Posted on November 01, 2019
Why you need them and how to choose yours
Margaret Guillen is a very talented business coach and a dear friend of mine.
In this article, she explains very clearly why we need niche business ideas and how to choose the best one for us.
We can’t be all things to all people and we can’t sell to everyone. Many small business owners struggle to attract customers because they’re often trying to appeal to a broader audience. They don’t want to lose opportunities to win new business.
The problem is when you are trying to appeal to everyone, the chances are that you will appeal to no one.
I know it can be tempting to consider the whole world as your customer. You want to sell to everybody, right? The problem is that no business can sell to everyone; still many make the mistake of trying.
Think about your buying behaviour. There will be some shops or supermarkets you use regularly and others you never go or very rarely. We spend money where we think we get the most value or we’re most comfortable with, in a place where we feel understood. Your clients or customers do the same.
What’s the alternative?
One of your very first steps to becoming a successful business owner with a profitable business is to pick a niche business.
What is a niche for a business?
Essentially, a niche is the industry you will be in and the types of service/ products you will sell. A niche business is what you specialise in.
Ideally, your niche business is where your passion and expertise cross with the needs and wants of a workable target market.
I know it may feel counterintuitive to restrict the market you intend to serve. Instead, if you can find a niche that is narrow and deep, you will make it easy for people to recognise themselves as your potential clients.
Also, narrowing your niche immediately sets you apart from competitors. You will find it much easier to do marketing and advertising! Also, it provides a gateway for your prospects to enter your world.
These days, the trend is toward smaller niches. Targeting teenagers isn’t specific enough; targeting male, African British teenagers with family incomes of £40,000 and up is.
When you have a niche, then you narrow down your market to a specific group, either vertically (e.g. by sector, for example, retail) or horizontally (e.g. by demographics, for example, businesses with 10-50 staff in a 10-mile radius of London).
The advantage of this approach is that you can speak to the very specific challenges and needs that this sector has. Also, if your background is in this area, it becomes very easy to demonstrate your expertise and gain trust quickly.
However, it is important to understand that there is a difference between your niche and your target market:
Your target market is the specific group of people you work e.g. women in the City, dog owners, creative female freelancers, brides to be.
Your niche is the service you specialise in offering to your target market.
For example, a design company can offer web design and app development, another company can offer them branding photography. It is the combination of the target market and specific service that creates a niche market.
Why is a business niche important? Why should I choose a niche?
Finding your niche is pretty much the most crucial aspect of setting up in business.
We live in a competitive world. One way to stand out from the crowd is by focusing on a niche market.
When you have a niche business, potential customers think of you as a specialist source of knowledge, ideas and products. That means they’re more likely to choose you, rather than a more generic provider.
Also, since customers see niche businesses as specialists, they are often more willing to pay a premium price for what they perceive will be a better product or higher level of expertise than they would get from a broad-based company.
A higher price means greater profitability for you. This makes niche businesses a better ‘lifestyle business’, not just because you can earn more by doing less, but it also makes ‘going to work’ a much more rewarding experience.
You get more and better referrals
As it is easier for others to understand what you do. Therefore, it becomes for them easier to refer more and better clients to you. You have built up trust and got more visibility and credibility, and it is clear what you specialise in.
Offering more targeted products, niche businesses can also be easier and cheaper to set up, as you don’t have to carry the range of stock that a generic business would.
Let’s recap why a niche business important? And what are the advantages of having one
- Immediately sets you apart from the mass of competitors
- Gives you a clear focus for your marketing and advertising efforts
- Often enables you to charge higher prices than non-specialists (because of your expertise)
- Makes you more memorable and helps you get referrals
- You are experts in your speciality
- People see you as the go-to person
The best niches are ones where you’re solving a problem for somebody.
If you had a skin problem, would rather prefer to go the GP or to have a specialist (e.g. Dermatologist) consultation?
What is an example of a niche?
Your niche could be…
- offering a specialised SEO service just for private medical practices,
- helping parents put on the best birthday party for their kids,
- pet sitting for absentee owners
Your niche can be a target market, a speciality or both.
For example, your target market might be “executive women” or “high-tech companies.”
Your speciality could be “career transition” or “communication skills.”
Having both a target market and a speciality to define your niche is ideal (e.g. “Executive women in career transition,” or “communication skills for high-tech companies.”)
Let’s pretend you sell trainers. You might say that your niche product is trainers. What if, instead of trying to market to all of the trainer’s customers, you decided to narrow your niche?
Let’s say the trainers you make are specifically designed for running. This way, we can narrow your target market down to runners. There are about 800.000 runners in the UK.
Perhaps your shoe has great arch support, which is perfect for flat-footed individuals. Now, just for the sake of making our point, let’s take it one step further and pick a gender: women. This way, you can cut your market in half to around 400.000.
Now, your target audience is highly specific: “Flat-footed female adult runners who need a shoe with arch support.”
Your marketing messaging is going to be on point because you know exactly who your customer is and what problem you solve for her. This means you’ll get an infinitely better return on your marketing investment.
More examples of a niche market
- Website design/hosting for dental practices
- Public relations services – for plastic surgeons
- Insurance agent / service for taxi/ cab companies
- House sitting for business travellers
- Catering service for vegetarians
- Babysitting service for parents of twins and triplets
How do you create a business niche?
To select your niche, begin by asking yourself these questions:
Of all the people who could use my product or service, who am I most passionate about working with?
Who will benefit the most from my product or service?
Who do I most closely identify with, understand?
If I have to devote a lot of time and effort to learn about a particular industry or demographic which one would I enjoy the most?
Which one do I already know the most about?
If I were speaking to a room of 100 people and could either give my product away or work with, just one of them, who would I choose?
Give your ideal client/customer a name and describe them in great detail.
“The people who give me the most positive feedback on my offerings are __________.”
The success of your niche marketing strategy depends on your understanding of them, and your ability to communicate effectively to them.
Narrow your focus. Get to know your audience. Once you’ve settled on a niche, spend as much time as you can get to know your target audience.
Now identify how you can reach your audience. Optimising your website and blog is important.
Create a free information product for your niche and market as a giveaway on your website.
Prepare a signature talk for your new audience and begin contacting organisers, podcasters and organisations who would welcome you to speak to their audience, which happens to be the same as yours, of course.
So to really sum it up: niche marketing is a combination of you and your talents and what the market wants and needs
Decide if you are going to be a niche or generalist. Once you have defined your niche, commit to it 100% and ensure all your marketing and sales promote and demonstrate your niche and specialist skills
Need some help with defining your niche?
You are not alone. Getting external support will really help understand your perfect client and most importantly, deliver more business.
About the Author
Margaret Guillen is a result-driven Business Coach for female entrepreneurs. Contact her for a FREE 30-min Clarity Session and take your first steps towards success.