s not as simple as doing a Google search, but it doesn’t have to be as complicated as putting together a fully-fledged business plan either.
As not many of us have the time or resources to search for a niche through trial and error, we will go over a handful of things that will hopefully help you streamline this process and lead you to a niche you can succeed in.
1. Look for what you like and what can be profitable
Lots of motivational seminars spend quite a bit of time harping on about passion. Finding a hobby or a pastime that you can be passionate about gives you an escape. However, if you really love doing something, why not try and make money out of it?
Marketing Magazine mentions that passion is essential to achieving success in a business environment. When looking at niches, passion might be defined best as the point where interest and enjoyment meet.
Before even jumping into the water with both feet, you need to consider how good your passions really are. The viability of the niche is a combination of how good you are at doing the thing you’re passionate about and how profitable that passion is likely to be. The happy coincidence where these two meet is where you want your niche business to sprout.
To be fair, the above scenario is ideal for service-oriented business. If your business idea revolves around a product, you just need to replace the “what you are good at” part with “how good is your product”.
2. Do the necessary groundwork
Let’s imagine that, at this point, you have a few potential ideas of what you want to do. Like it or not, now it is the time to roll up your sleeves and dive into research.
Doing in-depth research into your potential target audience, as well as into successes and failures in the field can help you decide whether your niche makes sense following up on or whether they’re a dead end.
Here’s what you can do:
- Target audience research: Every marketer will tell you that knowing your target audience is key to the success of any business. Besides talking with potential customers in person, you can check Quora, Reddit or other specialized forums where your target audience hangs out. Here are some additional ideas on how to learn more about your target audience.
- Competitor research: Look into your competition. If you do not have direct competitors, review businesses that offer similar products/services in a comparable niche. Look at businesses that succeed and those that fail. If you are able to find out the reasons behind those opposing trajectories, it will give you a good idea if you have the chance to avoid failure and replicate their success.
- Keyword research: The purpose of keyword research in this context is to select some keywords that people might use to search for your product or service. At this point, you are only interested in the volume to gauge if there is a potential interest, and trends that show if the niche is becoming more or less popular.
If you do everything stated above and the results seem promising, it is time to fine-tune your business idea.
3. Fine-tune your business idea
Rock Paper Copy says that specializing in a particular area allows for more focused business, offers a more streamlined marketing process, and is often more profitable for the business’ bottom line.
A few things that a new startup can use to fine-tune their business idea are:
- Define exactly what you are offering and what kind of need/problem it solves or satisfies
- Define who your target audience is (demographics, psychographics, challenges and pain points you can help them with)
- Define the price and payment model (if necessary; membership, weekly/monthly/yearly subscriptions)
- Sort out which channels you want to start with to market your product (Facebook PPC, Google Ads, Affiliate marketing, Instagram promotion, content marketing, etc.)
When you have that covered, before you fully commit, it is not a bad idea to first test the market.
4. Test the market
Testing the market is the final step in figuring out if you’ve hit on a brilliant business idea. No one wants to spend hours on building a site and driving traffic to it only to realize that they’ve been marketing a dud.
Here is one possible solution for running a test:
- Find a similar product and check their sales page: What you want to do is to create a mockup of their sales page. There’s no need to be perfect here; it just needs to look like a legitimate sales page.
- Build a fake “buy” button: You don’t have a product to sell just yet, but you can build a “Buy Now” button that leads to a page that says “Sorry, this product has sold out.” Alternatively, instead of trying to sell anything, you can just ask people for their feedback or ask for their email address to let them know when the product is available.
- Drive targeted traffic: If you have the budget for it, the fastest way to drive some initial traffic to your landing page is to use Facebook PPC or other paid methods.
- Check the numbers: You can use insight from Google Analytics to estimate how interested they are in the product (by checking metrics like time on page) and the conversion rate.
It is not a foolproof method that works in every scenario, but it is a fairly straightforward way to test the market and evaluate if the business can be profitable.
Mixed Made – A case study in successful Niche discovery
Shopify mentions Mixed Made as a successful startup business, that in 2015 managed to build sales of $170,000 in just ten months. Today, Mixed Made is now known as Bushwick Kitchen.
What strikes you immediately about the business owners is their intense passion for the product they’re creating. The ingredients they used served as a jumping-off point from where they would begin growing their business.
As they basically created a new category with their spicy honey, they needed to first gauge what people thought about the idea. They initially promoted the product by emailing their contact list and posting info on their personal Facebook profiles asking for feedback. That eventually lead to their first $1000 in sales and served to prove there is some interest in the product.
The rest of the story covers their research and personal meetings with potential suppliers. The increase in sales, according to the owners, came from increasing segmentation of their product which shows that even in a fairly small market, it is worth doing additional segmentation and personalization to improve your conversion rates.
The power of online marketing for niche businesses
It doesn’t matter if you are creating a new category or just offering a new product in an existing category, without online marketing, your niche business is unlikely to succeed. The good news is that there are increasingly accurate ways of targeting specific customers that fall into particular interest groups with advertisements thanks to the likes of Facebook and Google’s insights into people’s buying habits.
This is why setting up a website or a landing page and focusing on paid ads (when you know what you are doing) is a great way to jumpstart your project. In the meantime, you can work on the content marketing side of things to bring potential customers through organic means.
Because of everything we just said, just having plenty of experience in digital marketing is a huge asset when it comes to starting an online business. For those with little to no experience, this Complete Guide to Digital Marketing is a good place to start.