If you’re like so many others, you probably have a desire to launch an online business and build additional income for yourself.
But you’re unsure what industry or niche you should start with. And most likely you’re afraid to choose a niche that may not bring the success you’re looking for. I get it! I was once there.
How do you choose a niche? Choose a niche by focusing on your passion and balancing it with industry popularity. The more narrow the niche, the more people you will draw in. Choose a niche with less competition that shows profitability for success.
In this post, we will try to uncover a niche that works with both your strengths and interests.
Because when you match your business to your skills, you improve chances of success and shorten the time to profitability.
Introduction – The Power of the Niche
The most crucial element of preparing a business plan is identifying the niche or market you will enter. And if done correctly, your business will match your passions.
A word of caution, we have a saying around the office, “Profit isn’t in passion, it’s in popularity.” I know that seems contradictory from telling you to choose a niche that intersects with your passion.
Here’s an excellent example. If I type “lawn maintenance”, something I’m passionate about, into Ubersuggest you’ll see the monthly search volume is high (15k per month) and the SEO difficulty is low at 37… perfect!
You may also notice the PPC cost is very high at $22.24 per click. Ouch! This just means the keyword is valuable and companies are competing for ad placement. But if I put good quality content out there, I can rank high on the search results and let the companies fight for ad space.
Rushing into a business without narrowing down the market can be a fatal problem. And choosing a niche just because your’re passionate about it doesn’t mean there will be profits.
You can choose a niche your passionate about just make sure there is equal popularity in the niche to drive profits.
Profit isn’t in passion, it’s in popularity.
Narrowing Down Your Niche
Narrowing down your niche is a tricky topic. On one hand, trying to please too many people leaves you battling larger businesses. But if you choose a micro-niche, there may not be enough popularity and interest to drive income.
Here’s what we hope to learn:
- Locate a market that matches your skills.
- Identify a business that meets your goals.
- Evaluate a niche for long-term profitability.
- Find a market with low competition.
- Identify a product/services for your niche.
- Monitor changes for ongoing success.
- Create an action plan for moving forward with your niche.
If you’re just starting out, here’s a quick test. Check your internet browser history for the past 30-days.
What makes up most of your searches? I have found this to be a brilliant place to start when brainstorming.
You will also come across as more authoritative when focusing on something you are passionate about. It’s a fact, you spend more time working on things you find enjoyable.
Step-1: Explore Your Best Business Options
There are several factors to consider when choosing a niche.
To begin, you need to identify:
- What do you enjoy doing?
- Are there specific tasks you prefer to work on?
- What projects do you dread?
- What do people say are your strongest points?
- What are you good at?
- Who do you relate to?
- Is there something missing in the current marketplace?
- Are there trends in your area of interest?
‘Niching Down’ a Current Business to Discover New Opportunities
If you’re already running an online business, you can also discover fresh opportunities by narrowing your focus.
Especially if you have already have a current list of customers or prospects. If so, ask their opinion.
Tell them you are looking to provide value more value and would like their feedback. Ask them pointedly what could improve their customer experience.
Should You Niche or Micro Niche?
How do you know if you’ve narrowed your market enough? There is no ‘one size fits all’ solution.
Well, what’s the difference between a niche and micro-niche?
An example would be dog food… or German Shepherd dog food. “Dog food” is the niche, while “German Shepherd dog food” is the micro-niche.
Both can have business, but the niche (dog food) will have tremendous competition that may be hard to beat when starting out.
However, the micro-niche (German Shepherd dog food) can draw in quick traffic when focused on the specific group. Plus, Google will reward those blogs and businesses that are focused and on-point.
“You can never niche down enough. When you’re broad, you drive people away and when you’re specific, you draw people in.”John Lee Dumas (aka JLD)
It’s a balancing act between finding a niche and micro-niche. Just make sure the competition can be beat and there’s enough of a marketplace to be profitable.
Step-2: Evaluate the Potential for Success in Your Niche
You need to test your ideas to figure out if your niche is profitable.
You may want to consider the following:
- Is there existing demand?
- Will you be focusing on products/services or a customer type?
- Can you add value to this business segment?
- Can you provide a unique solution?
In rare cases, you may go in to a niche which has never been done before or with almost zero competition. In most cases, however, some competition is usually a wonderful sign.
I’ve tried starting in a niche that was brand new. I’m here to tell you it’s tough!
If you start in a niche that is new there will be no Google traffic and growing the business will require more upfront capital for advertising to draw people in. Be careful here…
If you see other online business and blogs with similar products and services, then you know there is a ready-made market and customer base for what you will be offering.
Evaluating a Market’s Financial Potential
You need to dig deeper to gauge earning potential and if the business type is relevant.
