If you do any research into starting a business, you’re guaranteed to come across the phrase “finding a niche” somewhere.
A niche is a specialization, it basically means finding your place in the market. There are many products that serve many different market segments, and this is because of market fragmentation.
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What is market fragmentation?
Back in the day, markets used to be a lot more cut-and-dry. You could sell to men, to women, to boys, to girls, but now with internet, television, magazines, and every other form of media, people need more personalization than used to be required.
Before, you could have a general shampoo for women, and it would sell. Today, you need a shampoo that appeals to middle-aged blonde women with dry hair, or young girls who want “fun and bouncy” hair.
Look at the shampoo aisle and you can see the devastation that is market segmentation. The number of choices are the result of fragmentation. People live different lifestyles, and need different products to meet their needs.
You need to get more specific in order to reach the market you want. If you’re too general, you risk reaching no one! This is where picking your niche comes in. When starting a business, you should define your market, and find your place.
Finding your niche
How do you find your niche? You could try targeting the most high profit niche you can think of like getting rich with real-estate in Beverly Hills, but your business will probably fail. I believe that you need to truly love and enjoy what you’re doing, in addition to being knowledgable, for your business to be successful. If you don’t enjoy it, if you don’t know it well, then it will reflect in the level of service you deliver.
My best suggestion for finding a niche is to consider the things that you really enjoy. How can you apply those things to your business? What market will your enjoyment best serve? What is the best way to serve that market? You could start a general baking website, but good luck competing with all of the other massive websites out there.
But what if your website focused on competitive baking, or advanced decorating techniques? You’ll still face steep competition, but you just cut it down substantially!
Attacking your niche
Attacking the niche is the really hard part. My number one suggestion, before investing any time or real money, is to look at the leader in your niche, and ask yourself:
- Can I do better than them?
- Will people want my offerings over them?
- Can I read the market better than they can?
- Can I offer something they have missed?
If you can’t do it better than the competition, can you do it differently that might appeal to a different market? If you can’t do it better, differently, or offer something new or improved, then people will have no reason to come to you. Examine the niche from every aspect and see where you can fit in.
If you have no competition, then awesome! You’ve struck gold! The only time I ever hear of this is when someone starts a website for a specific locality. An example would be starting a website about Beeswax Candlemaking in Sacramento. Obviously, that is an extremely specific market, so you’ll probably be able to dominate it.
The problem with attacking such a niche is that you may have segmented your market down to 5 or 10 people. 5 or 10 readers won’t pay the bills (unless they are terribly generous!).
Finding a niche can be extremely difficult, time consuming, and frustrating. It is all a part of the process. The worst part is when you know what your niche is, but you’ve got a Wal-Mart sized competitor dominating it. The only thing you can hope to do is fill in the blanks they miss, offer your business in a different way, or try to compete directly and hope that people take notice.
It may be tempting to skip the niche part of your business, but it has really become a necessity. Open up a general store just down the street from a Wal-mart, or Target and let me know how long it lasts. Broad markets are covered perfectly, that is why all of the big boxes have to compete with their prices. Find a niche, serve it better than anyone else, and enjoy your success.