Is finding a niche key to small business success?
You want to start a small business but there’s one thing that’s holding you back. You don’t know to position your business on the market. Should you aim for the masses or should you target a niche of consumers?
Read any business strategy book, take any one of hundreds of online courses, and they’ll all say the same thing: “Pick a niche or you won’t make it.”
But are they right? Does picking a niche give you a leg-up on other businesses in the space? Or does it set a dangerous limit on your small business and its opportunities to grow?
In this post we’ll explain what a niche is and how important it is to building and growing a successful business.
What is a niche?
The Business Dictionary defines a niche as a small, specialised but profitable segment of a market.
A niche is created by identifying a need or a want that’s not being addressed by other providers, and by offering a product or a service that satisfies that need or want.
There are two factors that go into niching your small business:
- S This is something that sets you apart from generalists in your field. It can be a specific method, framework or technology that you’re using. For example, you might be a copywriter who specialises in writing Facebook ads. Or you might be a fitness trainer who uses a unique training system or equipment that no one else is using in the area you’re targeting.
- This refers to a particular industry or vertical that you have lots of experience in. For example, you might be a passionate traveller and want to start an online shop where you only sell big travel backpacks for long-term travel. Or maybe you’re a career coach who has a track record of helping IT professionals.
A niche business is created by taking a specification or focus, or both, and coming up with a unique selling proposition (USP), meaning something that sets your business apart from the competition.
So, should you pick a niche?
Most experts say that if you want to be successful, you must pick a niche first. Don’t, and you have little chance to stand out from the crowd and attract customers who will pay for your products or services.
If you think about it, it makes sense.
Consumers today have specific wants, needs, and problems that they need fixing. And their Google searches stand as proof for that.
Just consider how users search online now compared to a few years ago. They now search for “custom t-shirt printing near me” whereas years back, they simply entered a general search term like “t-shirts”.
So when you pick a niche and optimise your website for specific keyword phrases that are relevant to what you’re selling, your site can rank higher for potential customers searching for your products and services on Google.
Another benefit is that when you cater to a relatively small target group, you have the opportunity to interact with and get to know your audience very well. It’s easier to engage with your prospects and customers, listen to their needs and improve your offer to better suit their wants and needs.
That usually translates into good business results.
Your audience knows that you understand their problem. And they trust you and are happy to pay for you to fix it. This kind of business relationship is very powerful and you can quickly become an authority in your chosen niche industry.
In other words, you’ll also find it easier to get customers once you start to build authority and become a well-known and trusted expert in your particular niche.
The problem is that, even if you pick a niche, it still takes time and effort to build authority and trust. Additionally, it’s likely that you’ll have other competitors that have been in the business longer than you, that are well-known and trusted.
So what else can you do?
A good solution is to take it one step further and find a gap. In other words, look for where you can position yourself or your offering in the marketplace.
Figure out where you can apply your skills or sell your products and services where there’s plenty of demand but perhaps not enough supply.
For example, if you’re a photographer, target the customers that few other photographers are targeting. Weddings and new-borns? That’s a crowded market. Why not try corporate headshots or product photography?
If you think about it, that’s usually how lots of businesses start. A person struggles with something or faces a problem in their everyday life, searches for a solution and wonders why there isn’t one. Then they decide to create it themselves.
So, a good business person finds a gap and creates a solution to solve a specific problem. Just make sure that there’s a market for what you’re selling, meaning that there are lots more people who are looking for and willing to pay for your products or services.
What if your business becomes successful?
If your small business becomes well-known and profitable, you may want to consider options to help it grow further.
In some cases, it will be your own customers who share ideas for improvement and growth.
For example, if you’re a successful career coach for IT professionals and lots of people working in other industries reach out to you to ask for help, you might consider expanding your business to professionals from all industries, not just IT.
If you have a small print shop but only sell custom t-shirts and many people start asking for custom mugs or other items, that’s your call for growth. Don’t be afraid to take the next step.
Amazon is a great example of this. Many people initially used Amazon to buy books. Then came music and DVDs. Then electronics, clothing, groceries etc. Once Amazon started to get lots of customers, it learned what they were buying and what they wanted. So it began to offer lots of other different products and services because it knew that’s what their customers wanted and needed.
Now, if you don’t take the leap and instead, decide to stick to your niche no matter what, you might still get customers. But you also might go out of business.
Think about it. What happens if three, five, ten other businesses like yours pop up in the next few years? They might come with better technology, nicer designs or better quality of products. Or they might invest more in their search engine optimisation and content marketing and, as a result, Google decides to show them at the top of the search engine results pages instead of yours.
What then? You might go out of business.
Bottom line, picking a niche or finding a gap where there’s demand but not enough supply is a good place to start. Just make sure you leave room for growth and don’t stick to a niche just because you’ve chosen it as the beginning of your journey.
You’re a small business owner. So it makes sense to start small. Pick a niche or find a gap in your chosen industry, and then build trust, authority and a successful business.
Just make sure you’re aware of the limits of operating in a niche market and sticking to it no matter what.