Finding Your Small Business Niche
If you’re a small business owner, you probably wear a lot of hats and have a lot of jobs: Making, marketing, customer support, advertising, social media management, accounting…
As business owners, we can get caught up in the day to day work - making it all run - and sometimes forget to do the higher-level thinking, planning and research that helps us stay on top of our markets.
I deal with this in my business BoyPilot Goods. There’s plenty of work to do every day just shipping products, ordering merch and supplies. It would be easy to get complacent and think that this was the whole business.
But without research into understanding and building new products to delight our central customer base, none of this would work as well as it does. We wouldn’t continually be able to adapt and thrive.
So periodically, I set aside time to dive into what my customers are really into right now — and how it’s changing.
I’m not so much interested in what is already hugely popular, but what is going to get big. As you get familiar with trends, you can start to spot new ones when they’re still growing.
Especially when you are first starting out, finding small but active niches is the key to success.
Business coach Don Markland says, “This can be a little more difficult since you’re predicting the future instead of looking at past data, but it can be worth it for the opportunity to get in on the ground floor of a niche that’s about to explode.” Once I’ve identified some directions to test out, we create products to fill those niches and try them in the shop and in our wholesale line. This is one way that we allow the customer to guide product development, rather than just thinking of the customer in when it’s time to market or sell.
That said, doing research of this kind can be overwhelming if you don’t know where or how to start. In my business, and when I coach e-commerce clients, I teach them to break down their customers or clients into segments so that we can better understand them and imagine their point of view.
Niche (noun): The golden zone that exists at the intersection of (1) What your customer needs, and (2) What you can uniquely offer to meet that need.
One of the biggest misconceptions about niche among small business owners is that niche is about types of products. While the type of product is obviously important, niche is primarily about people - the people you focus on serving.
#1: Know your customer niche
Your customer niche is made up of the people your business understands and serves. As humans, we define ourselves by belonging — things like:
Being a citizen of a certain city, state or country
Being a mom, dad, grandparent, sister or brother
Being LGBTQ+, disabled, or neurodivergent
Having a career like teacher, nurse, entrepreneur or firefighter
Being a bargain hunter, luxury lover, or eco-conscious shopper
These identities can influence buying in both emotional and rational ways. How customers think about things like cost, value, convenience and trust will depend partly on their demographics. A middle-class woman in her 50s makes decisions about banking differently than a 20 year old working their first job!
Powerful niches are found when you can offer something special to meet the needs and concerns of a client base that you truly understand. The process starts with developing that understanding.
Often, I find that small business owners understand their niches fairly well because they belong to them or are just very familiar with them from their everyday lives. Pet owners start pet companies; bicycle enthusiasts run bike shops.
Even so, we can’t get complacent. We must always be researching and intentionally taking our customer’s point of view. Even if you belong to your own customer niche, you’re only one person, after all, with your own idiosyncrasies. Make sure to keep engaging with customers to learn more about them.
The biggest businesses in the world are constantly studying their target customers. They do surveys, focus groups, product tests. They keep an eye on online communities and conversations. They keep up with trade publications. They leverage data and track spending habits. Some of the tools they use are also available to small businesses, so utilize them when you can. And take advantage of your small business, accessible status by also having those valuable one-on-one conversations.
#2 Develop Your Offer
When you understand your customers, you’re in a great position to evaluate what’s out there for them already and identify openings where their needs aren’t being met. This is where your skills and expertise come in. You’ll offer them something that solves their problem — whether it’s a vital daily need or an emotional one or a mix of the two. (Hint: It’s usually a mix of the two.)
Customers buy things for many reasons, both overt and covert, rational and irrational, superficial and deep. What needs might someone be meeting when they buy your product or service? Start with the obvious, and then dig deep beyond the superficial.
As you develop or refine your offer, there will be a lot to think about. Are there enough customers to create demand? Are there too many, and you’ll get lost among competitors? Focusing on a smaller niche, especially to start, is a time-honored technique for using niche effectively to build your business.
You should also ask yourself: What’s my unique advantage? What do I do really well that others don’t? What do I have at my disposal that others may not?
Who else is doing this, and will we be competing directly?
(And of course: Will people actually like this thing that I made or do?)
Some of these questions can somewhat be answered from the beginning (like choosing the right size niche) and others — like whether people will actually like it — take time and testing. There’s no substitute for that. I’m a huge proponent of testing. “Fail early and often” is a great mantra. We test a lot at BoyPilot Goods and really try to test in a way that gives us the most usable information for product development.
If you’d like to find out how to tap into your unique niche using branding or targeted product development, reach out to schedule a free consultation. My 1:1 e-commerce consulting clients get personalized advice and ongoing support.
