How to Find a Niche Market – Step by Step GuideFinding a free niche market shouldn’t be a hassle. From the tools, you’ll need, to you find your passion we’ve got you covered. February 26, 2019
Passion is at the base of everything we do. Thankfully, a small invention known as “the Internet” has given us the chance to monetize our hobbies and interests and even build businesses off of them.
But how do you start a niche business in 2019 when almost anything you think of has already been done?
The answer – A lot of brainstorming and a solid market research process.
But don’t let terms like “market research” scare you. We’ll guide you through each step of the process and provide you with the tools you need to find the perfect niche for your business.
Table of Contents
- What Is a Niche Market
- How to Find Your Niche Market
- Identify Your Interests and Passions
- Determine the Profitability of Your Niche
- Choose a Unique and Marketable Product or Service
- Explore the Audience Potential of Your Niche Market
- Research Your Competition
- Find Sub-Niches
- Test Your Idea and Finalise Your Decision
- Niche Marketing Strategies in Action
- Niche Market Examples
- Useful Tools
- Do You Need to Find a Niche Market?
What Is a Niche Market
A niche market is a focused portion of any given market. It’s characterised by high demand by a narrow group of potential customers that are willing to spend money on a product or service which is tailored to their needs and desires.
Simply put, a niche business is there to satisfy a small portion of customers, who are willing to spend money. Exactly how much money depends on the niche you’re operating in, whether or not you’re selling a unique product or drop shipping (if you’re selling products), the demographics of your customers and the quality of the products/services you provide.
How to Find Your Niche Market
The thing about running a niche business is that you need to have first and foremost passion. It’s what’s going to keep you pushing through the hard times that come with building a business.
So, how do you find your passion and if it’s worthy of starting a niche venture?
- Write down your interests and hobbies.
The best way to find something you’re passionate about is to sit down and think about the things you enjoy doing in your free time. For some it’s sports, for others it’s reading a book. And whatever it is for you it’s likely that you can monetize it.
- Figure out who your customers are.
Who is your potential buyer? How old are they? How much they are willing to spend? Knowing who you’re doing business with is important if you want to build a successful business.
- Research the competition.
Are you going against big brand names or are your competitors small businesses? You should spend some time doing thorough competitors research and determine if it’s worth it to start a business in that niche.
- Define the niche and its profitability.
While passion keeps us driven, a business should be profitable. And if your niche of choice isn’t lucrative, is it really worth it to spend your time and resources on trying to make it work? Short answer – no.
- Test your product or service.
As a business, you should know your product (or service) like the palm of your hand. This includes its weak sides, as well as the strong ones. Understanding what you’re selling can help with improving the current product and market it accordingly.
Identify Your Interests and Passions
“Follow your passion” – easy to say, hard to do. Why? Because most people don’t have their passions all figured out. And that’s okay.
Even if you know what you’re truly passionate about, and you’re willing to spend thousands of hours trying to try and build a business around it, can you monetize and build something sustainable?
So, how do you find your passions?
Grab a pen and paper and brainstorm.
List ten (or even more) of your interests and passions. Do you have a knack in carpentry? Write it down. Love hiking? Put it on paper.
Think of what you love doing in your free time. Ideally, you’d end with a list of things that you’re passionate about. Even if they don’t have anything in common you can still make it work!
Take for example Andrew Rea from Binging with Babish. Cooking, movies and film making don’t really mix together. That is until you put your film making experience with your cooking skills to start a cooking show on YouTube.
Oh, and he incorporates his love for cinema by recreating meals from movies and TV shows.
Was it successful?
Well, it took him a month to reach 50K subscribers, and now, three years later, his shows have been viewed just over 500,000,000 times on YouTube!
This goes to show that even the most distant interests on paper can become a successful venture.
Placing all your interests under one umbrella to come up with a business idea takes time. It won’t happen in a day, nor a week. Sleep on them, look things at unique angles and think of ways you can combine them so they work together in a way that you can monetise.
Determine the Profitability of Your Niche
“Stop chasing the money and start chasing the passion.”
– Tony Hsieh
It’s a quote that we, at Fantastic Services, enjoy a lot. But it’s also one that can be very damaging for new businesses.
Just like Tony Hsieh didn’t create Zappos without making sure there was demand for selling shoes online, you shouldn’t start a niche business without making sure you can make money from your idea.
Luckily you can do pretty detailed research and see if there is demand for your future niche venture. Most of the data you will need can be collected from tools like Google Keyword Planner, Google
Trends, Amazon and even Clickbank if you’re planning on developing a digital product.
Check the demand for your niche
Keywords relevant to your niche market can tell you an insight data of demand for products or services in your niche.
While paid tools like AhRefs can give you a very detailed data, you can also use the free Google Keyword Planner to see an estimate of how many searches per month keywords closely related to your market get.
Google Trends is an awesome tool that can help you check the search trends for your targeted keywords. It’s also an amazing way to see if the niche that you’ve picked has drastic seasonality changes or if it’s evergreen.
