What is a Niche Business and Why Choose one?

So, it seems like all you hear about is choosing a niche, but you are probably wondering what is a niche business? Well, you’re in luck, because today’s video is all about defining your startup’s resources and how they can lead to your niche.

If you prefer a refresher on resources in the written form, and why knowing what your business’s resources are is a key to your startup strategy, check out my guide to the resource-based view of the firm, complete with examples of why I find it so valuable.

what is a niche business
Image by Gerd Altmann from Pixabay

Resources and niche are intrinsically linked for me, you can’t define your niche without knowing what tools you have to generate value for your audience. Hence why I’ve combined the 3 types of resources (Tangible, Intangible, and Human) with a discussion of niche definition in this video.

What is a niche?

Now I scouted for quite a while to find a definition of niche that I felt truly encompassed the full meaning of the word, and I finally found this definition from Vocabulary.com that covers most of it from a business perspective.

“A niche is a space that’s all your own, from a literal corner or enclosure to some kind of professional specialty. Like finding a niche in the scented soaps market with peanut butter body wash and winning over a loyal, if not nutty, following.”
https://www.vocabulary.com/dictionary/niche
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But based on the definitions that are readily available no wonder people find the concept of business niche to be a confusing concept! For my purposes, I will expand upon the definition: A niche is a distinct subset of business space where you will find a defined and specific audience.

Isn’t a niche only important in blogging?

Now, one area that constantly talks about “finding your niche” are bloggers (just search niche on Pinterest if you don’t believe me). However, the reason why bloggers (myself included) are so focused on finding their niche is exactly the reason why all startups should also be niche-focused. This is, are you ready? That by focusing on your specific space, you are focusing directly on the people who are the ideal customers for your product or service.

Niches aren't just for bloggers

Why choose a niche business?

So, why choose to focus directly on your ideal customers? Firstly, your startup business should be solving a problem for your ideal customer. Solving problems is how you generate value for your audience, but in order for your audience to find you they have to be looking in exactly the right place and for someone with authority in a specific area.

Now, as an example – I run, I’ve been running a lot over the past few years (up to marathon distance), but my body isn’t really built for running so I end up with a lot of imbalances that get quite painful. As a result of this, I also need to work out in the right way to compensate for these imbalances. I have options of how to workout:

  1. I could join a cheap gym – I did this, and my overall fitness improved, but the pain when running didn’t
  2. I could get a generic personal trainer – but that’s outside my budget and how do I know they’re any good at fixing my specific movement problem?
  3. I could join a small class focused on functional training ** this one was the winner **

By joining a CrossFit gym which, believe it or not, is specifically focused on functional fitness my imbalances have improved dramatically and I’m much fitter than I was. I can also run long distances without pain! I made this choice because all of my research pointed to functional fitness as the solution to my problem (I was an engaged buyer), the price point was right for my budget (an irresistible offer) and the gym and its owner have a fantastic reputation in the local CrossFit community (an authority figure in this niche).

Now, the owner of this gym is also a brilliant personal trainer and weightlifting coach, but he’s chosen to focus on the functional fitness side via CrossFit. His niche is helping people with movement difficulties improve their movement patterns to reduce pain, gain fitness, and enter CrossFit as a sport.

He excels in this particular niche, membership spaces only become available periodically and the classes operate at close to capacity. And the best bit for him? He doesn’t advertise, people actively find him either through word of mouth or searching for solutions to their specific problem.

Practically, how do I choose a niche?

niche business
Image by mohamed Hassan from Pixabay

As you’re going to be spending a lot of effort within your niche it should satisfy a number of requirements:

  1. It should be an area of interest to you – if you are going to get bored after 6 months of effort developing your offer within your niche it’s probably not worth it. To build authority you have to be willing to focus on your niche for the long term.
  2. You should have an awareness of the problems that exist within your area of interest, and the types of people who are going to be looking for solutions to these problems. It’s important that you can be perceived as an authority figure.

For example: If you’re 18, have never had a job, and want to advise corporate executives on how to retire early you will probably find it difficult to generate authority in that niche.

  1. Your niche should be specific, you should be able to define your ideal customer, not just the industry, category, and market that they belong in.

The owner of the CrossFit gym knows that his ideal customers are: local, employed (CrossFit isn’t cheap), with movement problems, wanting to get fitter and healthier in a social, supportive environment and often scared of how to get started. The last one is key because it has allowed him to create a unique and valuable solution for this specific customer group’s problem that feeds them into the mainstream CrossFit customer group.

  1. Your resources, which you have previously identified, should be aligned to providing value in your niche. Your resources need to be able to overcome any “barriers to entry” (things that stop just anyone launching a startup in this niche) and generate value by solving the gnarly problems experienced by your ideal customer.

For example, some of the resources required to start a CrossFit gym include facilities and equipment (or money to acquire and maintain them), training expertise, insurance, and a route to attracting clients. If you’re skint and have no CrossFit, personal training experience, or qualifications I would suggest your current resources are not aligned to starting a CrossFit gym at this point.

So, Niche Business?

So, are you convinced? Will you be mapping your resources and defining your startup niche? I’d love to hear how you get on, so let me know in the comments box!

12 thoughts on “What is a Niche Business and Why Choose one?”

