The first question that aspiring entrepreneurs ask is: "How to choose a niche or how to find a business idea?" There are many ways. Some of them were shared by Galiya Berdnikova, the author of our novelty "Business Way".
Map for searches
There are many small segments in any market. They are called niches. Choosing a niche helps you find a narrow area in which you can become the best and withstand the competition. It is characterized by a narrow target audience and a specific product line aimed at it.
In what order should you search? Someone first comes up with an idea and only then decides in which niche it can be implemented. Someone has a clear understanding of which niche they would like to work in, and a business idea and business model are already being created for it. You can choose a niche according to several criteria:
- Strengths. What have you done well? What do you do best?
- Pleasure. What do you like best? What causes the “fire” in the chest to burn?
- Competences. Where are you an expert? What have you done before?
- Pain / problem. What “pain” or problem does a large or well-defined audience have? Could you solve it?
- Trend. What is gaining popularity now and what can you quickly enter? What products are selling well?
- Money. Where are consumers already spending their money? Which projects have high net profit?
- An example of a foreign market. What are they doing abroad, but not doing here yet?
Your strengths list consists of your personality traits and your ability to do things better than others. Your task is to determine which business areas or opportunities are applicable to your advantages and which of the selected business ideas appeals to you the most.
Step 1. Take a list of your strengths and competencies and indicate next to each item an idea or business area where you could 100% realize your strengths. For example, you are good at persuading others. Business ideas that may follow: a sales script company for a telephone conversation, a company that offers remote call center services, an investment attraction company for small and medium businesses.
Step 2. Rate the attractiveness of the idea for you. Opposite the business ideas or areas from the previous paragraph, put down values on a scale from 1 to 10, where 1 - does not attract at all, 10 - inspires, ignites, I want to start implementing this idea right now.
This is one of the key and most correct ways to start a business. You need to start from the problem, and not think about what "pain" your company solves after it has been working for a whole year.
Both beginners and experienced entrepreneurs have to choose a niche for business. The fact that you have already chosen a niche for yourself once does not guarantee that you will not have to choose again, because niches tend to change along with the changing demands of society. The ability to deliberately, not relying only on intuition, to determine the right direction for business development is useful to every entrepreneur.
Why is it important to choose the right niche for your business
The right niche for a business largely determines its potential success. The wrong choice of a niche will lead to the fact that the efforts invested in the business will not bring the desired result, and the costs will not pay off. It is difficult to count on large sales of winter clothing in warm countries and on super-income from teaching Swahili in a provincial town. As a result, the businessman will consider himself unlucky, stupid and incapable of doing business. In this case, the problem lies only in the fact that a person is trying to sell stop signals to hares.
Niche selection strategies
There are various strategies for finding the best niche for your business. Many follow the path of least resistance and use their own professional experience. Having worked for some time in a hired job, a person can get an idea of the market and consumer needs, get proven contractors and acquire a small client base, and then organize a new enterprise with this baggage.
Another popular option is to turn your own hobby into a profession. Especially often women on maternity leave are engaged in monetizing their hobbies. They sew, knit, make custom-made cakes, cut dogs, paint their nails, and so on.
An acquaintance of mine, a retired physics professor, began to earn money from his unusual hobby. For a long time he collected toy models of steam locomotives, sometimes repairing them or making spare parts for them on his own. Now this locomotive workshop feeds him in miniature, and orders for him come from locomotive fans from all over the world.
For those who do not fit the named options, there are market analysis schemes that allow you to identify niches with potential space for growth. This approach allows you to methodically assess all the possibilities and choose the best path. Very often, businessmen take an existing idea into work and refine it to a new level, for example, improve a product or service. People with entrepreneurial talent find ideas in their own needs, and then do business on their satisfaction.
A friend of mine wanted to buy a leather watch strap as a present for his wife, but he could not find anything suitable on the Russian market. Today, he and his wife own an online store for such straps.
Very often, business ideas can be found at the intersection of industries. For example, an accountant familiar with marketing can open a school to train fellow accountants in self-presentation skills to a client, and an adult drawing teacher familiar with event management can host art parties.
A year ago I read the book by Rohit Bhargava “Not obvious. How to identify trends earlier than others ”and decided to follow his method during the year. Here's my public pledge on Facebook in February 2021.
Oksana said - Oksana did. Having looked at what I ended up with, I did not describe the trends in the same way as Rohit does, but based on the news that I collected and analyzed in the Telegram channel, and my own practice, I found 3 promising niches for micro and small businesses in 2021. I believe that this information is more interesting for my readers than abstract market trends. I deliberately do not touch on new technologies, such as artificial intelligence, big data and blockchain, because building a business on them requires specific knowledge, but I want to show niches, the development of which is more or less accessible to every entrepreneur.
So, tara-ra-ram, drum roll ...
Eco projects, social projects and b-corp (a triple impact business model that combines economic sustainability, social responsibility and sustainability)
If the mission of your project, in addition to commercial goals, is to improve the environmental situation or to give jobs to those who are not hired for "normal" jobs, and you think "who needs all this but me" think - do.
In 2021, the market environment for eco-projects is more favorable than ever. Thanks to Greta Thunberg, who was named Person of the Year by Time magazine (1). The media wave raised around the 16-year-old Swede has become a catalyst for the demand for eco-products among the most conscious part of the world's population, regardless of country of residence. And yes, green is the new black. Favorable market conditions do not mean that it will be easy to develop an eco-business. Until eco-products became the new "common sense" and mainstream on the theory of technological revolutions, which I talked about at the webinar "Big Market Cycles". This is obvious if you go to the nearest supermarket. The shelves are still full of plastic and toxic refined products. The resistance of the majority, which does not want to compromise the conveniences achieved over the past couple of centuries of civilization development, is still great, but changes are already going faster, including at the expense of non-conformist millennials who are picky about the choice of products than their parents (2). If they do not find something that meets their requirements, then with an entrepreneurial streak, they are ready to create it themselves. Nielsen, in a 2021 study, called millennials the “green” generation (3).
