Early stage startups often face a challenge: how to stand out in a competitive environment and capture as much of the market as possible. The natural inclination could be to cast a wide net, perhaps by diversifying your product offerings, in the hopes of pulling your customers in.
The trouble with trying to attract consumers this way is there’s a danger that startups actually could be getting lost in the crowd. The solution? Find. Your. Niche.
It may seem that by niching down, you’re cutting yourself off from potential customers. The thing is, though, that having too many irons in the fire will actually work against you as a startup. If you don’t focus on your target market only, you will be watering down your message and, chances are, you won’t see the return on investment you really want.
So how can a startup go about picking a niche? Here are some things to keep in mind.
1. Look beyond trends
As lucrative as it may seem to be on trend, if something is extremely popular, there’s a good chance that it has already peaked. You don’t want to risk trying to get into a market whose time has passed. You may be able to make a profit in the short term, but if you can’t sustain it long term, your return on investment will be disappointing.
2. Know your market
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Having a clear focus on who your ideal client is and marketing directly to them is an important part of finding your niche. It is a huge waste of time promoting a product to a market that simply doesn’t need it. If you go where you’re needed, you will find that your reach will grow organically.
Your marketing methods will also change to meet what your market demands. For instance, a tech startup may market its product as a means for customers to save money; however, if clients were shown how it could help them make money, say, by improving efficiency, that subtle shift could increase interest in the product. As long as you have a viable product, clients will often get more excited about making money than saving money.
Of course, this approach means that you may have a slow build in the beginning, but once you’ve found your niche, growth will follow naturally.
3. Use intellect, not emotion
If you find yourself unable to choose between a niche that appeals to you and one that has proven to be lucrative, it’s better to follow your head instead of your heart. In the long run, following the more profitable course will work to your advantage. As an entrepreneur, you are accountable to both your investors and your employees. Therefore, it would make good business sense to apply yourself to focusing on the niche that is more likely to produce a good return on investment.
If you look beyond what’s trendy, center your efforts in the field in which you fill a need, and base your decisions on intellect and not emotion, then you will be on your way to moving from a startup to a successful enterprise.