Picking a niche is becoming increasingly important for businesses. It allows you to create a stronger, more direct strategy and also know which track you’re on, rather than just shouting into the void and hoping somebody will care to listen to you.

Oftentimes, business founders pick their niche by combining their passions with their skills, and targeting like-minded people, because that’s who they know how to help most. But what if nothing springs to mind? Or what if the niche you selected doesn’t have demand for your product or service? Then what?

If you’re feeling stuck and lost, and just want to get started, here are some tips on how to find your audience.

TL;DR

1. Take yourself out of the equation: look at the bigger picture
2. Look at what’s already working: don’t let saturation scare you
3. Think smaller: find a happy balance in the size of your selected niche
4. Prioritise profitability: ensure that the niche you choose is sustainable and scalable
5. Just start: you will learn far more from hands-on experience.

Take yourself out of the equation.

You must think I’m bonkers. But it’s true! You can’t create market demand out of thin air, no matter how passionate you are about a niche. Passion and drive is of course vital for long term sustainability in business, but don’t limit yourself to you favourite thing in the world if it simply isn’t going to take off.

What do people really, truly want? What problems are they facing daily that aren’t being solved? Observe real problems, you may even come across these problems in your own daily routine. Take a step back, and look at the bigger picture. What is there strong demand for, and what is there going to be consistent, scalable demand for in the future?

Take Airbnb, for example. It began when one of the founders, Brian Chesky, realised he didn’t have enough money to pay rent for a month in 2007. A nearby conference in San Francisco had sold out all nearby hotels, and so Brian and his friend (and now co-founder), Joe Gebbia, let out their apartment to three conference-goers, and took them around San Francisco for the weekend. Not only did this cover rent, but it revealed a gap in the market: affordable, authentic accommodation. The rest is history!

Try and think of 3-5 problems that you have faced in the past week. Are any of them business ideas? If you think so, do some research – are other people struggling with this? What is the solution? Let it snowball, and perhaps you have a new million dollar idea on your hands.

Look at What’s Already Working

Saturation is a big fear nowadays, as starting a business has never been easier & so more and more people are doing it. Don’t let that put you off.

If a market or industry is becoming increasingly saturated, it likely means there is strong demand for whatever is being sold there. If you can put a spin on your interpretation of this or offer something your competitors don’t (such as quality or price), there is still space for you to succeed in that niche.

Of course, some industries may be oversaturated and therefore have a very strong barrier to entry. But don’t completely write off a niche just because there are a lot of people already operating in it. If anything, use it as research to see what is selling and what customers want.

Think Smaller

It is easy to become overwhelmed when conducting market research. It is also easy to think of the money and growth potential, and therefore want to pick a broad niche to not limit yourself. By this stage, if you are looking at what others are doing, you will likely have a lot of ideas, niches, and categories spinning around in your head.

That’s when you go smaller. If a niche that you’re interested in is bags, niche down into travel bags, work bags, and festival bags. Find that happy balance between too small (where you will exhaust the niche within a month or two) and too broad (where you don’t have a chance at standing out).

Prioritise Profitability

You must take purchasing power and margins into consideration. For example, a niche could have a huge problem that needs solving, but if the market is full of people who can’t pay for the solution (such as broke students), then you’re going to be entering into a tough market.

Furthermore, if the solution costs a lot to create or provide, and you’re not able to implement a healthy markup to cover your business costs, it will be difficult to sustain and scale your business in the long term.

The general rule of thumb is a 100% markup (50% margin). For example, if a product costs you £25 to make, you should be selling it for at least £50. Some people will advise charging 3x the cost of your goods, which would mean charging £75 in this scenario.

Just Fricking Start

We have all been guilty of analysis paralysis: hours of research and analysing in the hope that it will give us the information that we need… then we’ll start. Well, really, there’s no time like the present. This is more relevant for products, such as for e-commerce, as it is so easy to try out different products and get real, hands-on experience.

You can read 10 books about how to ride a bike, or you can just get on the bloody bike. If you’re hesitating and comforting yourself behind pages of information and statistics, it’s time to pull the trigger and get out there. Yes, you may fail, but it’s all a learning experience, and I assure you it will teach you a lot more than any website or YouTube video will.

Of course, this must be done in moderation. Don’t spend £10k on inventory before testing an idea, and don’t trial random products just for the sake of experience. Research and strategy are still important, just don’t use them as an excuse for not taking that next step.

Final Thoughts

Niching down can be trickier than you may first think, but it doesn’t have to be. If you have a passion, branch off from that. If you’ve exhausted all avenues of your passion, try to think outside the box. The biggest learning device is just trialling things. Don’t let yourself get stuck in analysis paralysis. Pick a product, put it out to the world, and see what happens. Even if your first 5 attempts fail, you will learn far more than if you just wait for the ‘perfect time’.

If you’d like a personalised strategy call to get your idea off the ground, please get in touch.