Every business needs a target market to serve. If you think you've found your niche, you may want to take a closer look at it and make sure it's worth pursuing. Without these five critical niche characteristics, your business idea could flop before it even gets off the ground.
Easily identifiable customers
Potential customers that are easy to see are a hallmark of a great business niche. Jerry Rackley, chief analyst at marketing research and advisory firm Demand Metric Research, said it should be easy to identify who would do business with you based on a set of reliable characteristics.
"If you can't put your ideal customers into an identifiable segment, your business plan is a no-go," he said. https://www.businessnewsdaily.com
Easily accessible customers
For a business niche to be a great one, your potential customers must also be accessible, and more than that, accessing them must be affordable, Rackley said. Otherwise, your great idea will be dead in the water.
"For example, I might develop an ideal solution for nomadic goat herders in Outer Mongolia, but I have no way of reaching them with information about my solution," Rackley said. "Lack of accessibility is also a business plan no-go," he said.
An underserved or neglected market
Many markets become oversaturated with small businesses or startups eager to get in on the action. But for a business niche to really stand out, it should be underserved or even neglected, said Cody McLain, CEO and founder of WireFuse Media and productivity blog Mindhack.
"In my experiences with hosting companies, there are often underserved or completely neglected markets, as well as markets that are being poorly served," said McLain, who suggests researching these markets in your industry as potential niches.
"For example, in Web hosting, you can use Google Analytics and Ad Words to find searches that are not returning results to find markets or groups whose needs are not being met," he said. "Another way to find your niche is to search consumer ratings indexes and sites to find areas with poor customer service."
A large potential market
For your business to be profitable, your market and niche must be large enough that you can make money selling your product or service.
"In addition to identifying and accessing potential customers, there has to be enough of them," Rackley said. "The potential market for any business must have the size and mass to warrant the investment to enter that market. For example, I might have a great solution for any human who has ever walked on the surface of the moon."
Rackley said that while it may be easy to identify and even gain access to moon walkers, currently there just aren't enough of them to pursue to qualify this as a great business niche. A small pool of potential customers means little or no growth potential, which is another critical characteristic of a great business niche.
Is the market you're targeting likely to grow? Capacity for development and growth means your niche is more likely to support the development and growth of your business.
"Niches normally develop as a function of understanding what defines customer value on a totally different type of dynamic level than the competition understands," said Colin Baird, lean leadership training coach with consulting group Lean Synergy International.
Once you understand what your target customer values, you can identify and access your market better than the competition. However, capacity must exist that will allow the niche to develop as demand for the customer product increases, Baird said. As your business innovates in process improvement, quality and product design and services, the niche will grow and develop as well.
Originally published on Business News Daily.