Let Google do the Work
Google can reveal relevant info concerning profitability.
Search the general niche name and try to aim for markets that deliver fewer results.
Let’s try this. Type the general name of your niche into Google’s search engine, with no quotation marks.
If you search for “dating services” (without quotation marks) you’ll get approximately 794 million results! It will be hard to break into such an enormous market.
However, if you Google “dating services for baby boomers” (again without quotation marks) only 1,510,000 results returned. And now if we search the same phrase with quotation marks we only get 9,150 search results. This could be a great niche!
Repeat the process but this time pay attention to the Google Ads. If companies are advertising in your niche, it’s a wonderful sign. Companies will not spend money on ads if they do not expect to get a return on their investment.
Remember, fewer results mean you have a better chance of competing for rankings.
Here’s one more tip. Type your niche market name in Google followed by the words “affiliate program”.
If companies are paying commission in your niche, you know they’re making money.
Other Profitability Considerations
At this point you may probably have an idea what niche you’re aiming for.
So, to take is a step further, let’s cover a few things you can do to ensure success.
- Check the first couple pages of Google search results.
- What do you like and dislike about their sites?
- If every listing on the first few pages is a big brand, you may have trouble competing.
- You don’t want to compete with big retailers. You will lose!
- Check sites with demographic info regarding your niche.
- Make sure your business matches up to your demographic and ideal customer.
- Journals, magazines and forums are other resources.
Cost of Entry
- You need to have a good grasp on the capital required to start in your selected niche.
- Many businesses fail as they underestimate start-up costs.
- Do a Google search for start-up capital in your niche.
Step-3: Niche it Down (Narrow Your Business Focus)
You need to dig down to find your focus… Find an opportunity that meets your interests but is also profitable.
The Power of Customer Profiles
If you know everything about your ideal customer, you can tailor your marketing efforts to fit them.
Find out everything you can about your prospects. Where do they hang out? How old are they? How do they take their coffee?
You cannot be to specific here. The better you define our customer avatar, the better you’ll be able to target them and give them what they want and need.
Specific Internet Tools for Niching Down
Certain online tools can help you drill down into your niche. Below are my go-to tools when conducting niche research.
Ubersuggest – Free account with limited results. $29 to $99 a month for various plans. This tool is offered by Neil Patel and is amazing. Tip, the free account is usually more than enough to get started.
Ahrefs – Get trial version for $7. $99 to $999 a month for various package offers. This can be expensive, but Ahrefs will give you more data than you’ll know what to do with.
Google Ads Keyword Planner – Look for search volumes for unique niche phrases.
Google Trends – This is the tool I use when in the brainstorming phase. Google Trends will tell you if a niche is on the rise or decline. Always check the past 3-years to get a solid picture of your niche.
If we continue with our “German Shepherd dog food” example and search for this niche in Google Trends you’ll see this niche has slowing been on the rise over the past 5-years… very interesting!
What is the Word on the Street
Another way to verify your niche is to see what people are saying about it. What questions do they have? What are they struggling with?
Use groups and forums to narrowing down business focus.
Step-4: Refining Your Niche Over Time
Eastman Kodak is an excellent example of the dangers of not refining your niche to meet changes in the market.
They were too slow to offer updated digital products, resulting in bankruptcy.
Some business owners are reluctant to change when they’re close to their business model.
Don’t resist change when it’s necessary. You might just need to change your marketing approach.
What Questions Should You Be Asking?
Some questions you may want to ask yourself over time are:
- Is your business still relevant?
- Is your Unique-Value-Proposition (UVP) still unique?
- What are your competitors doing?
Make sure you and your team schedule regular market evaluation meetings.
When Should You Change Direction, and When Should You Stay on Course?
If customers are not coming back and revenue is dropping, obviously that’s a sign you need to change.
You can always make subtle changes and slowly add more options to your existing catalogue, blog our business.
Surveys and exit polls can be a brilliant source for understanding if your niche is still on-point.
Once you have multiple signals pointing to change, don’t sit on your hands.
Don’t be one of those businesses that fight steering away from disaster.
Conclusion and Next Steps
OK, you now have everything you need to identify your niche.
Let’s recap what you’ve learned:
- Achieve personal and financial goals by focusing on an industry you care about, but balanced with popularity.
- A smaller customer base means less competition. The more narrow the niche, the more people you will draw in.
- Offering something you enjoy talking about makes you more attractive to prospects.
- Find a niche that has room for entrance with less competition that shows profitability for success.
- Always monitor your market and niche and be ready to pivot should the need arise.
Now is time to take action.
Look at what you learned and niche down as far as possible, but don’t dig too deep!
Above all else, get started today!
When you run a business you are passionate about, you never have to “work” again.