Business niche is an important factor that determines the success of a business, it also determines how a business withstand a period of trials. For many years, experts have always emphasized on the benefits of finding a business niche and sticking to that particular business niche. This is due to the fact that without operating under a business niche, most business will die off due to exhaustion from trial and error, and can also lead to frustration. There’s a popular Russian saying that when you pursue two rabbits you catch none. The same principle applies when it comes to business. Having a business niche helps you as the business owner to be more focused. All your actions towards improving your business become centered and not spread out.
Although the idea of operating under a specific business is important, it can be agreed that finding a business niche can be quite tedious especially in today’s business world that has a lot of good opportunities, and most of these opportunities are quite tempting. The truth remains we cannot do many things at once.
A lot of businesses fail today due to lack of direction and positioning, the lack of direction and positioning can be easily attributed to a lack of focus on a particular business niche.
We all can agree that the current business environment is very competitive and also oversaturated with different products and services. The only way to become and remain profitable in a saturated market revolves around being the best in what you do. And being the best in what you do revolves around being focused otherwise known as having a niche.
To help us understand the concept and meaning of a business niche, we shall explore in this article the meaning and concept of a business niche, it’s importance and the best way to understand and find your business niche.
What is a Business Niche?
A business niche simply refers to the focus area of a business as opposed to the broader market segment. It is a way a business distinguishes itself from competitors in a specific business environment.
A business niche is a gap a particular business serves or intends to serve in a broad market otherwise known as the unique selling point (USP) of a business venture. The unique selling point (USP) is what will be appreciated by a selected group of audiences or customers in the market place and also be willing to pay to acquire the service or product. Operating under a niche gives the business owner the opportunity to easily build trust and customer loyalty, it is another factor that helps determine your pricing strategy as well as competence. Also, a business niche helps the business owner provide tailored products/services to a particular market segment enabling the business owner to charge more money due to the unique service they provide to the customers.
Brief Illustration of the Importance of a Business Niche
The illustration in this section might be perceived as a common story but the lesson in it demonstrates practically what is applicable in business and life in general.
To help us grasp the importance of finding a business niche and sticking to it, let us take a look at a famous Aesop’s fable about “The man, The Boy, and The Donkey”.
The story tells about a man who was traveling with his son and a donkey to the market to get food supplies for his household. Along the way, the man and his son came in contact with different people. On each occasion, the person they came in contact with gave them a suggestion on how to utilize the donkey. When the man gets the suggestion, he immediately implemented what was suggested, he eventually ended up making so many adjustments to his traveling style that he ended up going nowhere.
Looking at the Aesop fable, we can practically agree that the lesson in the story applies to business as well. When you try to do everything, you lose focus, and the end result is usually a failure. A business niche is a key element in business that determines the success of a business. Finding a business niche is the same as finding a business purpose.
Benefits of Having a Business Niche
- A business niche provides clarity to business and eliminates all ambiguity.
- It helps the business owner develop and implement appropriate strategies that will help the business grow better.
- A business niche can help the business discover other potentially profitable areas to explore.
- It also helps the business owner operate in harmony, eliminating any discomfort.
- It can determine a business pricing strategy.
- Business leadership. Operating within a niche is a factor that determines which business leads in a wider market.
How to Identify a Business Niche
When trying to come up with a business niche to operate under, there are various factors that must be duly considered. Now, let us take a look at some of the very important factors that must be considered when choosing a business niche, these factors are based on Jim Collins suggestion on how to make a business great, it is a concept that revolves around being focused otherwise called the Hedgehog concept.
- What can the business owner do better than others? What one thing can the business owner do better than others within a certain environment or a chosen/identified market?
- What is the business owner deeply passionate about? What do you love doing that makes you happy and fulfilled?
- What drives your economic engine? What passion, skill, knowledge or experience can you be paid for or earn from.
What can you do better than others?
To answer this question, consider your current location, ask yourself, what one thing can you do better than everyone else within that area, or market. It could be your city, state, country or even the world. The key concept is to elicit what you can do extremely well which would earn you a reputation for excellence.
This concept revolves around specialization because it is a great way of increasing productivity, efficiency, and competence. A SWOT analysis can be a great way to gain clarity as to what your core strengths and weakness are. With this insight, you get to know if your strength outmatches the competitors around your chosen field or market. The insight gotten as a result of carrying out a SWOT analysis can also help a business owner discover new market opportunities.
To help us understand what we are better at, the following questions are a great way to start:
- What is your unique selling point?
- What task/role/job can you do better compare to other people?
- What compelling service, product, skill, knowledge or combination of skills and knowledge can you offer better than your competitors?
What are you Passionate About?
Steve Jobs once said that “Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do”. Doing something you love is a great catalyst for growth, it engineers the business owner to study more, and do more. It is this process that results in innovative product development.
The basic idea of asking oneself this question is not to stimulate passion, rather, it is to discover what makes an individual passionate because success in business and in life requires loving what you do, and also doing what you love.
