“Appeal to everyone. Appeal to no one.” That’s a statement small business owners should put on a poster and hang in the office. Because niche customers and communities are easier than ever to find, there will be a motivated customer or client for your product or service. All you have is to find them.
Finding a niche is the first and most important step toward differentiation, so I’ll be using the two interchangeably in this article.
Once you’ve found your niche, you’ll be able to
- Establish a loyal customer base;
- Outmanuever competitors;
- Direct time and money toward your most profitable offerings; and
- Establish yourself as an expert.
We won’t be focusing on buzzwords. Instead, we’ll be discussing the process of finding the intersection between your strongest offering and your most loyal customers. Plant your flag there, and success is simply a matter of time and diligence.
What is a niche in business?
Here’s how Sian Lenegan at Forbes defines a business niche:
“Zooming in on the core of your core audience to carve out a piece of the market that only you can occupy.”¹
The truth is that most markets are saturated. Unless you invent say, a novel energy source or revolutionary software, finding your niche is more about finding your niche customer.
Too many startups fail because they don’t provide a solution to a specific problem for a specific group of people. As a CPA, I see this play out in financial statements. It’s one of the reasons I became interested in business advisory services. I’ve seen capital drained from businesses chasing multiple mediocre offerings instead of nailing one.
What’s my niche?
Simple. I serve small business owners with between 1 million and 10 million dollars in annual revenue who want an end-to-end solution for accounting, tax planning, and financial leadership.
Sure, I have to say no to some great people with promising businesses, but I have a niche. It’s given me the power to cut underperforming services and focus my team on specific, tangible goals.
Let’s find yours.
Finding a niche is key to growth
In this blog post, we’ll explore a step-by-step guide on how to find a niche for your business.
Step #1 — Reflect on strengths and weaknesses
Step #2 — Find your niche customer
Step #3 — Look for gaps in competitors’ offerings
Step #4 — Stay adaptable to change
Step #5 — Align your business with your new niche
As I said, a niche has several benefits, including differentiating yourself from competitors, building a loyal customer base, and increasing your chances of long-term success. Finding a niche is also key to driving traffic to your website. It goes hand in hand with SEO strategy.²
Here are five steps to finding and succeeding in your niche
1. Reflect on strengths and weaknesses
Begin by assessing your business offerings. Here are some questions to get you started.
- What is my stand-out product or service?
- Is the majority of my revenue generated from a particular product or service?
- Am I spending time and energy on non-revenue-generating products or services?
- Who are my most loyal and dependable customers or clients, and which product or service do they choose?
Reflect on these questions. If the questions brought a particular product or service to mind, I want you to consider what amount of time and effort you could save if you focused on it. Are your other offerings relevant to your niche offering, to your niche customer?
Passion is a factor I always take seriously. If you identify a niche offering and customer that’s already present in your business and you’re passionate about both, you’ve found a niche worth exploring.
2. Find your niche customer
Thorough market research is essential for understanding the current business landscape. It’s common for businesses to conduct market research before launch, but I’ve found that it’s just as common for businesses to launch products or services based on perceptions or simply what they do best.
Take a step back and look at
- market trends;
- consumer demands; and
- gaps in the market.
Market research is useful when you have multiple offerings with similar performance. In this scenario, you’ll be evaluating which offering has the most potential for growth. I see growth potential in terms of
- The size of a customer or client base;
- The relevance and urgency your product or service holds for that customer or client base; and
- The lifetime value of each customer or client.
So, you’ll find your ideal niche customer if their size is non-trivial, they value your product or service highly, and they are motivated to provide repeat business or expand the amount of money they spend on your product or service over time.
Create a customer profile
Define your niche customer by creating a customer profile or “persona.” This will help you put a fine point on your niche product or service.³
Counterintuitive, as it may be, going wider isn’t better. Your efforts should be focused on customers with a real and pressing need for your product or service instead of trying to court customers who need convincing.
Understand your customers’ demographics, behaviors, and purchasing habits. Identify their needs so you can tailor your product or service to meet them.
3. Look for gaps in competitors’ offerings
Remember all those competitors you’ve been trying to stand out from? Here’s your chance to analyze the competition to find their strengths and weaknesses, and the niches they serve.
Look for areas where competitors are underserving their customers or failing to meet demand.
4. Stay adaptable to change
Once you have your niche, start small.
Keep your ear to the ground. Measure customer response to determine if there’s sufficient demand for your offering.
Consider the long-term viability and potential for growth within your niche. If you find that your niche is overly saturated or doesn’t have the potential for growth, don’t be afraid to pivot to a new one that has these qualities.
Flexibility and adaptability will be essential as market conditions and consumer preferences change over time.
5. Focus on specialization
Specialization will help you build credibility and attract a dedicated customer base, but it takes time.
This is where your passion and expertise come in. If you’re working in an area you know, you’ll have an easier time tailoring your message to resonate with your audience.
And as hard as it may be, stay patient. Most small businesses take two to three years to become profitable.⁴
The right niche is crucial for your business’s success.
By positioning your business narrowly, you can differentiate yourself from competitors and attract a loyal customer base.
Remember, finding a niche is an ongoing process, and it’ll require adjustments along the way.
So do your market research, adapt to change, and continue to innovate within your chosen niche — and you can thrive in a competitive business landscape.
I’ll be here to help your small business when you bring an annual revenue of between…you get the picture.
Schedule a discovery call with me today to get started.
Talk soon,
Jeremy A. Johnson, CPA
References
- Lenegan S. Why your business needs to niche. Forbes. 2021. Available from: https://www.forbes.com/sites/forbescoachescouncil/2021/03/09/why-your-business-needs-to-niche/?sh=4b4e37ca5e21
- Hallebeek W. How to find your niche in 4 easy steps. Yoast. 2021. Available from: https://yoast.com/how-to-find-your-niche/
- Your customer profile: How to find your market niche. Accion Opportunity Fund. 2016. Available from: https://aofund.org/resource/your-customer-profile-how-find-your-market-niche/
- Jason Ding CPA. How long does it take a business to be profitable? A guide [Internet]. FreshBooks. Available from: https://www.freshbooks.com/hub/startup/how-long-does-it-take-business-to-be-profitable