Many people often have an idea of a business that they may be interested in starting. The next step should be to then do some initial research on that business and find out whether it is worth doing. If you have picked a good niche market or industry, it should have the following characteristics already:
- A Market that Can Pay for Your Product
- The Product You Offer is Valuable to Them
- There are opportunities for recurring revenue
- The Market is Big Enough to Support Your Product
Steps to Research Your Niche Industry
- Do some competitive research – What are your competitors doing for this niche industry. Hopefully there aren’t many in your niche industry yet but if they are there, try to find out what works for them. If no one is offerring the same product or service, try to find out what other companies who sell to the same niche are doing for their product or service. (Note: Keep note of these companies as they may be able to help resell your your product.)
- Find Out What Marketing Works Best for Them – Some niche industries are most effectively marketed to through referrals, while others can be reached most effectively through direct response in related publications, and still others might respond to more mass media like TV or radio. Once you know this, you can start researching those media for ads that have worked well for other companies. Ads that have run for long periods of times are often ones that are the most successful.
- Understand the Economics of the Industry – In an industry like dentistry, there are some interesting economics going on. Preventive dentistry is far less profitable than elective procedures like cosmetic dentistry. Therefore, most dental practices are more interested in increasing their cosmetic cases. If you know this, you can focus your product and advertising more on cosmetic dentistry and get a higher response on your marketing, provide more value for your clients, and gain more profit per unit sold.
- Is Your Product a Good Fit? – Play devil’s advocate here. If your product doesn’t exist yet, is there a reason why? Have other’s tried it and failed already? Maybe you have a great idea of how to reach potential new car buyers through the newspaper but your target market (high end car dealers) prefers for a little more high-end marketing?
Doing the Research of your Niche Industry is one of the more “abstract” steps in starting a business. There is not as much of an end goal like creating a piece of advertising or testing out your product. It’s tough to know what to look for when doing your research but the more you know about the industry that you’re targeting and the state of your potential competitors, the more successful you will be in targeting that niche market.