You want to start a business, but the thing that’s holding you back is the market niche you know you need to choose. And, honestly, this can be tricky: You could list all of your interests and passions and still come away feeling as if you haven’t hit upon the singular thing you were meant to do.
Yet putting that kind of pressure on yourself to choose the exact right niche may cause paralysis.
Certainly, you want to do your due diligence in selecting a viable niche business, but it’s better to get up and running than to wait around. That way, you can test out ideas, enter the market sooner and learn from your successes and failures. That way, too, if your first business doesn’t take off, you can always take what you’ve learned from previous attempts and move forward with new ideas.
If you’re struggling to decide, or you need more data to work with, use the following five steps to find your niche.
1. Identify your interests and passions.
This may be something you’ve already done. But, if you haven’t, make a list of 10 topical interests and passion areas, immediately.
Business isn’t easy, and at some point it will test you. If you are working in an area that you don’t care about, your odds of quitting will greatly increase — especially as a first-time business owner.
This doesn’t mean that you need to find a perfect fit. If you are passionate about some aspect of running the business, you will stick with it. If you don’t care about the topic, you may not be able to find the drive within to persevere.
Here are a few prompts to help you determine what your interests and passions are:
How do you like to spend your free time? What do you look forward to doing when you aren’t doing it?
What magazines do you subscribe to? What topics do you like to learn about most?
What clubs or organizations do you belong to?
2. Identify problems you can solve.
With your list of 10 topics in hand, you’re ready to start narrowing down your options. To create a profitable business, you first need to find problems your target customers are experiencing, then determine whether you can actually solve them. Here are several things you can do to identify problems in specific niches:
Have one-on-one conversations or idea-extraction sessions with your target market. Make sure to find or create a framework for asking questions that helps you uncover pain points.
Peruse forums. Search Quora, or find forums related to your niche, then take a look at the discussions that are taking place. What questions are people asking? What problems do they have?
Research keywords. Explore different keyword combinations on Google Trends and Google AdWords’ keyword planner. This can help you uncover popular search terms related to pain points.
3. Research your competition.
The presence of competition isn’t necessarily a bad thing. It may actually be showing you that you’ve found a profitable niche. But you do need to do a thorough analysis of competing sites. Create a new spreadsheet and start logging all of the competing sites you can find.
Then figure out whether there’s still an opportunity to stand out in the crowd. Can you still rank for your keywords? Is there a way to differentiate yourself and create a unique offer? Here are several signs that you can enter a niche and be successful, even if there are already other sites serving it:
Low-quality content. It’s easy to outrank your competition in a niche where other business owners are not creating high-quality, detailed content that serves the audience.
Lack of transparency. Many online entrepreneurs have disrupted entire industries by creating an authentic and transparent presence in a niche where other sites are faceless and overly corporate.
Lack of paid competition. If you’ve found a keyword that has relatively high search volume, but little competition and paid advertising, an opportunity definitely exists for you to upset the market.
4. Determine the profitability of your niche.
You should now have a pretty good idea of what niche you’re going to get into. Maybe you haven’t narrowed your list down to a single topic area, but you’ve likely found a few ideas you feel pretty good about. At this point, it’s important to get an idea of how much money you have the potential to make in your niche. ClickBank is a great place to go to start your search.
So, browse top products in your category. If you can’t find any offers, that’s not a good sign. It might mean that nobody has been able to monetize the niche.
If your search does turn up a decent number of products — but not an overabundance of products — you’re in luck. Make note of price points so that you can price your own products in a competitive manner.
Also keep in mind that you don’t have to start your business with a product offering of your own. You can partner with products creators, advertisers and site owners in your niche to begin generating commissions while you’re working on your unique solution.
5. Test your idea.
You are now armed with all of the information you need to choose a niche, and the only thing left to do is test your idea. One simple way to do this is to set up a landing page for pre-sales of a product you’re developing. You can then drive traffic to this page with paid advertising.
Even if you don’t get pre-sales, that doesn’t necessarily mean that you aren’t in a viable niche. It could be that your messaging isn’t quite right, or you haven’t found the right offer yet. By leveraging A/B split testing, you can optimize conversions and find out whether or not there is anything stopping your target market from taking action.
Once you’ve confirmed the viability of a niche, start developing a full-fledged website. You’ll want to learn how to create a blog, and generate more traffic to your site to boost your revenue and scale up.
But, do keep in mind that there isn’t necessarily a perfect process for finding a niche. You’ll want to do your homework, but if you get stuck in the planning phase, you’ll never actually get around to starting. As an entrepreneur, you need to become a good starter.
If you believe you’ve found a business idea you can invest yourself into, take the plunge. The learning and growth that comes from doing will be far greater than the rewards of just planning.
By THOMAS SMALE – CONTRIBUTOR, Co-founder of FE International