Choosing a business niche

Choosing a niche for a business is an unexpected challenge for both an aspiring entrepreneur and people who are already doing business. Choosing a niche for a business directly affects success. If you have gone (already going) the wrong way, then get ready to constantly overcome the difficulties that will appear again and again on the way.

Therefore, approach the choice of a niche consciously: analyze, compare and understand the profitability. This is better than banging your head against the wall and trying to sell a product that no one wants.

Choosing a niche for business - misconceptions and myths

People build their own barriers in business. Invent new products, want to be unique and try to cheat the system.

Some succeed. But 99% of entrepreneurs with an "innovative" product quickly go out of business.

Less competition - more money!

A common misconception is that you should choose a niche where there is less competition. This is fundamentally the wrong approach. Just a high indicator of competition says that money is spinning in this direction.

Turn on logical thinking. Would hundreds of people mess around with a business that doesn't make money? Obviously not.

This leads to the following misconception - customers have already been sorted out. It is not true. There are always clients.
Select your target audience from billions of people and work for it. The problem is not in the number of customers, but in the right offer and a well-developed product.

The business idea must be unique

The choice of a niche for a business depends on the uniqueness of the idea - absurd! Quality of service, demanded product, quick response to market changes, well-organized marketing - these are the basics that will help you grow your business and make money.

Of course it's great if the idea is new. The catch is that it's harder to promote something new. You essentially have to create a market and instill a culture of product consumption. This requires a lot of money. This point is worth considering.

Clients contacted our agency with new ideas and… 50,000 rubles for promotion. We refused them. Since the amount is small and people simply do not request such a product on the Internet.

If you have a new idea that has been tested on other people, then it is worth entering the market through the media, plus promotional budgets for at least 1 year in advance. Or find an investor who will make financial injections into the business for a share of the company.

I like the idea, and so do others.

It's great when a person burns with an idea and is in love with a product. However, here lies the catch. A person believes in his product so much that he forgets about:

• real demand;
• marginality and transaction cycle;
• break-even point calculation;
• taking into account the market trend and analysis;
• payback period of investments in the project;
• analysis of competitors and target audience.

As a result, choosing the wrong niche for a business can lead to problems and cash gaps. The scary thing is that at the same time, the entrepreneur blames himself for the lack of an "entrepreneurial streak", for not being smart enough, etc.

Stress begins, despondency, business closures and ... going to work for hire. Although the only thing that had to be done was to analyze the niche in cold blood.

Make a list of at least 100 niches that you like and analyze each of them according to the following criteria:

• demand;
• marginality;
• transaction cycle;
• complexity;
• investment volumes for launch and payback period;
• market trend;
• the presence of successful businessmen who earn millions in this niche; on how much, on a scale of 10, do you like the niche that you are analyzing.

Pavel Ugryumov

Choosing a niche for business: obvious and non-obvious niches

Niches are divided into obvious and non-obvious. The former are attractive because they are a final and simple product.

The second - complex, which are involved in the production process of the obvious. You can choose either type. Each has advantages and disadvantages.

Obvious Niches

Obvious niches - business on the surrounding things that we see. Take a look around: furniture, cars, real estate, books, and so on. These are end products that are in mass demand.

Advantages:

• easy to understand and quickly delve into a niche;
• established market;
• easy to analyze;
• many requests.

Disadvantages:

• a lot of competition, therefore a high threshold for entering the market;
• it is difficult to stand out among competitors;
• high risks.

Non-obvious niches

Highly specialized lines of business that are involved in the process of creating the final product. These are components for equipment, chemical reagents, etc. That is, in ordinary life, such products are not found.

Building a business in an unobvious niche is only worth it if you are a master in this direction. For example, you have a higher education in biology, worked in a relevant industry enterprise, and then decided to open a business on this topic.

Another example is the services of a forester, who provides services for the allocation of zones for deforestation in accordance with the legislation of the Russian Federation.

Working for hire, a person received 70,000 rubles a month. He quits because the salary is not raised, but at the same time remains the best professional.

Opens a business and works with a former employer already on a contract basis. In this case, the check is no longer calculated in thousands of rubles, but in millions.

Only a person who has reached the "master" level can advance and earn money in highly specialized niches.

If you try to become only an organizer, you will encounter staff turnover and will not be able to fully control the process of providing services.

Advantages of non-obvious niches:

• much less competition, while the demand for services is quite high;
• low entry threshold;
• minimal risks;
• the possibility of self-pricing.

Disadvantages:

• you must be a specialist who has vast experience;
• you need to analyze the demand for a highly specialized niche very well;
• at the beginning of the journey, it is quite difficult to earn quickly and a lot.

You learned about the fact that niches are obvious and non-obvious, and got acquainted with their features. Which one to choose? You decide. The main thing is to take into account the recommendations and do a niche analysis before investing money, time and effort in the chosen direction.

