4 Steps to Find Your Online Business Niche

By Kate Loyola | Last Updated: November 17, 2017

“Do what you love, and success will follow.”

Raise your hand if you’ve heard that before. Whether through Steve Jobs’ famous commencement speech or your well-meaning uncle’s nuggets of wisdom, society keeps telling us that groundbreaking triumphs come once we pursue our passion.

Should you listen? The short answer: No.

Here’s why: you might be your own boss now, but your success still depends on others. When it comes to building a profitable and sustainable business, you can’t put yourself first. Instead, you have to think about what your future customers want and how you can help them.

In short, you need to find a niche.

Making Nice with Niches

Let’s backtrack for a second. What’s a niche, and why do you need one?

“Niche” is shorthand for a clearly defined segment of the market. Think of success as a needle, and the market as a giant haystack. Instead of diving headfirst into a pile of hay, wouldn’t dividing that pile into more manageable chunks make your search easier? The broad “health and fitness” stack, for example, can be broken down further into sections like:

  • Weight loss
  • Food and nutrition
  • Yoga, running, or other activities
  • High blood pressure management

Each section can then be broken down into smaller and smaller subsections that correspond to ever more specific audiences. Running, for example, can yield subsections like:

  • Beginners’ guides
  • Race news and schedules
  • Running gear

The goal is to make it easier for you to find that needle on the first try. Simply put, a niche allows you to “focus fire.” By concentrating on a select audience, you narrow down the boxes that your business has to tick to make an impact.

Find Your Online Business Niche in 4 Steps

1. Brainstorm

Question 1: What do you like?

Your passions shouldn’t be the end-all, be-all of your business, but that doesn’t mean you can’t start with what you love. Your new company will take up a lot of your time and energy, so make sure it’s built on a topic, product, or service that piques your interest.

You might already be part of a potential niche for your business! Take a look at what kind of products and services you’ve happily spent your money on, and ask if you can see yourself providing similar products to other people.

Jot down all your ideas. At this stage, nothing is too small, big, or ridiculous — and if it is, you’ll weed it out in the next steps.

Question 2: What can you do?

Do you have skills from previous jobs that you can carry over to your new business? Maybe you’ve had a lot of practice time with hobbies like graphic design, computer programming, or even creating knitting patterns. How can those skills benefit your business?

Get creative! Excel proficiency and coding skills jump out as easy advantages for an online entrepreneur, but maybe you’ve got more unusual experiences or tricks that can give you an edge. Have you spent the past 5 years of doing your own makeup for community theater performances? Maybe you can start a style blog and offer tutorials to capitalize on your expertise. Look beyond the picture of a typical entrepreneur, and you’ll be surprised at how much you can offer.

2. Narrow it down.

Take all the ideas you wrote down in Step #1, and pick the 5 – 8 that you’re most excited about. Then, run quickly through the basic requirements each idea would entail, and measure that up against the resources you’ll be starting with.

Maybe you’re an avid runner, and your ideas include selling a custom hydration pack for marathoners, and offering resources for people who want to work their way up to their first marathon. You might have the skills to pull off both ideas, but one has much higher startup costs since it involves manufacturing a physical product. If your finances can’t handle that, then shelve the hydration pack for now.

3. Research, research, research.

Now, you’ve got two circles on your Venn diagram: things that interest you and things that you can do. You’ll notice that both of those pertain to you. But what about the other side of the equation?

Here’s where you whittle down your list to a single possible niche. One of the good things about starting an online business is the availability of data and information to help you make important decisions.

If you’ve ever watched Who Wants to Be a Millionaire, you know what you can do: Ask the audience.

  • How many people are interested in your potential niche?
  • What specific aspects of it do they find exciting?
  • What specific problems are they complaining about?
  • How much money do they expect to pay for products or services in this niche?

The web gives you tons of options to help you answer those questions. Some that you should try:

Use Google Keyword Planner and Google Trends.

Keyword Planner will give you a rough idea of how many people look up your niche and related topics every month. Google only gives you ranges, like 10K – 100K or 100K – 1M, but it’s enough to gauge if there’s demand for your idea. You’ll want to see at least 10K searches for your main topic (for example, “running” or “makeup”); any less than that and there might not be enough interest to fuel your business in the long term.

Speaking of long term, Google Trends gives you a glimpse at the overall “health” of your chosen niche. Trends shows you whether interest in your topic has been rising, holding steady, or falling over time. Getting a bird’s eye view of your topic’s potential can save you from investing heavily in a field that’s in decline, or in a new trend that might die out quickly. Similarly, you could spot a rising trend that your business can ride on.

Search the big marketplaces. Check sites like Amazon, eBay, Etsy (if you’re planning to go into crafts), and so on. Here are some questions you could use as a guide:

  • Are there lots of people who are already working this niche market?
  • How much are they charging for their products?
  • Are there lots of related products that you could sell as an affiliate?
  • Are there any people who could partner up or trade links with you to boost your business’ visibility?

Don’t be scared if you see lots of competition. Take it as a good sign. Competition means it’s a lucrative niche. Research will help you find where your competitors fail or fall short, so you know how to improve and set yourself apart.

Check your chosen niche’s sphere of users. Read the blogs, follow the social media accounts, and check out the communities that are popular in your chosen niche. Take your potential audience’s pulse. See what they’re excited about (their passions) or what problems they find aggravating (their pain points). Chances are, they’ll pay you to feed those passions or fix those problems.

Research won’t just show you whether or not there’s enough demand to make your business viable; it will also reveal any gaps that you can fill or opportunities that you can seize.

You can now draw the final circle on your Venn diagram: what people want. Look over you short list and see which idea best fits the intersection of all three circles. That could just be your niche.

4. Test your idea.

How do you know if you’ve found your niche? Test the last (best) idea standing: get started. If you’re apprehensive about going all-in, start small with limited pre-orders, sample products, a crowdfunding campaign, or maybe even free trials for your services. How you choose to go about this depends on you and the nature of your business — the key is to try a controlled release so you can see if your business can make it in the long run.

And if your idea is a bust? Don’t worry. Regardless of result, the experience you get from running a business is a powerful asset. People with a successful business have a 30% chance of succeeding on their next venture, but here’s what’s interesting: people who failed go into their next try with a 20% chance of success.

The Bottom Line

When you’re trying to build your first online business, you almost never know where to start. The web is a vast and overwhelming market, and you can quickly burn yourself out by trying to appeal to all audiences at once.

As it turns out, building a successful online business is not a matter of finding a ready-made slot to occupy. Rather, it’s about carving out a space for yourself by narrowing your scope, asking your audience what they’d like to see, and figuring out how you can deliver.