Do any of these apply to you?
- You’re thinking of starting a business, but you’re not quite sure what it’s going to look like or who you’re going to target.
- You feel the pull of entrepreneurship…but you have no idea what kind of business you’d run.
- You’re in the early days of running your business but you don’t feel you’ve found your groove yet and you’re struggling to get your message across to the right people.
If you’re currently nodding along to any of these statements, there’s one thing that could help you gain clarity — choosing a business niche.
Why you need a business niche
Choosing a niche can feel counterintuitive to budding entrepreneurs. Whether you’re desperate for your business to bring in enough money for you to give up your current job, or you’ve already gone all-in on your business, you need some paying customers…yesterday.
And it feels like the best way to attract as much business as possible, is to be ‘all things to all people’.
However, there are actually many benefits to choosing a niche for your business:
It’s easier to market your business
Imagine you’re running a health-based business. If you plan to offer everything from personal training sessions and yoga classes to nutrition coaching and mindfulness practices, and your potential client is anyone of any age, any gender, it’s going to be incredibly difficult for you to create and deliver a clear marketing message. You might even end up with a roster of clients you’re not particularly keen on working with.
However, if you narrow your focus to, for example, yoga and mindfulness for busy women juggling work and parenting, it becomes easier to speak directly to your ideal clients, to home in on the problems they’re likely experiencing, and to show them how you can help.
You know where to focus your time and energy.
Every business owner has to commit time and energy to keeping their skills fresh, staying abreast of industry changes, and increasing their expertise. Sticking with the example above, if you’ve picked a yoga/mindfulness niche, you know exactly where to focus your time and money when it comes to upskilling and you’re less likely to burn out from casting too wide a net.
It keeps you motivated
No matter how convinced you are that running a business is for you, motivation can wane over time.
But, if you’ve chosen a niche that you’re truly excited about, it becomes a million times easier to persevere when your initial rush of enthusiasm fades, when you get your tenth knockback in a row, or when you start wondering if you should go back to the 9-5.
With those benefits in mind, how do you go about choosing the right business niche for you?
These 5 steps should help you get started.
1. Where do your passions lie?
When you imagine running your business, which aspect of it are you immediately drawn to? Is there a certain type of person you dream of helping? Or a particular service that makes your heart race with excitement?
If you’ve already started trading, is there one specific area of your business that really gets you fired up?
And if you’re dreaming of the entrepreneurial life but you haven’t yet settled on a specific business idea, think about how you like to spend your free time. What’s the one thing you look forward to all week? If you look at your bookshelves, is there a topic that stands out? What could you talk about for hours without getting bored?
Wherever you are in your entrepreneurial journey, your business niche is likely hiding somewhere in the answers to these questions.
2. Who do you want to help?
Is there a particular type of person you’d particularly like to serve?
Perhaps you have lots of previous experience in working with children. In which case, our budding health entrepreneur might want to focus on leading children’s yoga or exercise classes.
You might feel that people of a particular demographic have been traditionally underserved and you want to address that imbalance.
You might have personal experience that makes you feel more drawn to working with one type of client over another.
Have a good think about who you’d be happy working with over the next five years and see if that leads you towards a potential niche.
3. What do your customers need?
It doesn’t matter how passionate you are about your niche, if there’s no audience for it, it’s going to be extremely hard to make your business work.
So, start talking to people who fit the description of your ideal customer and figure out:
- Does the problem you want to solve actually exist?
- Is your solution something that will be of interest?
- What do they actually want from you?
- Is it something they’re willing to pay for?
4. Is there a gap in the market?
Don’t worry, this question isn’t about realizing that there are a million other yoga teachers/social media experts/events planners out there and giving up or trying to come up with a different passion to follow.
It’s about researching the market and trying to identify a gap. Maybe your local area is saturated with yoga teachers, but none of them specialise in restorative yoga. Maybe social media experts are a dime a dozen but very few focus on teaching new entrepreneurs to use LinkedIn effectively. Maybe there are 20 other event planners in your postcode area alone, but a lack of those that focus on corporate events.
5. Is it profitable?
Again, passion alone isn’t enough. If you’re going to embark on the rollercoaster of entrepreneurship, it pays to know in advance if the numbers add up.
So, in addition to the “is your product/service something people are willing to pay for?” question you’ve already answered, there are other money-related matters to consider.
For example, what are the training costs? Do you already have the qualifications you need to start your business or do you have the funds available to take the necessary courses?
What overheads will you need to get started? Insurance? Rent? Equipment? Do you have enough cash set aside to cover those costs if you don’t make any profit during the first year?
If you’re creating a product, how much does it cost you to make each unit and how much do similar products typically sell for?
If the numbers add up, great! If they don’t, it doesn’t mean you have to give up on your niche entirely, you might just need to tweak your idea or manage your expectations a little in the short term.
And remember: choosing a niche now doesn’t mean you’re tied to a single idea for the next thirty years. Starting and growing a business is always about testing, reacting to new information, and finding new avenues, new ideas, and new business iterations that work for you.
So don’t let the thought of choosing a business niche stress you out. This is one of the most exciting phases of the business journey — enjoy it!
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