Before You Invest a Ton of Time and Money in It
Choosing a niche is one of the most important decisions when starting a business. If you choose the right niche, then your odds of success increase dramatically.
Picking a niche that is too big can result in being unable to compete effectively. Pick a niche that is too small and you simply won’t be able to get enough customers. Here are a few tips to picking a sustainable niche that is just right.
Is there a decent amount of competition in the niche?
Competition is usually a good sign that there is demand in a particular market. Most people are afraid of too much competition, but a niche with lots of competitors is actually a good sign. It means that the demand is there.
A lot of people think they have to do something that has never been done before or that is unique. If you want to be the next Microsoft or Google, then yes, you have to do something new and big.
But for most people, it is far safer and far less risky to enter a proven market. In fact, in local markets and freelance markets, most professionals are not knowledgeable in sales and marketing, so it is actually not as competitive as most people initially fear.
Is the product or service you are selling a commodity product? In other words, do people have a clear perception on how much it should be worth?
If there is a big range in pricing, then most likely you should be okay. That means that perception of value can greatly increase the prices you command.
For example, for article writing services, you can find people to write articles for just a few dollars to hundreds of dollars. The reason for this is that people that command higher dollar amounts have higher perceived value. Things like specializing in sales copy or being knowledgeable in a certain niche can be helpful.
Something like bubble gum or laptops are commodity products and are often available in stores. The less unique your product is perceived, the more price competition comes into play. Usually, you should avoid markets where you are competing directly with big name brands and retail stores.
Developing your own unique product or service can be good for this reason. Just make sure you are servicing a niche with existing demand.
Is the market growing, in decline, or staying the same?
Try to avoid declining markets if you can. If possible, try to find a market that will grow or at least sustain itself for at least several years.
Tools like Google trends can be helpful in viewing whether a market is on the rise or declining. Type in a keyword that a person might use to search for your product or service and make sure that the trend is favorable. Try different keywords instead of just relying on one keyword.
Test your idea first
If you are an online business, then test your idea with PPC and other paid advertising. If you don’t want to pay for advertising, then consider contacting other people with the type of traffic that you want and offering your services to their audience in exchange for commission.
Usually it’s better to gather your own audience first to test it out though. Ask if people are willing to pay for your product or service and then test it out by trying to sell it to them.
If you are a local business, then test it in your local area using the lowest possible cost. For example, if you want to open a bakery, try selling some of your baked goods to people at a street fair and see if they sell before investing in a long term lease.
About Brian Liang