One of the essential tips for anyone who wants to start a business is to find a niche to focus on. Having a niche is an essential part of a business model, regardless of the industry, size, or location. In this article, we go through how to find a business niche and why having a niche is important for the success of a business. 

Let’s dive in. 

What is a Business Niche?

By definition, a business niche is a specialised area of a broad industry that businesses can serve to differentiate themselves. A niche is a specific part of the larger market that business owners can target. Every business has a target audience, but this audience has smaller groups, and this is what niche is. It’s about offering products or services that appeal to a subgroup of people in a larger market. 

Now, you may wonder, why reach a subgroup of people when you can reach everyone? 

Most businesses benefit from having a niche because it differentiates them from the competitors in the same industry. Knowing how to find a business niche will help you narrow down your business to reach your target audience quickly. Let’s assume that your target audience is brides and you offer wedding dresses. In this case, you are not the only one in the industry as many brands also offer wedding dresses. An excellent way to establish yourself and set yourself apart in the industry is by angling for a niche. For example, you could offer just silk wedding gowns or gowns made from sustainable materials or gowns imported from Turkey.

But, Do I Really Need a Niche? 

One of the mistakes many small business owners make is being a ‘jack of all trades’. While it sounds like a great idea to offer different products to appeal to customers, it doesn’t always work out. The truth is that your business will do better if you identify a niche for yourself. 

How is that? 

One of the importance of a business niche is that it helps you specialise in an area of business.  But won’t you be pushing customers away? No, narrowing down means catering to a particular subgroup of clients. 

Let’s take a look at these two scenarios: 

Scenario 1: You are a therapist who works with everyone with mental illness. 

Scenario 2: You are a therapist who provides counselling services to ex-convicts who have a hard time reintegrating into society. 

Based on these scenarios, some of the benefits of having a niche market include:: 

1. Minimises Competition

Having a niche is a vital part of minimising competition because it helps differentiate yourself from other sellers in the mass market. Business competition can be stressful when you don’t have a niche because you will be competing with so many people. However, once you know how to identify a business niche, you can cut back the number of competitors you have. For example, the therapist in scenario one competes with other therapists in the market. However, therapist two has fewer direct competitors as the brand is competing majorly with therapists who target ex-inmates. 

2. Easily Identify Target Audience

Who is your target audience?  Your business target audience is a group of people you want to sell to. Being broad with your business means your brand will appeal to a wider audience. However, it is not as easy as it sounds. Businesses with a specific target audience can easily identify the people that need their products. Also, choosing a business niche makes it easier to identify the needs of your target audience. 

Scenario 2 has a clear target audience, so it will be easy to identify and understand their needs. 

3. Become an Expert

It isn’t easy to establish yourself as an expert in different things. However, when you focus on one part of the industry, you can spend time honing your skills and becoming an expert. Building your expertise will give you the chance to withstand the test of time and stand out from the general market.

4. Reduces Marketing Costs

A major importance of a business niche is that it makes marketing easy and reduces promotion costs. Establishing yourself in a brand niche makes it easy to run targeted ads specific to your target audience. You can easily create marketing campaigns relevant to your customers with a clearly defined audience. Also, knowing your precise target audience cuts marketing costs because you run ads specific to your audience’s needs instead of broader promotions.

Scenario one has various target audiences like kids, teenagers, alcoholics, couples, and ex-convicts. These groups of people do not have the exact needs, and you may need to create multiple campaigns. This will cost more than if you were reaching out to just couples. 

5. Increased Sales

Business owners with a niche often find more customers and thus make more money. When you establish yourself in a niche, people will identify you as a thought leader and gravitate toward your brand. The most successful businesses attract more customers not because they meet more needs but because they meet a special need. For instance, many restaurants have fried chicken on their menu. However, when someone speaks of fried chicken, you might immediately think of KFC because they established expertise in that area.

Tips for Choosing a Brand Niche

Defining a niche for yourself is crucial to building market expertise and reaching your customers better. Here are some steps to choosing a brand niche no matter your industry: 

1.  Take Note of Your Passions and Interest

Your area of passion or interest is one of the best sources to find a potential niche market. It’s not a good idea to just start a business because everyone is doing it. Instead, go for something you are passionate about and see yourself doing for many years. Some questions to evaluate your passion include: 

• What skills do you have? 
• What topics do you enjoy learning? 
• What do people tell you you’re good at? 
• What’s education 

If you are great at baking, you can start a business making cakes. Also, you can combine different things you are passionate about to find a niche. If you love baking and weddings, you may have just found a market niche. You can niche down to wedding cakes. Another tip on how to identify a business niche is by using tools like Google Trends to seek out ideas.  

