Finding the small business niche can be vital to having a successful small business. However, finding your small business niche can be difficult when you are in the early planning stages of small business creation. This is because there are dozens of small businesses that serve the same type of customers and offer similar products (or services).
Your small business niche isn't too hard to find, and it can be essential in connecting you with the right customers. Here, we'll show you how to identify your customers and develop your brand, so that settling into your niche is easy and quick.
1. You should have a clear understanding of your product or service
The first step to identifying your niche is having a clear understanding of what you offer to customers. If you have a small business that has been operating for some time, then this is probably not much of an issue. However, if you want to start small business from scratch or are just beginning to market your small business, then you'll need to consider what it offers in more detail.
For example, a small craft bakery may make a variety of cakes and pastries. But this is too general for branding - you need to get specific. Do you specialize in cakes for college grads? Or creepy desserts? Are your products affordable or designer? What makes you stand out against the bakery next door?
If you're a service-based company, then you'll need to identify things like your ideal customer, how they feel when you use their service, and how you keep your customers coming back. Maybe your small business services small businesses, or offers certain types of people a discount. Maybe you offer after-service follow up to ensure customers continue coming back for future small business needs.
2. Do some research to see what other businesses are doing in the same industry as you
Knowing your competition helps you build a better business. Even if you're not directly competing, understanding the things that your competitors are doing can help you make your own plans.
For small businesses that sell products, it may be as simple as seeing what small business items your local competitors are selling (and how many). For small businesses that offer services, you can look on the right-hand side of search engine results for small businesses to see which small business websites come up when someone searches for terms relevant to your industry.
But knowledge is different than copying. You should not mimic too much of your competitors' offerings, because you don't know what their financial health looks like. They may be underselling themselves, or making poor decisions about products. Just because something is on the shelves doesn't mean it's selling.
3. Conduct a SWOT analysis on your business and figure out where you need to improve
After you've researched other businesses, and you have a good handle on your own business, you'll want to conduct a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Basically, just spend some time thinking about each category and how it applies to your business. You can do a small business SWOT analysis by yourself, but it's often helpful to get feedback from friends and family.
A SWOT analysis doesn't have to be fancy. It can be some scribbled notes in a notebook. The importance is doing the exercise for yourself. Not for anyone else. You're not going to show customers a SWOT analysis! It simply goes into improving your products.
4. Develop a value statement for your business to help find your small business niche
With all of this analysis under your belt, you should have a good idea of how to fill this sentence out. "My business offers ________ so that customers can ______"
For this business, Sticker Crypt, the value statement is, "My business offers advice on the sticker business so that my readers can sell their art!"
The more specific you can be, the better. "I produce comics" isn't very informative. "I produce comics about death so that my customers can access their emotions" is much more telling.
Basically, your value statement should serve as a gut check for you whenever you're trying out a new product or service. Does the product or service fit your value statement? If not, what needs to change? The product? Or your business?
5. Identify specific niches based on your value statement
Once you have a value statement, it's easy to develop your small business niche. You should only have as many niches as you can safely develop and sell products. 10 products for 1 niche is likely better than 1 product each for 10 niches, because in the former category, you'll be able to compete "against yourself" instead of against other businesses. Customers will linger longer and end up choosing your product over another.
To use the cakes example, maybe you're a baker that really loves baking with nut butter. Your niche is nut butter cookies. You start off developing a peanut butter cookie - good, classic, soft, chewy. People love it. Then, you start doing variations on that cookie - adding in some ingredients, or switching out for a different nut butter. At the end of a few months, you've got four different nut butter cookies that are selling like hotcakes. Congratulations! You've got a niche. You're the only baker in town doing double chocolate almond butter cookies, and your customers love them.
6. Get feedback and make decisions for your small business niche
No niche is ever perfect. Receiving feedback from your customers, friends, and family during the development phase is critical. Just keep in mind that the people that are buying from you are more important than the people that you love - in this instance. Your mom might hate your artwork, but maybe your artwork is meant for Gen Z college kids. Of course your mom won't like it - she's not your target. Seek out feedback from your targets.
I hope this guide was helpful in kickstarting your small business! Let us know your niches in the comments down below!