You walk into a restaurant, and the menu is eight pages long. It features Mexican, Italian, French, and American soul food. But you wouldn’t trust that place for authentic Mexican chilaquiles. Why? Because Mexican isn’t their niche. A restaurant chooses a clear niche will impress with specialty dishes much more than the all-around amateur. While we’re talking about the resto-biz here, the same rings true for any other type of service — especially online services. In this article, we’ll discuss how to pick a profitable niche for your online business.
Maybe you’ve experienced it yourself. Perhaps your service page covers graphic design, social media management, screenwriting, and video production for anyone and everyone. Pretty quickly, you’ll feel drained with all the hats you’re trying to wear — and your customers might notice too.
The more general a product or service selection you offer, the less opportunity you have to make your products stand out. Keep reading to learn how to pick a profitable niche for your online business and why it’s important.
What is a niche?
A niche addresses a specific audience, problem, or need within a market. Online businesses with a clear niche demonstrate mastery in a field. Meaning? You know exactly how to solve your customers’ problems and offer a better experience than the more general, big-name competitors in your field. Let’s take a look at a few examples for reference:
- Canva’s niche is graphic design templates for the DIY content creator.
- Mailchimp’s niche is email marketing automation.
- Creative Clan’s niche is business advisory services for creatives and non-profits, including accounting and marketing.
Why niche selection is essential for your online business
We get it; your customers have tall orders. In addition, as an entrepreneur, you probably want to help everyone with everything. We understand the urge to encompass a little bit of everything in your business. Unfortunately, that’s not a solid, long-term business strategy. Selecting a niche helps you develop a name for yourself in your area of the market. People know to come to you when they need help for a specific problem — not your competitor.
Sub-niching is an even more bulletproof strategy. For example, Creative Clan’s business operation services could technically suit any business — but we specialize in serving creatives and non-profits. The question becomes, why niche down? Keep reading to find out.
Benefits of Niching Down
- Consistent audience: One of the biggest business mistakes you can make is to act without your audience in mind. Don’t worry; some of our clients have this problem, too. It’s easy to have hungry eyes when securing new clients, but a niche helps you streamline that vision into a specific, consistent audience that you can help the most. By becoming an expert in your niche, you’re likely to get more business in the future because your objective is clear.
- Become an expert in one field: Thought leadership, anyone? You’ll stand out as an expert if you know exactly what you’re talking about. Sometimes, it’s as simple as niching down. You’ll become more reputable if you speak to what you know about in your area of industry — not the entire industry. A niche shows your audience they can trust your opinion and judgment within a specific area of business.
- Stave off the competition of other generalists: Generalists have a potential appeal to larger customer bases. The keyword here is potential. What if your customers just want you to solve one specific problem? Niching down makes you more approachable and garners more customer trust.
- Reduce marketing spend: Choosing a niche will cut your potential audience in half — but that’s good! You’ll spend your marketing budget on only the most qualified leads.
How do I choose an online business niche?
Don’t know where to start? Here are some simple steps on how to pick a profitable niche for your online business.
Finding the right balance between passion and profitability
The Harvard Business Review reminds professionals that their relationships with their employers are ultimately economic. The same goes for business owners, but they have clients instead of employers.
While your passion will shine in every business meeting and deliverable, it won’t mean much if you don’t have the customers or sales to back your business. Of course, you need to balance that profit with a genuine interest in your service.
That’s why it’s important to find a niche that you’re excited about that also has profit potential. Of course, this looks different for every entrepreneur. It ultimately boils down to what you’re good at and where you can apply those skills in a market.
Similarly, you’re more prepared to follow a passion with risks if you have a safety net to cover your potential losses. For the seasoned, experienced entrepreneur, that might be feasible. But for the brand new college grad launching a startup? Not so much.
Another way to balance passion with profit?
Research competition and market size
Let’s say you’re looking to resell AliExpress-style crochet tops on Etsy. The bohemian eCommerce fashion niche is definitely specific, but it’s also oversaturated. You’ll need to bring more to the table and think about how your product truly stands out from all the other Etsy sellers.
Step one? Research your market and competition. Start with industry reports and stats from government resources, then Statista, Gartner, and Pew. Then, study your competitors to the ‘t. Look at their products and services, price points, marketing messages, and customer engagement. Once you understand all that, diversifying yourself from the competition should become crystal clear.
Consider your target audience and their pain points
The more you know about your audience, the better you can serve them. Start with your competitors. You already conducted a competitive analysis on their products and price points — now expand that to their customers. What is your customer’s primary issue? How can you solve it? You can gather valuable data here to inform your niche strategy and find inspiration on gaps to fill.
Next up, look to your existing audience of customers. Ask them if they’re satisfied, and if not, why not? You can find out through customer surveys, interviews, and data analysis on customer service interactions with your brand.
