A lot of people dream of becoming entrepreneurs but don’t realize that it’s hard work. Any fledgling business faces an uphill challenge just to survive, competing against both large and small companies. In the United States alone, approximately 595,000 of these new companies will shutter before they operate for two years. Despite these odds, new businesses can and do succeed. The secret is identifying the right market for your goods and services.
One problem new business owners develop is the desire to please everyone. You might be under the mistaken idea that catering to the needs of as many people as possible is the key to success.
But your business can be more profitable if you pursue a niche market.
What are Niche Markets?
A niche market is a smaller segment of a larger consumer market that deviates from this larger body through different factors. They can be different for reasons other than basic demographics. They could be different because of their values, their income ceiling, or their culture.
Pursuing a niche market means that your business can have a dedicated market that few other businesses are providing solutions to. For example, a company only offering hair loss solution for men won’t have to compete with medical practices that provide similar solutions for women.
Other examples of niche markets include people with dietary restrictions because of religion or medical conditions, eco-conscious consumers, and people who have specialized interests such as woodworkers or online gaming streamers.
One of the largest niche markets is the global LGBT+ community. This niche market is large and diverse enough to have niche markets of its own, such as gay people with children or athletic trans people. The total spending power of the international LGBT+ community has been valued at over $3.7 trillion making it one of the most lucrative niche markets out there.
How to Spot Lucrative Niche Markets
If you are planning a new small business and still undecided on which market you are going to cater to, you will find it more profitable to target a niche market. But how can you discover the niche market that’s right for your enterprise?
Below are 6 steps you can follow to ensure you identify and pursue the perfect niche market for your new company.
- Identify Passion
First, make sure that you are passionate about the business you are pursing. Unless you are sure you can keep going down your chosen industry, it doesn’t matter how lucrative the niche market you find is. Being passionate about your business will also help you give quality products and services to your customers, ensuring that they will become loyal customers of your business.
- Discover Pain Points
Once you have ascertained that you are passionate about your business, it’s time to discover your niche market. The best way to determine who your business will cater to is by uncovering their pain points. Pain points are the specific wants and needs of any large market. These pain points can be as general as “I want vegan food” to something as specific as “I want kosher vegan food in southern Arizona.”
The more specific the pain point, the more niche the market that is asking the question. Keep winnowing questions and needs until you can find pain points that fit your business perfectly if you want to identify the perfect market for you.
- Scope the Competition
Despite how small you may think the niche market you have found you are bound to find competitors. With how big online businesses have become, your new enterprise can be facing competition not only in the local area but also over the internet.
You need to see how many other businesses are catering to the niche market’s desires and pain points. Aside from that, you must see what they’re doing that you could adopt.
Are they delivering their products instead of relying on walk-in customers? What tactics are businesses using to rank on search engines? How do they engage with the market? What sort of angle are they using to market their products and services?
- Initiate Test Runs
Finally, you should start a few tests runs with your target niche market. Have a soft opening of your new business and gather feedback. What do your new customers say about your services? How many people bought your products? A test run is essential to fine-tune your business before gearing up for operating at full capacity.
Opening a new business requires plenty of courage and determination. These steps and information will also help you get your new enterprise on the way and make sure that it not just survives but thrives in these trying times.