Evgeny Shleenkov, founder and general manager Center for Entrepreneurship Development "Shmel", co-founder construction company Eurodom, the owner of the DiMaestri coffee company, shared life hacks that will help you come up with an idea for a business and test its strength.
Where does a business start?
Let’s not idealize and talk about ideas that suddenly came in a dream: and now you woke up like this and ran to implement what you saw. It happens. But these are rather exceptions to the rule. Business starts with your personal choice. You decide to open your own business and clearly understand what you want to get in the end. Then it’s a matter of technology and knowledge. But the very first step is that very choice. What exactly do I want to do?
If we take the field of online sales, then the very first question you should ask yourself is what do I want to sell? The niche of your future business is your foundation, the basis for all subsequent actions. And if you lay a weak and shabby foundation, you will most likely be disappointed and suffer losses after a while.
I have seen many examples of successful niche selection, for example, the Taxovichkof company, which began offering nanny drivers with child seats in each car, or Airbnb, which created a site for safe rental housing, and vice versa, when people were in a hurry, they rushed into the pool, invested millions and ended up with nothing. Thus, McDonalds tried several times to launch a line of healthy food and even created a service for VIPs, however, they failed miserably: customers love the restaurant precisely because it is democratic and accessible.
A sober analysis of what you want to do in the future is the first thing that should worry you, and not a beautiful website or booklets. So, before you start realizing yourself in a new niche, evaluate how well your choice meets the following criteria:
1. You must solve people's problems with your product.
What do people pay money for? For pleasure and the opportunity to solve their pain. If you have trouble seeing, you look for glasses. If you're hot, you look for a water or ice cream stall. And so on.
Look around and think about what problems you have that are still not so easy to deal with.
In my practice there was interesting story: Once I was stuck in a traffic jam in the summer, it was +30 degrees outside, the heat was terrible. Young guys knock on my window and offer me magazines. What can I say, at that moment I would have given anything for a bottle of water and a Snickers, my body was so exhausted. And I looked around and saw the same unhappy faces in the neighboring cars.
What we did: hired guys who, in the daily traffic jam, offered drivers not magazines of dubious content, but water and snacks. The cost is minimal, we recovered the costs in the first few days of work.
What makes this event successful? The fact is that we didn’t try to sell people what we thought they needed. We offered what they need most now. And this example can be transferred to any niche. Look around, think about what worries people today, what they would like to change and improve.
Among the famous new products of last year, we can highlight an application that broke the figure of 10 million downloads in the first week alone. And why all? People are tired of standard photo processing filters in . They were given an application that allowed them to edit their photos in the style of a famous artist. As simple as possible and to the point. The creators felt the pain and created a product for it. This is the secret of any startup.
2. Your product must provide value.
Don't try to make light of the significance and importance of what you do. Assess the situation realistically.
Is your buyer willing to pay an amount for what you are offering him? If I’m offered water in a traffic jam, I’m ready to buy it for a reasonable 50–100 rubles, but if I’m offered the same product for 500 rubles, I’ll endure it until the next gas station.
The same thing with branded clothing - if you are trying to sell branded items in small town, but at the prices of a Moscow department store - don’t be surprised that your customers will refuse such an expensive purchase and go to the same aliexpress, where they can buy a copy ten times cheaper. The quality will be lower, yes, but for this audience the price is the decisive factor.
Be sure to analyze whether your customer is willing to pay for your product, no matter how good it is.
Here I can’t help but give an example at the beginning of the journey:
Attempts to create a computer for the whole family that cost several thousand dollars failed miserably and cost Jobs his job. Only years later the entrepreneur was able to return to the company and still complete his project, significantly reducing the cost of the final product.
If you want to create a consumer product, analyze how much your customer is willing to pay for it. Precisely ready, but not supposed to. Don't build sandcastles about people flying your product off store shelves. In an age of very fierce competition, your chance is one in a million.
3. Fast transaction cycle: make profit immediately
Now we are talking about small businesses and opportunities for beginners and not only entrepreneurs to start their own business here and now. Therefore, the strategy should be as short-term as possible.
If you see that your product is selling quickly, you can lower your markup to increase conversion. If you require promotion and, accordingly, financial and time costs, the price must increase. However, do not try to make money, act honestly and openly.
For example, a successful startup once did not spend money on a vehicle fleet and hiring employees. Basically, the company consisted of several people. They created an application where everyone could make money from taxi services. You register, take an order, get paid. Everything is as simple and fast as possible. Today Uber is a global giant and an example of successful company taxis in recent years. And all thanks to a successful combination - low price and convenient service.
The consumer always reacts very sharply to two things: an artificially high price (“they want to make money on me”) and too low a cost (“poor quality product”).
4. Sell emotions, not products.
Remember that people want bread and circuses. Don't try to present your product too rationally, especially if it concerns the entertainment sector. For example, Party-bus, popular in the last few years.
