5 Ways To Find A Niche Business Idea
We are back to our Perspectives series, which gathers practical perspectives on the subject of money.
It's aimed at offering deep insight whilst also inspiring and encouraging our readers to get better with money and ultimately seek Financial Joy and Independence in their lives.
I'm excited to introduce you to our guest, Emily Wilson.
She offers actionable tips for anyone wanting to start a business or side hustle.
Emily is a Business Management grad with a flair for entrepreneurship.
She's currently setting up her own business and writes about ways other entrepreneurs can tackle the hurdles of starting out.
In her downtime, you can find Emily frequenting the local cinema or with her head in a book.
Now let’s hand over to Emily…
Despite the economic uncertainty brought on by Brexit, the UK remains a highly favourable environment for entrepreneurs.
You only need to look at the numbers.
According to business advice website Informi, the number of self-employed individuals has increased by 23% in the last decade.
The UK remains one of the top-ranking countries in the Global Entrepreneur Index.
However, research suggests as many as half of all startups fail in their first five years.
Poor planning, cash-flow issues, and naïve decision making are amongst the chief reasons for startup failure.
One of the less discussed reasons, though, is the fierce competition that businesses face.
There is a sheer amount of choice available to consumers today, both online and offline.
From independent high street shops to global retailers.
Small businesses need a compelling offer in order to attract and retain customers.
The difference between success and failure, therefore, might lie in your business carving out a market niche.
A niche refers to a product or service with a smaller, specialised appeal, as opposed to the mass-market.
Your compelling offer might be that you are the only business doing what you do.
Or you have an artisan focus that makes your offering special, unique and invaluable.
A real-world example would be to look at the food industry.
While it’s become almost impossible for high street food retailers to compete with the likes of Tesco and Sainsbury’s on everyday items, independent food retailers find success focusing on niche markets.
For example, vegan and organic produce or specific luxury items such as wine or cheese.
As this example shows, niches can work really well for small businesses.
Especially as you’re unlikely to have the resources to cater to a mass market audience or compete with bigger competitors.
Speaking to the Guardian, business coach and author Heather Townsend says:
“Small firms will never win on price, but they can compete on value and service, while the more specialised their product or service, the better.”
But niche business ideas are not without their risks.
By their very nature, a niche business will not appeal to everyone and therefore limits potential customers.
The key to finding a viable niche idea is to establish whether there is a captive market for your niche idea and whether you’ve got a clear run at it.
So, how do you do this?
We’ve looked at five ways you can identify viable niche business ideas.
1. See what’s trending
Your niche idea might come from you being ahead of the curve and responding to a new market need before anyone else.
One of the ways you can do this is by using Google Trends.
This tool offers insights on local, national and global search trends so you can identify what people are typing into Google.
It helps to spot any consumer interests or needs that are currently being underserved.
Here’s an example of how you might do this:
In 2017, the most searched food recipe in the UK was Chilli Con Carne.
You’ve then done further research and found there are no Mexican-themed restaurants in your area.
From identifying that search trend, you’ve now stumbled upon a potential niche business idea that would appear to have legs.
This is market research on the cheap.
2. Delve further into search results
Another essential Google tool is Keyword Planner.
This is a more advanced version of Google Trends and allows you to really drill down into detail on particular keywords and search phrases.
If you think you’ve got a strong niche business idea, this a great way to understand the viability of your proposition.
Through Keyword Planner, you’ll be able to research the search volumes for related keywords and phrases.
It also covers the level of competition (i.e. the number of results you’re competing with).
The jackpot you’re aiming for is the combination of high search volumes and low competition.
Taking the Mexican-themed restaurant idea as an example:
You could use Keyword Planner to identify the number of searches for Mexican restaurants in your area.
If you’re seeing that there are a lot of people searching but the results are limited – then your niche business idea has potential.
Alternatively, you might see that if you make your search phrasing more specific, there is still a demand but less competition.
if so, therein lies your niche.
For example: Mexican restaurant with a children’s play area.
3. Speaking of competition…
If you have a loose idea of the business you want to launch but need to find the niche angle, reviewing similar businesses will help you locate your niche.
Start by looking at the services and products your competitors offers.
Then check out customer feedback on sites like TripAdvisor, Google Reviews or Checkatrade to identify opportunities.
Sometimes, however, you don’t need customer feedback, your own personal intuition is enough of a spur.
“I personally grew bored of walking into sports shops wanting something fun and bright and being presented with an array of black and pink garments,” says Faye Jobbins, co-founder of Tikiboo Fitness.
Her answer was to offer something her competitors didn’t by setting up a brightly coloured sports fashion brand.
“There are so many fabulous colours that companies could be using and I felt this was something I wanted to bring to the market.”
4. Explore combinations and novelties
One other way to discover a niche business idea is to look at combining popular business ventures.
While, clearly, some business ventures aren’t compatible, there are many good examples of multiple popular but different business types or models blending together.
Some of these might strike you as outlandish and novelty – drive-thru weddings – but others hit the dream spot of practicality and convenience – for example, a cycle-workshop and cafe.
Even where there is a novelty factor, that can be a great way to stand out from the crowd and gain added exposure.
Take Cereal Killer, the London café that specialises in breakfast cereals.
They’ve generated lots of press coverage by having a strong USP and appeal that blends novelty and nostalgia.
5. Follow your passions
It’s all very well finding a niche business idea but it needs to be something that you’re passionate about.
There’s no point investing your time and energy into a venture that has appeal to a niche market but no appeal to you, the business owner.
A good way is to work backward from your interests and hobbies.
If, for example, you’re a sports fanatic, look at specific sports you’re interested in, and then look at offshoot businesses that could relate to it.
Or if that sport is football, you could start a business selling classic football shirts.
If you love working out, you could start a clean-eating fast-food brand, like Carly Jones, founder of Kettlebell Kitchen.
“I felt I belonged in the sport and nutrition industry as that was my passion.
Struggling to eat healthy after long days in my call centre and gruelling CrossFit sessions later on at night, I realised there was a huge gap in the market for fast, healthy food.
Most people said it was a ‘mad' idea but I was determined to prove them wrong.
I made the leap and it worked!”
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Do you struggle to find business ideas to explore? Or have you successfully explored a niche business idea? Please comment below.
Do please share this post if you found it useful, and remember, in all things be thankful and Seek Joy.