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.
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.
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.
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:
- I could join a cheap gym – I did this, and my overall fitness improved, but the pain when running didn’t
- 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?
- 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?
As you’re going to be spending a lot of effort within your niche it should satisfy a number of requirements:
- 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.
- 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.
- 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.
- 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!