People were offered a replacement for big clubs, the opportunity to relax with friends in close company, but with all the club surroundings, and even take a ride around the city. In total, a comprehensive interactive for any occasion: wedding, birthday, bachelorette party. And when we think about these buses, the most vivid images arise in our heads: celebration, fun, smiles and other pleasant things.
Let's summarize. How to choose your business niche:
- Think creatively and start with yourself: what excites you, what would you like to improve in the world around you?
- Next, look around, are there many people around who are facing the same problem?
- Are they ready to pay?
Because they position themselves differently and target different target audience. In short, they work in different niches.
Examples can be found here and there: Zara and Bershka, Elle and Vogue, “Shokoladnitsa” and “Coffee House”... the choice of niche directly determines whether you will secure demand for yourself and whether you will be able to compete with other players. But how to choose your business niche in order to be successful? Let's figure it out now.
Why is this so important
To begin with, let's define the concepts. A niche is a specific, usually narrowly limited area of activity that focuses on its target audience, and also allows the entrepreneur to show his competitive advantages and do your job as well as possible. For example, an experienced jeweler decided to open his own workshop for repairing precious items. There are a million such workshops around the city - and in order to improve their position and competitiveness, a jeweler needs to choose a narrower niche. Let it be the repair of diamond jewelry.
Thus, choosing a niche for a business provides, firstly, clear positioning and specialization, and secondly, a solvent audience. Those same diamond owners have money and are much more willing to pay more, but will entrust their jewelry to those who are better versed in such work. This, in turn, will allow our supposed jeweler to keep high prices and work with more profitable clients.
“Step 1: look at what we love and what we can do”
In other words, we analyze our skills and preferences. Before choosing a niche, you need to clearly define what you can do well, what you are interested in working with and what you understand 100%. If an experienced jeweler opens his own jewelry repair shop, he will probably do it better and more convincingly than a bodybuilder who goes into jewelry stores only on March 8th.
Reply to the following questions: What am I good at? What have I always liked to do? What would I do for nothing if I didn't have to work for support? Write down all the options and try to find common ground between your interests and business.
“Step 2: see where the crowd is and what is free”
To open new business, the entrepreneur must carefully assess the overall market conditions - its capacity, demand and competitive environment: who sells what, how and for how much. Whether you want to repair jewelry or sell clothing, finding a good niche requires careful study of your competitors' offerings, positioning, and advertising messaging.
“Step 3: choose your niche for business”
It's time to decide which niche to choose! Simple types of niches in occupied segments are:
- focus on physical or legal entities(tours for individual travelers, organization of holidays for corporate clients);
- gender division into men and women ( men's watch, women's magazines);
- age ranking (clothes for children, phones for grandmothers);
- price division (cheap dumplings, elite Belgian chocolate self made).
Complex nicheing highlights 2-4 elements at once, for example, by gender, age and price. Turning to a jewelry repair shop we are already familiar with, this could be:
- workshop for repairing diamond jewelry. Choosing this niche for business means that there will not be many clients, but each order will be well paid. The main requirement is the quality of work;
- Economy workshop for repairing precious items. In this concept, each order does not bring a very large amount, but the mass client comes in a continuous stream. The main requirement is speed.
- jewelry remaking workshop. Targeting young and creative people who want original products. Cost – medium to high. The main requirements are creativity and boldness of ideas.
When addressing a complex niche, you need to clearly understand who your target audience is and how your offer differs from those already on the market.
“Step 4: check the chosen niche for viability”
Now that you have chosen a niche, you need to understand how interesting it is to the segment you are targeting, and what could be the main reason why clients will turn to you. Otherwise, you may find yourself in a situation where the services of your jewelry workshop are, in fact, only needed by pensioners who have diamonds buried in their chairs, and their next retirement is not soon yet.
You can find out the opinion of your potential audience in a number of ways: conduct surveys among your friends and social networks, use mailing lists or look at statistics on Yandex.Wordstat. In addition, you can contact specialized companies that will select a focus group and provide accurate statistical data.
The final step in our search for a business niche is to develop an advertising message that will convey your trade offer to consumers and will show the client how you differ from your competitors. His main task– to be remembered, and at the same time emphasize why you are better than everyone else.
A niche is a small but profitable market segment that arises in response to the unmet needs of a particular audience that have not yet been covered by competitors.
Profitable business niches are a topic that is relevant both for existing companies and startups at the planning stage. The former strive to differentiate themselves from competitors, the latter to find trends that will influence their choice of business.
The bad news is that niches are unstable. And you need to clearly monitor trends in your field to create a truly unique selling proposition. Pay attention to the giants. They constantly “insure themselves” by offering a wide variety of sets in assortment matrices.
The simplest example: good old Hewlett-Packard once sold equipment that simultaneously printed, scanned and sent faxes. At the same time, the company offered devices that performed all these functions separately. On the other hand, it’s also not worth “fragmenting” and scattering across many niches or creating them artificially.