  1. Wow, you defined that just like a niche expert 😯
    Thank you for this great information to keep in mind while thinking about developing any new start-up.
    I have been thinking about a new food truck business that serves sandwiches. Now maybe I will only serve different types of grilled cheese sandwiches 🥪 Mmm 😋

    Food for thought 😀

    1. Hi Greg,

      Thanks for the compliment!

      There is, local to me both a pop-up food stall that sells only grilled cheese sandwiches and a cafe-style restaurant that is unrelated but does the same. They both seem to do excellent business, with long lines and a small risk of food wastage. This is also in the south of England, where grilled cheese sandwiches are not particularly well known…

      Now, you’ll have to excuse me while I go and make a sharp cheddar and onion grilled cheese sandwich as a midafternoon snack. Yum!

      Cheers,
      Lisa

  2. Nice work defining a niche. I’ve been having a trashy time of it of late as well… doubt creeping in has me wondering if the niche that I’ve chosen is well defined enough or if I’m ever going to be able to build the following or create content that converts…
    Bob

    1. Hi Bob,

      Doubt a gnarly beast when it strikes, isn’t it?

      Have you tried looking at your ideal customer within your current niche definition as an exercise to see if you are niched down enough? If you can define your perfect customer (and it might be right down to what they’re eating for dinner or what size town they live in or even that they’re 35-year old first time Dad’s…) Then you can target your content to provide the perfect customer with an irresistible offer. You’ll find more about the Irresistible Offer in my Newbie’s Guide to Entrepreneurship, the table of contents is your friend here, I wouldn’t recommend trying to digest it all in one go.

      Looking at your site Bob, you have a clear brand that is not confining you by being too small. I would recommend the following actions to help with your content conversion:

      1. Focus down further to a very specific audience that you can identify with.
      2. Figure out everything that you can about that audience, but most especially their pain points. The things that make their lives difficult that you can show them how to fix.
      3. Use your content to deliver solutions to their pain, and make those solutions no-brainers. For example – I read your post about keto ice cream (https://ketobandeeto.com/halo-top-ice-cream-review-white-chocolaty-macadamia/) and when I do use a keto diet I do it to shred (lose fat so that my muscles look more defined) – its often a bikini season thing… and desserts are always my downfall. Therefore, my personal keto diet pain point is all around feeling like I’ll lose all of my good work if I have something that tastes sweet and yummy for dessert – like ice cream, therefore this Halo top ice cream could be the solution to my keto dessert pain!
      4. Make sure that you are visible where you niche audience hangs out, so craft your social media strategy around where your specific audience is, so if they’re on Pinterest, make sure one of your post images is optimized to be shared. If they’re on Instagram make sure your Instagram account is set up so that your audience can find it.

      Drop me an email via the Contact Us tab if this is helpful or if you’d like to chat more.

      Best wishes on your journey!
      Lisa

  3. Hello, good article on choosing niche. I had a bit of trouble when I started my website, I changed niches three times, I thought about buying another domain because I didn’t like the title of my site either, until I figured out what “niche inside niche” means. I hope I’m on the right track now, the results will show in future. Cheers!

    1. Hi Tom,

      Thanks for this insight! “Niche within niche” is an excellent way of saying it, I find saying “niching down” just sounds a bit daft!

      I think niche is one of the most misunderstood elements of business, and as the example of the local CrossFit gym, its not just relevant to online businesses.

      Thanks,
      Lisa

  4. When I first started out, this was hard to figure out but eventually I found out E-Bikes are my area of interest and also is a good niche. I like how your article explores what a Niche really means and that if you put your focus on what you truly want, you can achieve anything!

    I think a lot of newcomers to the online world to start their business will gain much knowledge and insights from your post, thank you for sharing with us!

    1. Hi Rowan,

      Thanks for sharing your experiences with niche. It’s good to remind ourselves that we’re rarely the only one struggling with a problem and that lots of other people can benefit from our experiences!

      Thanks,
      Lisa

  5. Love this post!
    Up until recently niche was a foreign word to me and once I did know what it was, my mind was blank.
    After doing a lot of research I now find it much easier to come up with niches, but I am still educating myself so thank you so much for this post!

    Martine

    1. Hi Martine,

      Thank you for the feedback!

      I agree, I found everything to do with niches to require research, as I mentioned even finding a definition that fits with my understanding of choosing a niche for business was a chore, and even then I still couldn’t find one that was quite right!

      Thanks,
      Lisa

  6. Such an important as aspect of going into business. Even in traditional offline businesses as you alluded to, these days there are so many businesses it is important to focus on a specific niche in order to stand out and find your place in the community. Your example of cross fit is perfect. Speaking of which I have been giving serious consideration to going a cross fit gym here in town and when this covid deal is behind us I might just do so. Congrats on your marathon running!

    1. Hi Robb,

      I’m glad that you agree that locating your business within a niche is so important. It’s one of the things that I really see people failing to do at the beginning of online-based startups. They must spend so much time getting pulled in all different directions trying to be everything for everyone all at once!

      I can highly recommend CrossFit, despite its reputation (and its core niche!), it is completely scalable to anyone’s level of fitness and a good gym will focus on bedding-in correct movement and form first, before adding significant weight and speed.

      All the best with your post-Covid adventure!

      Thanks,
      Lisa

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