How To Find a Niche for Your Business

Since many large companies corner the market in an industry, small businesses would do well to focus on becoming niche businesses. Markets are large, so find your target audience in a niche market. This is a smaller subsection of a larger industry. Instead of "dog food," maybe an entrepreneur could run a niche business selling "organic dog treats."

This article offers a step-by-step guide to questions to consider when trying to pick a niche for your business.

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Timeline of Becoming a Niche Business

Before business owners can start selling a business idea to potential customers, entrepreneurs need to form their business. Here is what you need to brainstorm before opening your business to a broader market:

• Pick a unique name that you can trademark
• Buy your online business domain name (website name)
• Form your legal business and pick your business entity structure (sole proprietorship, partnership, limited liability company, corporation, or nonprofit)
• Create a business plan
• Do market research, including the demographics of your target customers
• Apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS)
• Secure your business licenses and permits

If you target a new niche market, ensure this niche is consistent with your overall business plan. For example, a small bakery that makes cookies by hand can't compete in a market for inexpensive, mass-produced cookies, regardless of the demand.

Picking a Potential Niche Market

There are as many niche ideas as there are markets. Entrepreneurs should do their research on what specific products or services a particular customer base needs. Knowing your target market's pain points is essential to picking the right niche for your small business.

Here are some niche market examples:

• Disposable medical instruments
• Tiny homes and van conversions
• The pet owner market is booming right now. From pet food to pet accessories, this is typically a profitable niche.
• Online dating and relationship guidance is another niche market with many potential customers.

When picking a niche, you must ensure you can profit.

• Can you stand out from the competition?
• Are you able to scale your business?
• Are there any regulations you need to be aware of?
• Is there a market demand for this niche?

No matter what industry you pick, always consider the venture's sustainability. Is it a fad, or can it last for years to come? It would help if you chose an industry that continues to thrive.

Understanding Your Niche Audience

Part of any successful entrepreneurship is knowing your customers. You can learn a lot about your business niche customer's pain points or products or services they would like to buy by asking them. There are companies who pay for a focus group to get these answers. The easiest thing to do is to ask family, friends, or people on message boards what they need.

You should have done some market research during your business planning stage. Now, you need to hone in on your specific audience. Doing this helps you figure out their specific needs.

• Where would your loyal customers spend time online? Are they on Facebook, Amazon, or Reddit? If you are an e-commerce or online business, this is critical.
• What is your ideal customers' annual income? The United States Census Bureau has current statistics.
• Where does your ideal customer live?
• What are the larger market's annual profits?
• What is the biggest issue or product they find is missing in the broader market?
• What are the spending habits of your audience?
• Do small business clients take advantage of your customer service more often than larger ones?

Put this information into a spreadsheet or a graph. That will show you where any gaps exist for your product or service. You should try to find a balance between market demand and profitability.

Now that you know what your startup audience needs, it's time for you to start marketing to your specific niche.

Profitable Niche Business Marketing Strategies

The best strategy for a smaller business is to divide their audience's demand into manageable market niches. Combine this with the target market research. You can have a profitable business by filling those gaps.

Some useful tips for a successful marketing strategy for your new business:

• Keyword research in your market to find the best keyword search terms for you to use
• Search engine optimization (SEO) to make sure your product listings on Amazon, your website, and any other e-commerce site show on the first page of search engines like Google
• Create a landing page with keyword terms and answers to frequently asked questions so that when customers find an ad for your niche product, they can buy it from that landing page
• Create a podcast for your business or book interviews on other podcasts where you can reach potential customers
• Create social media campaigns for your product or service

A good starting point for keywords and to see what the market is doing is to use websites that track trends, like Google Trends.

Get Help From a Successful Business Lawyer

Don't be afraid to talk to small business lawyers when figuring out your niche business. They can review your business plan and market projections to help you expand into your new niche market.