A surprising number of aspiring entrepreneurs have the problem of not knowing what to sell. At first glance, this appears to be a strange conundrum. Wanting to start a business without having a product is a little like wanting to be an athlete without having a favorite sport. But it's a fairly common issue for many people who want to start their own businesses. If you find yourself facing this difficulty, here are some ways to narrow down your focus and choose a niche or product.
The Importance of a Niche
First of all, you must have a product or products aimed at a specific target market if you want to start a viable business. Some people think they can follow the model of a Walmart or Amazon that sells thousands of diverse products. As a small business, you probably aren't going compete on this level, at least not at first.
That’s why starting an online store and simply adding products that seem like they should be popular is a strategy destined to fail. You cannot possibly market too many different items, especially when you’re just starting out. It’s best to focus in on a specific market or even a single product at first. You can gradually expand, but that takes time.
Niche Is More Than Passion or Expertise
Two things you often hear when it comes to business advice is to sell what you love (or are passionate about) and to stick to a niche where you’re an expert. This type of advice is, at best, incomplete. First of all, just because something fascinates you doesn’t mean it will make a good business. On the other hand, you never want to sell something that you have no interest in. If your business bores you, it’s unlikely you will make it a success.
As for expertise, this is something that helps but is not essential. If you are committed to learning about something, you can find many resources to get yourself up to speed nowadays. Of course, if you happen to be an expert and passionate about something that also is in great demand, so much the better!
Characteristics of a Profitable Niche
So what are the key qualities that your niche must have? The two main ingredients are demand and monetization. In other words, a sizable number of people must want what you will be selling, and there must be a way to make money from it. While this sounds fairly straightforward, quite a few businesses fail each year because they don’t meet these criteria.
When it comes to demand, this is often phrased as “solve a problem.” A good example of this would be information products that teach people how to overcome personal, health or financial problems. Not all good products solve problems, though. Some are appealing simply because they are entertaining, taste great or look amazing.
Monetization simply means that it's possible to sell the product or service to a willing market. One common obstacle, especially on the internet, is that many things are now available for free. For example, millions of people upload funny and even informative videos to YouTube every day. This means that if you want to sell videos to people -- such as via a paid membership service -- you will have to offer something exceptional that’s not readily found online for free.
How to Do Basic Niche Research
There are a few places that are very efficient for doing niche research. Even if you’ve picked a broad category already -- such as sports, entertainment, information products, health, etc. -- you should do research to narrow it down.
- Research keywords -- Keywords are an important part of any business that’s going to be marketed online. That’s because people use words and terms to search Google, Amazon, YouTube and everywhere else online. Luckily, Google provides a tool to help you do keyword research and there are quite a few other tools online, both free and paid, that let you know how many people are searching for certain terms.
- Keep up with trends -- Tools such as Google Trends can let you know how popular a certain topic or product is right now. You can also use Amazon for this purpose by looking at bestselling books and which subjects are popular. With Amazon, it’s also very helpful to explore all of the categories and sub-categories -- not only for their books, but other products as well. Be sure to keep your eye on Amazon New Releases.
- Industry publications -- Don’t overlook specialized publications, both online and print, that cover the industry you’re interested in. This can give you an insider look at new developments. Publications, blogs and newsletters sent out to, for example, doctors, investors, lawyers, artists, jewelry sellers, real estate agents, etc. will contain more specialized information not found in the mass media.
Choosing the right niche is one of your most critical decisions as an entrepreneur. Doing the right type of research in this area can save you from many of the problems faced by new businesses. You should also think of niche research as an ongoing process, as it's essential to stay current on what's happening in your industry at every stage.
Shawn Porat is the CEO of Fortune Cookie Advertising, a non-traditional and out of home media placement company selling advertising space within fortune cookies at Chinese restaurants throughout the United States.
Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launchedStartupCollective, a free virtual mentorship program.