by MeMeME

Created on: March 19, 2009

Finding a niche, or specialization, is key to having a successful online business. With a niche, you can weed out your competition and set your business apart. For example, there could be hundreds of people selling baby blankets online, but the person who sells customizable baby blankets made from 100% organic cashmere will stand out above the crowd. Likewise, there are many logo making services available, but if your logo service catered only to those in the fitness industry, you would have a specific target audience.

There are a few things to keep in mind when choosing a niche for your online business including the demand for your product or service, your target audience, and your competition. Having a niche to separate your business from your competition is useful, but picking a niche that's too specific can severely limit the demand for your products and services. Let's say you wanted to go into business selling art prints. Knowing there are many online retailers of art prints, you decide to pick the niche of selling only folk art- that is a good niche to differentiate your business. However, choosing to sell only folk art from Saskatchewan is going to appeal to a very limited audience.

Considering the affects of choosing a specific niche goes along with assessing the demand for what you'll be selling. Just as you don't want to choose a niche that is too specialized, you don't want to choose to sell a product or service that very few people will be interested in. You may think it's a good idea to exclusively sell rhinestone-embellished coat hangers, but how many people are willing to buy them? Could you feasibly make money by starting a pet sitting service just for ferrets? It's a good idea to think outside of the box in terms of figuring out just what your business will sell, but you also need to be realistic- if you can't make money from your business idea, the chances of your business failing will be much greater.

As mentioned before, finding a niche can decrease your competition, but there are few truly unique ideas in the world; just about everything has been done before. Once you choose your niche, take a look at your competition- how well are they doing in terms of financial success? What can you do differently to make your business more successful? Are there any areas where the competition is lacking, such as customer service, packaging, or product pricing? Learning from the mistakes of others can help prevent you from going through the same thing. Plus, you don't want to launch your business, only to find out there is someone else who has been doing the exact same thing, only they've been doing it longer and have an established clientele. For example, let's assume you want to start an online dating site just for military singles, but there's already a well-established dating site for that. Your options would be to further specialize your niche (perhaps you could cater only to Marines or those in the Air Force), or you can zone in on something the competition is not doing well and emphasize that difference. Maybe they don't offer a chat room for their members but you can, or maybe they charge for their services, but you will offer free memberships and make your money through advertising.

Finding a niche is important when starting any online business, no matter what the industry, and whether you plan to sell a product or service. You will definitely get a leg up on the competition by starting out with a unique specialization.

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