Find or source profitable niche products
Finding the right product to sell is just as hard, as finding an open niche market. Before you could even begin selling products you have to find reliable suppliers.
This is especially important if you’re headed towards drop shipping instead of producing your own.
Spend some time researching suppliers. Talk and meet with them. Don’t be afraid to ask who they work with. Speaking with their current customers can give even more insight into how good they are delivering the goods on time and the quality of their work.
Which are the most profitable niche markets
Undoubtedly, the most profitable niche markets revolve around the health, fitness, finance and entrepreneurship.
But that also means that the competition there is fierce.
It’s going to be hard for you as a new brand to cut through the noise.
Instead of focusing on the broad niches, for example, fitness gear, you should narrow down and concentrate on a particular sport.
Almost any market can be narrowed down, and if you do enough searching you can find a lot of open business niches which big brands can easily be out-competed in.
Choose a Unique and Marketable Product or Service
In order to stand out, you’d want to spend your time in finding a unique product to sell.
The first advantage is pretty obvious – you’re the only one selling that product or service.
The second one is that it’s marketable. How do you stand out with a bracelet that 50 other websites are selling? You don’t. But making a unique bracelet makes it way easier for you and your brand to stand out in the eyes of your customer.
So, how do you know you have a unique and marketable product?
You’re solving a problem no one else is
Have you heard about Warby Parker? The eyewear designer may sound like a company with a lot of history, but it was founded in 2010 to solve a problem – increase online sales of eyeglasses.
Before they entered the market, just 1% of eyeglasses were sold online. So, if you wanted a new pair of glasses you’d have to go to the store and try out numerous pairs.
What Warby Parker do differently from other brands is they send you five pairs of glasses of your choice and you have five days to try them out. For free.
That’s problem-solving at it’s finest. And it’s marketable.
When you’re picking your product think of the perspective of Warby Parker. Can you improve what’s being offered currently? If you think you can, then you’re on the right track to finding your niche.
Go with a disposable or consumable product
Returning customers are vital for all businesses. Ideally, you’d want to create a business that has some amount of recurring customers in order to create a business with a stable revenue stream.
Choose hard-to-find-locally products
Finding a product that’s hard to find locally can be an open niche if there’s enough demand.
Keep in mind that choosing to supply such products can be a double-edged sword. While you’ll most likely have no competition if demand drops your business will flop.
Explore the Audience Potential of Your Niche Market
In order to market your brand and what you’re selling you have to know who you’re selling to. If you’ve been in business for some time, you most likely have an idea of who your customer is.
To better understand who’s your buyer ask yourself questions like:
- What is the demographic of my customer base?
- How much money can they spend on my products or services?
- Is my product solving a problem, or is it bringing them joy?
- What are my customer’s interests?
- Where are my customers located?
If you don’t have all of this information available you can conduct email surveys, or even via phone.
Understanding your customer will save you a lot of money when you start marketing your product or service. From targeting the right audience with Facebook ads to creating content appealing to the right customer, knowing your customer base is of utmost importance if you’re serious about building a business.
Research Your Competition
Choose a free niche market!
Go within a highly competitive niche so you know there is demand!
Suggestions online are quite… diverse. You can find both types of niche markets have their pluses and minuses, but the only thing that matters is which one is the right for you.
Building a successful business is possible in both, given that you have the knowledge and expertise to build a brand that will stand out in a highly competitive niche.
Research your niche of choice. Just by googling your keywords (remember to turn on ‘incognito mode’) you can see who you will be competing with.
Do you get results from big brand names, or do you see small, badly made websites ranking? The latter would indicate a fairly free niche. So, you will have an opportunity to outperform your competition with less effort.
Keep in mind that even small, but well-made, websites can be hard to outrank.
Whatever market you choose to work in it’s almost sure that you can narrow down your niche and build a business in a narrower niche – thus becoming more of an expert in the field.
Let’s say you’re passionate about gardening. But gardening is a pretty wide market which includes flower care, landscaping, tree surgery, lawn mowing, organic gardening, vegetable gardens and a ton others that you can grow a business in.
So, how do you dig up sub-niches?
How can you segment your market? If you’ve chosen menswear as your market of choice, you can focus on crafting high-quality bracelets.
Whatever sub-niche you choose to start a business in, make sure it has enough demand to keep a business growing and you can offer enough products or services.
We can take the brand MVMT as a quick example. They saw a gap in the watch market ⇒ started selling quality male watches at a lower price ⇒ once successful with that diversified into female watches ⇒ then started designing and selling eyewear.
This goes to show that a business may start with one unique product but should be able to diversify its goods once the original product reaches its full potential.
Test Your Idea and Finalise Your Decision
Okay, you’ve chosen your market (or a couple of different ones), you’ve narrowed down your niche and now comes the time to test your product or service before selling it.
If you’re using suppliers for your product make sure what they supply you with is of high quality. This applies to manufacturers creating your original product as well.