This question is also a great way to help the business owner elicit their core strengths in terms of knowledge, experiences, and skills necessary to run and manage the business.
Now let us take a look at some questions that can help us develop clarity when trying to come up with a business niche. It is worth noting also that this process should be taken with care, and all ambiguity should be avoided, try to be as specific as possible and be disciplined.
The following questions can help a business owner elicit their passion. Ask yourself:
- Consider what you love doing very well?
- What job/role/activity motivates you?
- Which activity/work inspires you the most?
- Which activity/work are you more enthusiastic about?
- What problems do you love solving?
- Which core business process do you love exploring the most?
- What is that one thing that you will be happy doing for a long time?
- If money wasn’t a problem, what one thing would you be happy doing?
What Drives your economic Engine?
The key concept of this phase is marketability.
This is where most people get discouraged because the skills, knowledge, or experience they have might not necessarily be adequate to provide sustainable income or cash flow.
The focus in this phase is for a business owner to identify a unique selling point that can be adequately marketed above everything else, and it must also be able to generate adequate funds to finance and maintain the business.
To help you determine your economic engine, locate a pain point in a market, evaluate your qualities, that is things you possess that can solve the identified problem. Can you have been able to generate a sufficient amount of money for you?
If the answer is yes then that’s your economic engine, that is what will make you distinguishable in the market place.
Other Ways to Determine a Business Niche
Aside from the concept discussed above, there are other ways in which you can determine a business niche. And the bottom line is that they all in a way revolve around the same concept.
1. Examine Areas People Complain about the Most in your Domain, Environment, or Business
When you observe your domain or business environment, you’d observe that there are areas in which people frequently complain about, things you know can be solved but not being solved. The areas which people complain the most is referred to as a pain point. This pain point can be an opportunity for you to explore. Check if you can solve the problem adequately, do you have the necessary skill, knowledge, or experience. If yes, you then have a business niche to explore. It is as simple as that.
2. Neglected Market or Unmet Needs
This is somewhat the same as the first suggestion, it requires you to diligently observe your environment and explore unmet needs or neglected market. The needs that are not being met by the current business in your domain becomes an area for you to explore. It will also aid you as the business owner to identify an emerging market.
How to Develop a Business Niche Strategy
A business niche strategy is a process that ensures you understand the business you are doing or intend to do, the benefits and the potential customers.
The following is a simple step to guide you towards developing a niche strategy to grow your business:
1. Select a Target Audience/Market
As mentioned earlier, a lack of focus is the single most common cause of business failures. To succeed in business, you need to choose an area where you would operate.
A simple way of selecting an audience is to select an area you are familiar with in a larger market, topic, or domain. Also, examine subtopics or areas within the selected market or audience to see which interests you the most.
2. Identify an unmet need or Underserved Need.
After studying the different areas within a market or business, carefully analyze gaps in the various market segment.
- Ask yourself these questions, what is lacking currently in the identified market/audience?
- How can you effectively solve or bridge the gap within the identified market?
- Highlight products or services you can render/produce to solve the identified problem or gap within the identified market?
- How would you deliver the identified product or service?
These questions will spur you to think effectively and also guide your market research process. It is important to spend some quality time during this process to enable you the business owner to properly understand the real need of the market or customer.
3. Do research on the Customer Base.
Understanding the market composition is another important element in trying to develop a business niche strategy, it helps the business owner understand who the real or intended customers are, what are their preferences, the buying choice, demography, age distribution, and so on.
The important thing in this phase is to try as much as possible to gather enough information about who will buy or needs your products/services. Understand their basic preferences.
4. Create a Business Plan.
A business plan is a business strategic map that lays the path for a business to follow. It serves as a guideline for various activities that will be carried out to ensure a business is successful.
All the previous activities we’ve mentioned also plays an important part when writing a business plan. While developing a business plan, the business owner carries out market research, customer research, and so on. The business plan helps the business owner to fine-tune their ideas, concepts, and information collected during preliminary business research.
5. Market your Business to the Identified Audience or Market.
Without sales there will be no business, without sales an idea remains just an idea with no tangible benefits. After conducting all the necessary research and developing a business plan for your business, it is time to market it to the identified market or audience of your choice.
There are various avenues that a business owner can use in marketing their products/services to their selected customers, e.g. social media, networking, tv, radio, etc.
The current environment we live in contains so many opportunities that can be explored to make a lot of money. These opportunities are large as a result of advancements in technology. Although there are a lot of business opportunities around, it can be quite difficult to identify the one that suits our ability. To help overcome this challenge, it is always advisable to specialize, or remain committed to a certain goal or objective.
Finding a suitable business niche can sometimes take time, it is however advised to take the necessary time to find the most suitable niche for your business.
Business Niche is one of the most important factors that determine the success and failure of a business, and not knowing your business niche is leeway to failure.