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How to find a business niche

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SmallBusiness.com How-tos are step-by-step instructions for specific small business tasks. They are created and edited by readers like you. You can help edit this How-to or you can create your own. Find more How-tos at the SmallBusiness.com How-to Hub.

A massive marketplace -- say, all consumers in the country or even in a large city -- is too broad in scope for any but the largest companies to tackle with success. The best strategy for a smaller business is to find demand in smaller, more focused niche markets. Small operations can then offer specialized goods and services attractive to a specific group of potential buyers.

Steps to take

  • Study the market carefully taking note of the areas in which your competitors are already firmly situated.
  • Try to find the right configuration of products, services, quality, and price in your niche that will ensure the least direct competition.
  • Be realistic about your stengths vs. the strengths of your competition. In your enthusiasm to start your business, don't let your optimism convince you to over estimate your advantages, or underestimate those of your competitors.
  • Talk to the people you believe will be you customers. More importantly, listen to them. Tell them you have an idea or concept, but do not tell them you have already committed to it or they may not want to disappoint you by sharing their true feelings. And do not try to convince them to accept your idea -- you are not selling at this point. You are learning what the market wants.
  • Make sure your niche matches your capabilities. You may have a good idea for one part of town that wouldn't work in another.


Be flexible when searching for a market niche. If you have your mind made up before doing your research, you may overlook the key information you need to improve your chances for ultimate success.

See also

External links

Sb cc 50x20.jpg Creative Commons attribution: This entry includes content from the following Business.gov source: SBA.gov - Writing a Business Plan