2. Research Your Market and Competitors 

So you have a field you are passionate about and even a business idea in mind. Now, it’s time to find out if your market is viable. As much as you want to choose something you are good at, it would help if you also did market research. This will help you know if there is a target market for your business idea. If you are dedicating your resources to a business idea, then it should be profitable and lucrative. 

An important step on how to find a niche online is by searching for keywords related to your business idea. You can also use tools like Google Trends and Answer the People to gauge the market of a specific niche. 

Also, it’s essential to research your competitors when finding a business niche. Look at what the competitors in your industry of interest are doing and see where they are lacking. Is there an area they don’t serve? Are there some gaps customers are complaining about? Now, try to come up with a niche that fills that gap. If there is no competitor within a niche, it may be a sign that it is not profitable enough.

3. Identify and Research Your Target Audience

Another tip for choosing a business niche is to identify your target audience. Think of their needs and determine how your business can provide value to them. Once you know their needs, you will be able to define what you should offer to them. You should also research other characteristics of your target audience, such as their demographics, buying behaviour, location, and income level.

4. Narrow Down Your Niche

Once you find a niche, it’s best to narrow down your business idea further. You can divide almost all markets into subgroups, so research for narrower subsets you can focus on. For example, within the jewelry industry, there are many segments. Jewelry for men, jewelry for couples, diamond jewelry, jewelry for women, engagement and wedding rings, and more. 

Some tips for choosing a brand niche and narrowing it down into subgroups include: 

• Research relevant keywords in the industry. By searching popular keywords on Google, you can get other frequently searched keywords that can give you ideas.
• Take a look at category lists on shopping websites like Amazon and Alibaba.com.

• Check out social media trends and conversations.

You can also narrow down a niche market according to: 

• Cultures
• Location (Specific city, state, or area)
• Occasion
• Activities 
• Demographics (e.g. age, gender, marital status)
• Values
• Quality (e.g. handmade, affordable, premium)
• Profession (e.g. remote workers, contractors, doctors)
• Income 
• Hobbies
• Lifestyle

5. Test Your Niche

Identifying a niche is one thing; identifying it’s a good business niche is another. 

What is a good business niche?

A good market niche differentiates itself from the general market and appeals to a subset of the audience. Also, a good niche market is profitable, in demand, and lucrative. 

An excellent way to identify a good business niche is by testing your market in real-time. There are different options to test your market to see if it’s a good idea or not. You can create a survey for your target audience and promote it on social media, blogs, and other industry-related platforms. Another option is to create trial products for your target customers and see if they will buy. 

Also, you can test your niche by creating a website and then using paid advertising or SEO to direct traffic. Based on your test, you can determine whether your niche is a good idea or not. If the test isn’t successful, you don’t have to discard the whole idea. Instead, you can restrategise and find areas to improve. 

Business Niche Examples

Let’s take a look at some brand niche examples that already exist:

1. Bees Wrap

Bee’s Wrap is a company that appeals to environmentally conscious customers by offering a plastic-free alternative to store food. The company also works on projects like protecting the bees and cleaning oceans, which appeals to environmentally conscious customers. Some other niche products ideas for entrepreneurs interested in eco-friendly products include: 

• Reusable drinking straws
• Ethical skincare products
• Used books
• Houseplants and gardening tools

2. Lefty

Lefty’s San Francisco is a perfect example of what a good business niche is. This company caters to left-handed people by offering practical items like pens, scissors, utensils, and notebooks. These items have designs made specifically for left-handers, so the brand appeals to people in this category.  

3. Nomatic

This luggage brand appeals to travellers, especially freelancers and digital nomads who prioritise functionality. Nomatic offers suitcases and luggage for travellers who want to bring their work with them. Other business niche examples in the travelling industry include: 

• Travel planners or organisers
• Noise cancelling headphones
• Ultralight travelling bags

4. Whole Foods

Whole Foods serves affluent customers who prioritise health and wellness. The company offers organic foods and appeals to conscious customers with high buying power. Some other product ideas to serve customers conscious about health and wellness include: 

• Organic beauty products
• Vegan food

5. PiggyVest

Piggyvest is a finance app that markets itself as a goal-setting app for people who want to increase their savings. This platform also has a blog offering financial tips and appeals to people who want financial freedom. 

Bottom Line

Hopefully, you now understand why having a single focus in your industry can be very profitable for the success of your business. Having a focused niche also means targeting a specific audience and dealing with fewer competitors. Once you master an area perfectly, you can grow into other products and services. So, learn how to find a business niche and establish yourself as an expert with the tips above.