Develop prototypes, use them in real life and even let friends and family use them as well. Note its weak points and improve on them.
Same applies if you’re going to provide services. Ask if you can provide them to your friends and family and if they can assess the quality of the service.
Always make sure you can provide what you’re selling. Hurting your business’ image from the beginning can be fatal for your success.
Niche Marketing Strategies in Action
From choosing the right domain name for your website to coming up with an interesting way to market your goods or services on social media, the right marketing strategy is of utmost importance for any niche business.
Invest in a website
Building a website to sell from and represent your business is pretty much mandatory in 2019. While there are numerous platforms that allow you to build a professional looking site, without necessarily having all of the knowledge, we’d strongly advise you to let a professional handle your website if you want to have a competitive edge over your peers.
Start a blog
One of the best ways to become a trusted business in your niche is to start a blog.
While there are many polarizing opinions if starting a blog is still worth it or not, blogging is a great way to drive more traffic to your website and prove your understanding of the niche you’re working in.
Find the right marketing channel for your product
Knowing your customer will help you market your product where they spend their time If you have 40 and 50-year-olds as your main customers, maybe marking on Instagram isn’t the right choice for you.
Seek out where your customers hang out. Facebook groups, subreddits, forums, different social media – there’s an abundance of places online that your potential clients spend their time and find information about the niche that you’re operating in.
Marketing is your way to reach and educate an audience about your product. While it takes trial and error, it’s an essential part of building a business, and more importantly, creating a brand.
Niche Market Examples
If you dig deep enough you’ll come to find that every market has its own niches that you can start a business in.
Let’s take a look at a few:
If you’re a left-handed individual you’ve probably noticed that tools for left-handed people are much harder to find.
From gifts to kitchen tools, all the way to gardening, this online store offers some of the hardest-to-find left-handed tools people need on a daily basis.
Men’s pants may seem like a niche that has been already perfected, but the founders of Bonobos proved the market wrong.
How? Well, they listened to what men have been complaining for years – store bought slacks didn’t fit properly.
Bonobos found a way to improve a niche product within the menswear industry and they proved to be right. Just half a year after launching their product the company earned $1,000,000 in revenue.
How hard can it be to do a pet bed the right way? Yet another example of a niche business that saw a problem and tackled it successfully. Only this one might have hit two birds with one stone.
First, they create cozy, scented beds for your beloved pet to sleep in. Then, they’ve made sure that the design of the bed has a design like no other store-bought bed.
So, you’re gifting your dog a comfy place to ZzZz in and you’re introducing beautiful furniture in your home.
We briefly mentioned a few tools above. Keep in mind that even if you can gather a lot of valuable information with the tools that we’ll list below, the only true way to understand your niche is to be a part of it.
Either as an unsatisfied customer or a business who sees room for improvement.
Is your product seasonal or evergreen? Google Trends is the tool to help you answer that question.
Enter your keywords and you will see a graph of how search changes throughout seasons, months, years and even decades. This is a great way to see the demand in your niche and ultimately help you determine if it’s worth it or not.
Specifically developed to create targeted online ad campaigns, a free AdWords account can help you see how many searches per month your targeted keywords have.
While you won’t get exact data, as a paid tool would give you, it’s still a good guiding amount to see if people are searching for what you’re selling.
A web host provider
While there are a few names that stand out in the web hosting business, choosing a provider for your niche venture would depend more on where you’re located rather than who is the most popular one.
Wherever you are in the world, it’s likely that your country has a web host provider that you can use for your website.
For Australia, it seems that SiteGround provides the best speed/feature/price ratio.
Starting an online shop requires the right software and Shopify is the best one in the world.
From processing payments to listing products and keeping your website SEO friendly, setting up Shopify as your website software may be the best option for your business.
A website builder, WordPress is the best software for making competitive, and technically sound websites.
While it does require an understanding of how building a website works, it’s also a great way to organise and run a store. (… psst, Shopify integrates with WordPress for a seamless webstore management).
Do You Need to Find a Niche Market?
Running a business in a niche market is a lot like walking on thin ice. While some definitely succeed, most fail.
There’s this thin line between creating an income stream and creating a successful niche brand. Income streams have a short life.
To succeed in a niche market you need a strong brand, and developing one takes a lot of time, marketing and selling skills.
So, why don’t you skip the hassle and start making money faster by investing in a franchise? You still get to work in a niche market, you’re still running your own business, however, you’re working as an already world-famous brand.
You can check out our franchise business opportunities here or for more information on how to start a niche business around home services check out our guides on:
- Starting a Landscaping Business
- Starting a Gardening Business
- Launching your Cleaning Business
- Beginning a Handyman Business
- Opening your Pest Control Business
About the Authors
Created by Gratsiela Borisova, project manager of the Fantastic Services franchise sites in Australia and the UK, and Evgeni Asenov, blog strategist for Fantastic Services Australia. Both of them produce business-related content and share the ins and outs of starting and running a business in Australia.