42% of startups fail because they aim to solve a problem which, more often than not, has already been solved by someone else. This makes it the number one problem that new businesses face when attempting to penetrate or appease a market, far beyond cash-flow problems (the second highest contributor at 29%). So, with that figure in mind, we’ve compiled a list of five questions to ask yourself before you begin your venture.
What are your passions and skills?
Though it seems obvious, conducting an in-depth evaluation of what you’re passionate about and what you’re skilled at can really help to solidify your goals. It’s not worth choosing a niche that you only have a partial interest in, ideally it should be something you can see yourself doing for at least 5 years. Of course, there are exceptions to the rule - your passion might be to run a successful business or to deliver a product that really makes a difference, for example.
You could ask yourself whether there’s something you love to do in your free time, or that you’d do even if you weren’t getting paid for it? If you’re able to answer yes to this question, there’s a good option for your niche.
It’s important to recognise what you can bring to the table, which areas you have special skills or experience in. What do people regularly tell you that you’re good at? What’s your training and education in? Do you have any specialist skills or knowledge that you’ve developed along the way?
Finding an area that you love and are skilled in is the holy grail for identifying your niche.
Is there a market for your niche?
Having passion and skill are great hallmarks to begin your niche-finding journey, though the cold truth is that skill and passion isn’t enough. You’ll want to determine if there’s a need for it.
One way to start analysing your market options is with some basic keyword research. What are people searching for online surrounding your potential niche? What specific words or phrases do they use? You’ll need to know how your target market are trying to find your potential product or services; which phrases are popular enough to generate a steady amount of interest in an area that’s not overly competitive. A good way to check this is with The Google Keyword Planner.
Type in some keywords related to your niche and see which words and phrases are suggested. Narrow down the suggestions by monthly search volume and competition level.
You’ll want around 1k - 10k per month for search volume. Any less means there’s probably not much of a market, any more means that it might be hard to break in to. Keep competition at low-medium; this will give you a general idea of the organic competition levels.
Are you trying to do too much?
One of the largest mistakes you can make when determining your niche is being too broad with your objectives. For example, in reference to our podcast on the subject, if you advertise yourself as a general mortgage broker rather than a specialised one, you’ll be one of many voices appealing for a customer segment and can easily be washed away by larger competitors. Having an area that you are the expert in will set you apart from any competitors you might have and will attract a targeted audience, yielding better results.
Who are your competitors?
Making a list of all the competitors in your chosen area can help you determine how competitive your chosen niche is. Once you’ve made your list, you need to decide what sets you apart from the competition. Is there a service, feature or product that you provide that can’t be found with your competitor? How do your prices differ from theirs? If you have something that your customers won’t find with another company, make sure they know about it.
Is it going to be worth it?
Determining the profitability of your niche can seem like a shot in the dark, however with thorough evaluation and analysis you will be able to identify your potential profitability. Check if your final niche has little to no competition. If so, it could be a lucrative venture. You could offer samples of your product or service and analyse its performance. Learn from the feedback you receive before launching or re-launching your new business.
For a comprehensive case study about finding your niche, we interviewed Taj Kang, Compliance Director of CMME Mortgages, on how they found their niche. The podcast is available here.