Identify trends and growth opportunities
Competitive analysis and audience research aren’t a set-it-and-forget-it tasks. Even after you pick a niche and develop your brand, your industry and niche continue to evolve. Your customer demands expand, contract and change, and so should your offerings. Keep up the research with regular check-ins with your audience. Our advice? Create an avenue for consistent customer feedback.
You can also keep tabs on industry trends by following big names in your field, listening to podcasts, and reviewing data from relevant statistics and reports. By keeping a pulse on what’s happening in your industry, you can enhance your offerings and brand faster.
Develop a business plan
No business (online or otherwise) is complete without a business plan. Once you have decided on a niche, consider how you’ll become a leader in that niche. How much money do you need to create a service your customers will love? How long will it take to acquire repeat customers? Your business plan is your roadmap to success even through turbulent changes in your industry.
Psssst. We can help you create a business plan. Just reach out!
What are the top 5 markets for niches?
Canada has about 1.21 million small-to-medium enterprises — but chances are, the most profitable are in niches within one of these five markets:
Pets
Canadians are getting more and more pets each year, especially after the pandemic. Of course, the pet store and food subindustries have kept up with that momentum. But so have online pet businesses. Think about all the pet-sitting people needed as pet owners finalize their travel plans. Or dog walking demands as busy professionals return to their office space.
Popular online pet businesses:
- Canada Pet Connection (online pet supply marketplace)
- Rover (pet boarding and walking app)
Personal Development
Mental health is a growing concern for Canadians and the world in general. The personal development market is expected to jump by over 5.5% in value from now until 2030. But personal development is a wide niche encompassing anything from mental health and fitness to meditation, education, self-esteem, and behaviour therapy.
Popular online personal development businesses:
- Headspace (app for meditation and breathing exercises)
- BetterHelp (platform connecting patients to therapists)
Dating and Relationships
Dating and tech have merged into a profitable enterprise through endless platforms for love, like Tinder, Bumble, and Hinge. But love is complex, and your audience could have tons of related problems that need solving. Existing couples might need support communicating — hello, couple’s therapy apps! Or, people with unique backgrounds or personality types could desire a more specific dating platform. Then, there are platonic relationships too. One super-niche platform is Peanut, an app that connects pregnant women to one another for new friendships!
Popular online relationship businesses:
Travel
Remote work has spurred tons of travel activity across Canada and beyond. Whether we’re travelling 30 minutes away from home or across the world, we want new ways to stay connected and save money. We’ve seen tons of travel bloggers make it big with a solid SEO strategy while innovative techies launch helpful new tools to support your next adventure.
Popular online travel businesses:
Personal Finance and Investing
Open banking is coming to Canada, which means more of a demand for third-party financial providers to ease people’s personal finances. The beauty of this niche? An endless supply of sub-niches to keep audiences happy. From budgeting and stocks to business accounting and retirement planning, the personal finance software market is expected to increase by nearly $700 million by 2030!
Popular online personal finance businesses:
- WealthSimple (taxes, stock and crypto investing app)
- AdvisorSavvy (online platform connecting people to financial advisors)
How to make your business niche work for you
So you picked a solid business niche. And? Your work isn’t done. Here’s what you need to do to make your business flourish in any niche:
Building a solid brand
Branding helps your audience recognize you amongst a sea of competitors. Still, this recognition is vital no matter how saturated your market is. You’ll need an eye-catching logo, strong web presence, and solid messaging to infuse your company values and selling points into clear, visual message for your audience. Next step? Monitor and repeat! Building and maintaining a brand is an ongoing labour of love.
Creating unique value proposition
Do you know what sets you apart from your competitors? That je-ne-sais-quoi that made you go into business in the first place. Remind yourself of that, and you have your unique value proposition (UVP). This tells your audience exactly what you can do for them that your competitors can’t.
Building relationships
Audience relationships are number one. Another vital relationship skill for today’s online business is within their industry. No, this doesn’t always mean you have to buddy up to competitors. But still, your niche is part of a larger market. Why not connect with other businesses at network events or conferences to gain inspo and ideas? You might even send them a few referrals for inquiring customers that need a slightly different service than the ones you offer, and they’ll return the favour! Entrepreneur Patrick Bet-David reminds his followers that successful business owners make money with others, too. There is such a thing as healthy competition — we can all win together!
Continuously researching and adapting to the market
Remember, your work isn’t done after a few months of consistent sales and new customers. You’ll need to keep your business as current as possible to survive amongst your competitors. This includes keeping up to date on industry trends, competitor moves, and customer demands.
Streamline your business in any niche with Creative Clan!
Now that you know how to pick a profitable niche for your online business, what comes next? Launching a new business or adjusting an existing one demands a lot of time and attention.
But why take on all the heavy lifting? You have support if you need it.
Creative Clan takes pride in helping new ventures get off the ground with informed operations, financial, and digital marketing services. Ready to soar your new business? Contact us today!
