How to Find Your Perfect Niche

W hen writers begin writing, they ask, “Who’s my audience?”

When a new solopreneur starts a business, the question they should ask is, “Who’s my customer?”

In this article, you will meet your ideal customers and find the perfect niche for your business.

You will identify — or better yet, create — a handful of market niches that suit you.

Then you will whittle your potential niches down to one: the perfect niche for you.

When you finish this exercise, you will be able to answer:

1. Who will buy from me?

2. What do they need?

3. What will I sell?

4. Where will I sell it?

5. Will I love working in this niche?

A warning: finding your perfect niche isn’t easy. Are you ready?!

Step 1: Examine Your Past

Think about your life and the people you’ve enjoyed working with. This could be classmates, teammates, teachers, professors, roommates, colleagues, relatives, customers, members of nonprofit boards and committees, teammates, etc. In other words, it could be anyone you’ve ever worked with, on any kind of project.

On a piece of paper or on your computer, make a list of these favorite people. Give yourself plenty of time, because this step determines whether you take the shortest route toward finding your perfect niche.

Step 2: Find Patterns

Take your list of people and consider their characteristics. Here are possible characteristics:

• Job title
• Age
• Sex
• Education
• Number of years of experience
• Professional challenges
• Income level
• Marital status
• Children
• Associations and memberships
• Level of physical activity
• Hobbies
• Resistance to risk
• Values
• Beliefs
• Goals

Looks for things that your favorite people share. Try to find patterns.

Is the picture of your ideal customer coming into focus?

Now, take what you’ve done and use it to construct at least three ideal customers.

Give them names, physical features, and modes of transportation. Decide where they live and what they believe.

These people represent your potential niches, and the people could be very different from each other.

Step 3: Listen and Learn

In this step you will discover your ideal customers’ needs, and which ones aren’t being met.

To do this, find your ideal customers online. It could be in: LinkedIn groups, Facebook groups, Twitter chats and hashtags, discussion forums, websites, blogs. When you find your ideal customers, observe:

How do they communicate with each other?

What questions do they ask?

What challenges do they face?

What annoys them and makes their lives difficult?

What needs do they have in common?

What do they all desire?

What keeps them awake at night?

What secrets do they keep?

When and what do they celebrate?

What are the major ways that the group solves problems and finds answers?

How do they define a good day?

How do they define a bad one?

What other groups do they get along with?

Who’s their “enemy”? What groups do they not understand?

It will take time to answer those questions thoroughly, but the process leads you to the ultimate questions: what problem can I remove from my ideal customers’ lives? How can I save them time, money, or pain? The answers are your opportunities.

Step 4: What Are Your Capabilities

You’ve identified your ideal customers and their needs. This is a huge accomplishment, and you should be proud of yourself.

You’re not finished, but you’re getting close!

Now, consider capabilities: what skills do I possess that would meet the needs of my ideal customers?

If you already possess those skills, you’re golden. If you don’t, then ask: should I hire someone with these skills, should I take on a partner, should I contract some of the work out, or should I take the time to gain these skills myself? Each choice comes with costs.

Step 5: Passion and Purpose

You’ve found a niche — hopefully more than one! But which one is the perfect niche for you?

Passion and purpose enter the picture, and you must ask yourself:

• Would I enjoy working in this niche?

• Does it fit into my life plan?

• Does it fit into my vision of a typical day?

You might know the answers immediately. If you’re unsure, make a list of your favorite things to do when at work and at play — these are things you love, things you could talk about all day if given the opportunity; include things that you haven’t done in a long time.

Do you see anything in the list that would indicate you’d be passionate about working in the niches you’ve identified? Would you jump out of bed every morning, eager to work?

The overlap between your passion/purpose and your prospective niche is your perfect niche.

Step 6: Financial Viability

You’re nearing the end of this article, and it’s time to look at the bottom line for your prospective niches. Examine three areas:

Cost of entry. Do I have the money I need to launch my business? If not, can I raise the money?

Competition. Is there room in the niche for me? Is it crowded or wide open?

Profitability. Can I make a living serving my perfect niche? If you can’t, then it’s not the perfect niche.

Step 7: Whittling the Niches

If you’ve gotten to this point and have more than one perfect niche remaining, that’s awesome! But it’s time choose.

If all things are equal, I think the tiebreaker is simple: profitability. In which niche would you make the most money?

Step 8: Return to the Start

I began this article by saying that if you can answer these questions, you’ve found your perfect niche:

1. Who will buy from me?

2. What do they need?

3. What will I sell?

4. Where will I sell it?

5. Will I love working in this niche?

Can you answer the questions? If so, congratulations on finding your perfect niche. Don’t feel bad if you can’t answer these questions yet; go back to the step that corresponds with the question you can’t answer and work through it again.

Next week: How to Win When There’s Competition In Your Niche.

I’ve focused on the subject of niche for the past two years, and I want to acknowledge five small-business thought-leaders who have helped my understanding: Jay Ehret , Seth Godin , Becky McCray , Rob Place , and Liz Strauss.