What is a niche? And do I really need one?
Mar 09, 2020
So, you decided to start your own business! You have a rough idea on what you want to sell, based on what you are passionate about, or maybe based on your expertise. The next thing you hear everywhere is; "you need a niche!" But WHAT on earth is the meaning of niche, and do you really need one? That is what I will explain in this article. Hint: yes, you need one, so keep on reading!
What IS a niche?
When entrepreneurs talk about a niche, they are referring to the combination of:
- A specific target market; the type of customers you are focusing on
- Specific products / services for that target market (and more specifically products and services, that you know your customers actually WANT and need)
- A unique way to stand apart in that market, a unique benefit of working with you or buying from you.
A good niche is quite narrow and specific.
Here are some examples to help explain the concept:
- "Fashion" is not a niche. And OMG how often do I see new websites that do "fashion". It is not a niche,, because it lacks a specific target market, and it lacks a way to stand out in that market. Bridal fashion would be better, because it combines a target market and a product, but the target market is still very broad and the benefit / uniqueness is missing. Handmade bridal gowns for romantic brides would be a niche that ticks all boxes.
- "Coaching" is not a niche either, because again it lacks target market and a unique way to stand apart in that market. Relationship coaching would be more specific, but it still misses the target market and the benefit. Relationship coaching for women in their thirties who want to find a serious relationship would be a niche.
Do I need a niche?
Yes, you need a niche! Choosing a niche will help you in so many ways when you are a new business owner, I 100% recommend it (although I understand that it can feel restrictive, more about that in the next section, so bear with me). Here's a list of reasons why niching works so well:
- It gives you focus. As a small company, you cannot serve everyone, you simply don’t have the time. Imagine you sell "fashion". How will you decide what type of products to sell? How will you decide what to post on instagram, or who to interact with? I mean you could post ANYTHING and interact with ANYONE, and that is not a strategy.
- It is easier to become an expert in a smaller niche. Experts get more clients and more repeat business. When you are a relationship coach for teens, you can specialize in that area and become the go to coach for that niche. But when you are just a coach, then how do you become an expert in such a broad area?
There is less competition inside a niche.. There are millions of coaches, or fashion websites, but way fewer relationship coaches for women in their thirties, or handmade bridal gowns for romantic brides!
- It will be easier to get referrals from family, friends and acquaintances, because people will remember what you do if you have a clear niche. The more vague it is what you do, the harder it will be for people to remember it. What you want to happen is that when they are talking to someone about your topic, that YOU pop up in their mind as the expert and they say "hey, I know someone you should talk to, she does exactly this!"
- Marketing to a niche is easier than marketing to everyone, and a lot cheaper too. Imagine you want to run ads for your store or your business. The more generic your niche, the more expensive the ads will be (because there is so much more competition), and the harder it will be to make a sale, because you will attract various types of clients to your website.
- Social Media will be a lot easier too. Imagine you have "fashion" as your niche (I keep using this as an example because it works so well, but the same applies to ANY other business), and one day you post bridal gowns, and the next day you post baby stuff and the day after camo gear. You will get a LOT of unfollows because those posts are not relevant for everyone. But if you sell bridal gowns for romantic brides, and your followers are romantic brides, then they will LOVE all of your posts, because you post exactly what they love seeing!
I hope this list convinced you that yes, you need a niche! Or do you have some doubts? I probably know what the doubts are, so make sure to read on!
But won't choosing a niche limit me?
I get it, you are probably multi-passionate (that is one of the reasons why you wanted to start a business) and choosing a niche feels as if you are going to limit yourself. But that is not true, and here's why: choosing, let's say career coaching for teens as your niche, does NOT mean you won't be able to help adults, or to help teens solve other problems, it only means that you will market yourself as a career coach for teens, which will help you focus, become an expert etc (the advantages mentioned above).
And once you are established and you have more budget and more time (for example a team), you can ALWAYS choose a larger audience or sell more products and services, choosing a niche is just a fantastic way to start a business.
You might also worry: won't I decrease my earning capacity by choosing a niche? And again the answer is no! The total number of people that can buy from you might get smaller, BUT the chance that they will actually purchase will increase big time, because what you do is super relevant for them. It is of course a good idea to do some market research to see whether there is actual demand for your niche, and you don't want to go extremely super niche (especially if you are a local business), but generally speaking, no, a niche will not decrease your earning capacity, it will INCREASE your earning capacity! Whoop whoop!
How do I know if I chose the right niche?
Great question! You have done your "niching homework" if your niche is:
- clear: you are clear on who your clients are, what your services are and how you are different from the rest
- narrow: you don't sell everything, for everyone, but you are specific
- well researched: you understand the needs of your target market and you know what they are looking for when it comes to your niche
So that's it! The meaning of niche, why you really need a niche and why it will not limit your business opportunities..
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