In December, I started working with the Ukrainian brand Bilka, under which they produce reusable fabric bags for buying vegetables and fruits in supermarkets instead of plastic bags, and reusable shoe covers for schools and hospitals instead of disposable ones. In addition, the founder of the brand, Irina Bilyk, conducts master classes for the waste sorting business.
The project was created in May 2021 and by December 2021 has evolved to:
- 2-3 corporate trainings per month;
- an online store with products under the Bilka brand;
- presence in 55 pharmacies Ukraine (in December, an agreement was signed for the supply to 11 more pharmacies in Zhytomyr);
- 2-3 corporate orders for reusable shoe covers per month,
- sales of reusable bags in 8 retail stores.
This is what Irina herself wrote to me before starting work.
“It all started in May 2021 after meeting with the founder of the Zero Waste movement, Bea Johnson. She pushed me to try to change something around herself, and not wait for someone else. At first, I just wrote in a Facebook group about my experience of sorting, shopping, using reusable bags. Then one friend asked if I could make reusable bags for her too. I answered “yes” and in 4 days the order was ready.
This is how two parallel development paths began: educational and industrial. In December 2021, the idea of creating New Year's bags came up. She was supported by many people and for 4 weeks I packed orders day and night and sent them to all corners of Ukraine. Then it was decided to take on the team a person who would be in charge of orders, and a separate SMM manager for maintaining an Instagram account.
In January 2021, the idea of making reusable shoe covers was born. She also caused a sensation and quickly found her buyers. In March 2021, we have already registered an LLC and began to produce quality certificates for reusable bags and shoe covers. In April 2021, we entered the first retail network and started selling bags not only in social networks, but also in retail chains (8 stores). "
Choosing a niche for a business is an unexpected challenge both for a budding entrepreneur and for people who are already doing business. Choosing a niche for a business directly affects success. If you have gone (are already going) on the wrong path, then get ready to constantly overcome difficulties that will appear on the path again and again.
Therefore, choose a niche consciously: analyze, compare and understand the profitability. It's better than banging your head against a wall and trying to sell a product that no one wants.
Choosing a Niche for Business - Misconceptions and Myths
People build barriers for themselves in business. They come up with new products, want to be unique and try to cheat the system.
Some people succeed. But 99% of entrepreneurs with an “innovative” product quit quickly.
Less competition means more money!
A common misconception is that you should choose a niche with less competition. This is fundamentally the wrong approach. Just a high rate of competition says that money is spinning in this direction.
Include logical thinking. Would hundreds of people tinker with businesses that don't make money? Obviously not.
This leads to the following misconception - clients have already been sorted out. It is not true. There are always clients. Identify your target audience from billions of people and work for it. The problem is not in the number of customers, but in the right offer and a well-developed product.
The business idea must be unique
Choosing a niche for a business depends on the uniqueness of the idea - it's absurd! Service quality, a product in demand, quick response to market changes, well-built marketing - these are the basics that will help you develop your business and make money.
When talking about a successful person, the first thing that comes to mind is a businessman in an expensive suit. Although the global economy is in decline today, many people aspire to become entrepreneurs. The success of a company depends on the ability to sell advertising, communicate with customers and the right choice of a field suitable for development. You can draw an analogy with payment means. If you have an inflatable mattress, then prying into the ocean is dangerous, but with an aircraft carrier it makes no sense to plow the local lakes.
What is a niche in business
A niche in business is a narrow focus of a company. Do not confuse niche and segment, because the second term has a global meaning. A niche in business has significantly less consumer coverage, but the correct approach to its definition will allow you to get significant profits. It is critically necessary to devote sufficient time to analyzing the entire market situation. Do not think that choosing a niche for a business from scratch is a quick process, sometimes it takes several months.
To choose a suitable area for your own business, you need to include the maximum of analytical skills. We'll have to look through the market inside and out in order to understand what is profitable at the moment. Returning to the metaphor, let's say that a large ship is not always the best choice, because sometimes several small boats are more effective. Consider the current state of the market where you are going to work. Thus, the concept of a niche can be compared with the problems of future consumers and they must be solved.
Aspects of choosing a niche
There are three key factors to consider initially:
- Consumer demand;
- Existing rivals;
- Company management.
If consumers don't need the product you are willing to offer, then it will not make a profit. At any time, the fundamental law of economics operates: "Demand creates supply." Seasonality must be taken into account. If the desire of buyers to use goods or services arises at a certain time, then the profit will fluctuate greatly from these surges. Often in the "off-season" companies either cease to exist or change their profile.
There are always rivals, now there is simply no absolutely free niche in business in Russia. There are at least 2-3 competitors even in small towns. You need to understand how the competitors' offer differs from yours and whether you can entice customers. Major rivals in the chosen field will slow down profit growth and try to minimize the chance of development. For this reason, it is important to find niches that are free for business.
Of course, the most important thing when choosing a niche for a business is the leadership skills. The way management activities are carried out affects the profitability and speed of development. The correct approach of a manager to the issue of management will allow him to develop, even if the niche is already occupied. At the same time, a bad leader can ruin the most promising ideas.
The importance of choosing the right niche