Choosing a Niche for Business: Trending Directions

This type was decided to be taken out separately. Trend niches are similar to the obvious ones, but have a number of features. This is where product demand analysis plays a key role.

For example, goods from China are ideal products to sell, but only at the moment when the demand trend for them is at its peak.

This type of niche needs to be entered immediately and done quickly. The task is not to build a stable business, but to hit the jackpot and move into another trending niche.

Let's take a GPS watch as an example. At one time, they could earn millions of rubles in a short period of time.

Now the demand trend is steadily falling and if you want to enter this business, then in 90% of cases you will lose money or hit the breakeven point.

But for electric bikes and scooters, the trend is growing (2018). You can safely enter this niche. The main obstacle will only be finding a reliable supplier who will not let you down.

Advantages:

• the ability to earn quickly and a lot;
• deep knowledge of marketing is not required;
• high demand at the peak of the trend.

Disadvantages:

• business is not forever - as soon as the trend starts to fall from this direction, you should leave;
• risks - the supplier failed, they did not have time to sell quickly, demand fell and you are in flight;
• the case is not suitable “for the soul” - the main task is to quickly buy, quickly sell and get a margin;
• you need to closely monitor trends, the slightest mistake and you are in the red.

Choosing a niche in business - algorithm and analysis tools

Choosing a niche for a business should start with a demand analysis (this does not apply to unique ideas). In the USSR, the model of the superiority of supply over demand worked. In simple terms - "take what they give."

If you have studied modern economics, you know that demand creates supply, and not vice versa! Trying to impose a product on the market is a path to bankruptcy.

1. Demand analysis

Demand is easy to analyze. To do this, you need to go to Yandex.Wordstat and enter the request of interest on time.

To find out the demand for a purchase, add the word “buy” to the request. For example, "buy an electric scooter." Do not forget to select the region where you plan to sell goods or services.

Find out how to analyze demand in practice from the video in which our leader Pavel Ugryumov will review the Yandex.Wordstat service.

2. Analysis of competitors

Choosing a niche in business is impossible without analyzing competitors. Find out which players are on the market, how much they earn, what promotion methods they use, and what size budgets are allocated for promotion.

Imagine the following situation: you decided to repeat the success of one project, but did not analyze a competitor that receives hundreds of thousands of dollars of investment from America for promotion.

And you have 50,000 rubles to launch. What will happen? With 100% probability, you will fail, because you cannot even be at the level of your opponent.

If you analyze competitors, you will understand whether it is possible to enter the market and whether it is worth it.

Evaluate competitors according to the following algorithm:

• product line - what they sell;
• determine the best-selling product;
• unique properties of the product;
• determine the marketing strategy - what tools to promote / attract customers are used;
• find out the points of contact with the audience;
• calculate the effectiveness of advertising channels;
• check the competitors' sales algorithm (yes, we leave orders, call, buy);
• define sales channels;
• check the chain of work with the client;
• find out the availability of sales scripts;
• determine the average check, the number of applications, sales and market coverage among the analyzed competitors.

The result of competitor analysis

Based on the data received, you will understand what the state of affairs is in the market and whether you can take a piece of the pie. Also, based on the analysis of competitors, conduct a SWOT analysis that will help you stand out from competitors.

If you do not want to bother and waste time analyzing competitors, then delegate this process to our agency. Just click the button below and apply:

Choosing a niche for a business depends on the target audience. Knowing the target audience will help you understand whether you can meet the needs of customers at the level or better than your competitors.

Also, the knowledge and understanding of customers in the future will greatly simplify the promotion and development of business. TA is the foundation of the project. Understanding the pains, fears, desires and needs of the audience will ensure a flow of customers.

If you want to learn more about the target audience, then we recommend that you familiarize yourself with the course: "". To find out more, just click the button below:

* Remember! Anyone who knows the target audience has no problems in sales!

4. Estimate Marginality and Deal Cycle

The choice of a niche for a business is influenced by the marginality of the product and the transaction cycle. These two factors are closely related.

Product margin is the difference between the selling price and the product cost price. In simple terms - net profit from the sale.

Look at how profitable the margin is in the chosen niche. The higher the net profit, the better. But there are nuances with the deal cycle.

The transaction cycle is the time that passes from the moment of contact with the client until the moment of receipt of income. As a rule, the higher the margin, the longer the cycle and vice versa.

For example, a grocery store has a deal cycle of 60 seconds, but the margin is quite low. Another example is real estate. Here the margin is much higher, but the time of the transaction takes weeks or months.

Determine the margin to cycle ratio and choose the option that suits you best.

5. Determine where the soul lies

After analyzing the niche according to dry statistical data, you will get a dozen directions. To choose, we advise you to focus on knowledge and love for a niche. If you start doing a profitable, but not your favorite thing, then nothing productive will come of it.

Love business, love customers! Well, we wish you success, high checks and a lot of positive!