Odds are that most working Americans have multiple proficiencies in many different areas and points of interest. Some may even be considered experts. And for those planning on starting their own business, there may even be an opportunity to turn that expertise into a viable business niche.
The American poet E.E. Cummings once wrote, “It takes courage to grow up and become who you really are.” This can also apply in the world of business. If you are one of the many people looking for a change and the opportunity to try something different, one way is to start a business that supports a specific business niche — ideally something you have a passion for. Here's more about why you should pick a niche for your business idea and how to do it right.
The Power of Niche Business Ideas
The year 2020 has upended many industries, including travel, hotel, entertainment and food. The impact is far-reaching, but there are pockets in the market that have seen increased demand. Before you start your keyword search — “top-growing businesses” or “trending niches for 2021” — take a moment to think about what you like to do, what you are good at and why you should go with a niche business. Sure, you could start your business selling pet products, but perhaps there's more opportunity to niche down and sell only custom pet collars.
Some reasons to pick a niche for your business include:
- It allows you to focus on an area of interest. A niche business also gives you the chance to concentrate on a unique product or service.
- It gives you the opportunity to work with a focused customer base with a specific need. This can help establish a level of comfort and familiarity.
- It provides you with the opportunity to do a job or offer a service that you enjoy, or sell a product that you love.
- It establishes a clear and focused direction for your business. Your business niche can also reflect you and your values, giving you an outlet for self-expression.
- It allows you to connect with others that share the same interest. This can go beyond the business and grow more into an engaged community where you interact with like-minded people or a customer base that's looking to fill a particular need.
- It helps you build credibility and gives you the opportunity to become an expert in your niche. Having a niche business can help position you as the "go-to" person that will help solve a problem, provide a service or offer a product within your niche.
How to Pick a Business Niche
So how do you go about selecting the right niche for your new business idea? Ultimately, it comes down to a combination of interest and profitability.
Be Guided By Your Passions
Take time to think about what you like to do. Is it home repair? Fitness? Boating? Gaming? Do you enjoy buying and selling items? The best way to find the right niche is to start by looking at what you enjoy doing. You likely already have an expertise or a thorough understanding of your interests, which will help you immensely if you decide to make it your business.
Look for Missing Services or Products
Although big-box stores and online retails may appear to have everything for the offering, there is a good chance that they do not have all the things people may be looking for when it comes to a specific item in a more specialized category. For example, Walmart may have a toy section that sells board games and video games, but the selection may be limited and a big-box store like Walmart may not offer any of the older games. If you were shopping for a specific game — let’s say it was a vintage Dungeons & Dragons game or another limited edition product — you would look for a niche store like The Compleat Strategist. Figuring out where there's a need for a specialized service or product can help you find a niche that will give you a unique edge.
Research the Popularity
Another way to choose a niche is to see what is already popular and profitable. Although you may believe that you have the right niche idea to turn into a business, make sure to do the required homework and put in the research. Here are some places to help get you started. Hopefully, they will support your business idea or give you enough information to go back to the drawing board and rethink your options.
- Use Google Ads to look at product listings and service offerings, and Google Trends to help analyze the popularity of searches and conduct more in-depth market analysis.
- Go to social media sites and use hashtags to search for trending topics and to plug in your niche business idea.
- See what's selling on Amazon, Alibaba and eBay.
- Look at Amazon, Alibaba, and eBay products and look for any customer needs that are not fulfilled.
- Use Jungle Scout to help with your product research, if you're planning to sell on Amazon.
- Conduct a survey to gauge product popularity with other people that share an interest in your niche idea. Look for groups and clubs on social media, including influencers and bloggers that cover your niche.
Study the Competition
It's likely that you may not be the only game in town and the niche idea that you have may not be as unique as you think. Start by conducting an online search and look for potential competitors. Research what they are selling, study their pricing model and see if there is something missing in their offering where you can fill in the void. Is there any customer feedback? Look at the comments and read up on what they are they doing right...and what they doing wrong.
Learn all you can about the competition and don’t get discouraged that someone else had the same idea as you. Be positive! Finding a competitor only validates that your niche product or service has potential and that there is a customer base for your business. Just make sure that your niche is not oversaturated by the competition.
Know Your Customer
In addition to knowing who your competition is, you should also know who your potential customers are. One way to connect with people who share the same interest (and may become your future customer base) is to utilize social media. Take advantage of Twitter, Facebook and Instagram and see what people are talking about. And in addition to just "seeing" what people are talking about, become engaged and participate in the conversation. Working with social media groups and clubs can provide some useful insights and opportunities to survey the niche business landscape and give you a heads up on needs and trends.
Get Your New Business Idea Started
Stay on top of your niche. Your market is narrow, and that’s for a reason. Above all, stay focused and make sure that you have a business plan in place and a clear direction for your niche business. It's easy to get distracted, but the benefit of having a niche business is the fact that your service, product and audience are targeted.
Once you’ve identified your niche, it’s time to set up your business, work on your business plan and develop your website. Establishing a business entity, such as an LLC, will help add credibility to your niche business and also provide you with the benefits of having a limited liability company.
Need help getting your business idea off the ground? Incfile has helped over 250,000 small businesses and entrepreneurs get started by offering a $0 LLC + state fee package and providing free tools to help make your dream of starting a niche business a reality. Let Incfile help you form your niche business and support you with its suite of services so you can get to business in a specialized market that you love.