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There’s never been a better time to be an entrepreneur. There’s also never been a more competitive time thanks to the 30 million small businesses vying for a slice of the pie in the United States today.
With the ability to work anywhere in the world, thanks to the Internet, new businesses pop up every day. Our markets are becoming saturated with companies that do exactly what we do. As a business owner, how can you compete?
You find your niche.
Defining a Market Niche
I can see you rolling your eyes at me on the other side of the screen. You know what a niche is. It’s that mysterious market segment somewhere out there identifying a need or want not being addressed by your competitors, that only you can fill.
If that didn’t sound elusive enough, you also know that committing to a niche market means verbally confirming that your product or service isn’t for everyone. It has a very specific end user.
But, what if your product really can be used by everyone? Isn’t it your responsibility to make sure you don’t limit your market by only targeting one specific end user?
What is a Market Niche?
A market niche is a subsegment of your target market that provides you with the ability to stand out as the go-to expert in that specific subgroup. While it may sound like an overused buzzword, establishing a niche ensures brand loyalty, often from overlooked audiences who are already willing and able to pump money into your narrowly-tailored business venture — since you’re the only one who can meet their needs.
Why Niching is Important for Your Home-Based Business
Here’s the cold hard truth. As a home-based business owner, you don’t have an unlimited marketing budget.
Don’t feel bad. Coca-Cola doesn’t either. But, when you’re marketing your business on a budget, it’s even more important that you find a very specific target and speak to them directly. Why? Because targeting everyone is simply too expensive. You need a marketing message so clear that it paints a picture of exactly who you work with and why. This is your niche, and as soon as you define and share it, the people within your network will finally understand who you help. Better yet, they’ll send those people your way.
How to Determine Your Market Niche
So how do you choose a niche? Well it’s actually easier than it sounds and there are three key factors to help determine who your ideal target should be.
1. Your niche sees exponential results from your products or services.
Imagine you are selling a magic pill that gives people unlimited energy with zero side effects. Who would see the most impact from the pill? A hyper teenage boy or the mother of an infant who hasn’t slept for more than four hours in six-months?
This scenario isn’t limited to imaginary magic pills. Make a list of your customers that see radical results from your products or services. This will give you a starting point for finding your niche.
2. Your niche has the resources to pay you on time.
This may sound obvious, but it bears mention. It doesn’t matter how much your products or services radically change the life of a starving artist. If they can’t pay you, you don’t have a business. You built your business because you have value to bring to your customers. Don’t give away your time and resources to people who can’t pay you.
3. You are passionate about helping your niche.
Finally, the third key to finding your ideal target is often found in your why. Why did you start your business in the first place? What makes you get out of bed every morning excited to get back to work? The people that you enjoy working with will always get your best work, so your niche should take this into consideration.
Now that you have the three elements, take a look at your current and past customers. Who on the list fits all three categories? What industries are they in? Is there a demographic, geographic, or psychographic commonality among them? What pain points lead them to buy from you?
Did you find a customer where the shoe fits? There’s your niche.
Your Niche is Your Target, Not Your Market
Anytime I bring up the word niche, business owners get nervous. They are scared that choosing a single, distinguished target in a specific industry or demographic will too narrowly limit their sales possibilities. To this concern, I share one of my favorite niche stories.
In 1994, a 30 year old man working on Wall Street quit his job to start an internet business out of his garage. He made a list of ‘top 20’ products he could sell and chose books because they were low cost and always in demand. He focused his marketing efforts on people living in rural areas that didn’t have a local library.
This fairy-tale start up story is that of Jeffrey Bezos, founder of Amazon. Today they are famous for being the world’s largest online retailer with annual revenues over $280 billion. Do they still only sell books? Of course not, but Bezos understood the power of the niche from the start.