The good news is that we have unprecedented control over targeting. Provided that we know the characteristics of a representative of the target niche, it is easy to find him on the Internet, attract him and guide him through all stages of his digital funnel.
Choosing a niche: 5 stages of the process for an existing business
Your managers can be as experienced and trained as you like, follow all the techniques, have scripts, but this will not help if the target audience is chosen incorrectly. As a result of this systemic error, further segmenting the audience and choosing niches within it loses all meaning.
In general, the business process of choosing a niche, so-called niching, goes through several stages.
- Analysis of the portrait of the target audience,
- Selecting several niches within the target audience,
- Marketing strategy development,
- Analysis of dynamics and cost of attraction potential clients in the chosen niche.
Choosing a niche: signs of working outside your target audience
Choosing a Niche: Determining Your Target Audience
Choosing a niche: segmenting the target audience
The main step to segmenting your target audience and choosing specific niches within it is an ABCXYZ analysis of your customer base.
It allows you to first analyze client base according to two parameters: the volume of purchases of each counterparty (ABC group) and the frequency of its purchases (XYZ group). The point of the analysis is to place the buyer in one of the categories by volume (ABC) and in one of the categories by frequency (XYZ).
ABC Group:
- A - buys in large volumes
- B - buys in average volumes
- C - buys in small volumes
XYZ Group:
- X - buys regularly
- Y - buys irregularly
- Z - bought once
First, this study will answer important questions:
- Who is your ideal buyer?
- Who pays you more often and more,
- Where should the sales department focus its efforts?
- Which clients should you avoid working with altogether?
- And do your target customers even enter your funnel?
Secondly, at the intersection of ABC and XYZ in certain areas you will see exactly your customers.
Very often, many of us come up with the idea of starting our own business. And really, what could be better than your own implementation? However, the problem for most is that they do not know how to choose a business niche. After all, it is very important that the business you will be doing is not only interesting, but also generates income. What is a niche and how to choose one?
We are looking for a niche wisely!
A niche is a place in the market that has not yet been occupied by anyone or a small number of companies. Free business niches are an opportunity to realize yourself and show your advantages over other competitors. At the same time, the scope of your interests needs to be narrowed so much that you can actually create a product or service that can compete with others and at the same time be popular with the target audience. Most novice businessmen do not take into account the peculiarities of the market, do not research it, and therefore are faced with the fact that they are investing in places where everything is already occupied and it is very difficult to compete.
Business is an investment
On the other hand, it is worth remembering that in any niche for business you will have to invest money, and considerable money at that. If you don't have starting capital, then opening your own business is almost impossible. The minimum amount you should have should be $3,000-$5,000. But money is not the main thing if you don’t know how to manage it and invest it wisely. Remember that your income level will depend on how well you invested in your business. Choosing a niche for a business should be based on several rules:
Firstly, the business you plan to do should bring you pleasure;
Secondly, the niche must be in demand and useful for society;
Thirdly, your activity must generate income, so you should choose something that is not yet in demand, but may still be useful and interesting for a potential consumer.
How to choose a niche for business?
Before you do, you should study the market thoroughly. This will allow you to timely calculate whether your undertaking will be unprofitable. To find the right business for you, you need to do a few things:
- Create a wish list, that is, outline the range of your interests and the clients they are focused on.
- Analyze the state of the market from the consumer's point of view. In this case, it is important to study various business projects in detail before choosing the right direction for your activity.
- Before choosing a niche for business, you should properly evaluate and test it, and for this high costs are completely optional.
- After making your choice, you can begin to implement the idea that you like the most.
Potentially profitable places: where to go?
When choosing the area of your future activity, start from the fact that fresh idea- this is an opportunity to create a successful business. Of course, there is a list of business niches that are popular among budding businessmen. They can be grouped as follows:
- Online stores through which you can sell various categories of goods.
- Online charity shops or consignment shops.
- Proposal of services of nannies, nurses, governesses. Today this niche is quite in demand. You can, for example, open your own agency that will help people find suitable personnel.
- Bureau of consulting services.
- Handyman services.
- Tutoring.
- Fitness trainer services.
- Various services in the field of hand made: handmade jewelry or knitted items. Isn't this a way to please yourself and at the same time earn an extra penny?
Of course, these are not all business niches that are worth paying attention to. Promising ideas There are always plenty of them, the main thing is to catch one of them and start implementing them.
Deep analysis is the key to success
However, no matter how promising your idea may seem, you should clearly understand that it is far from a fact that it will be in demand. That is why experts advise starting to build your own business by studying which business niches are not occupied. For example, the Internet sphere is just beginning to develop, representing enormous opportunities for earning money. But there is one important “but”: you need to be able to earn money and invest not only money, but also time and effort. This is the only way to wait for the result.
Another interesting and actively developing area is logistics and cargo transportation. True, women are unlikely to want to engage in such activities. But they can always find something to do for themselves. For example, those who know how to do something with their own hands: sewing, knitting, embroidering - can simply create unique things and sell them. Of course, this requires perseverance and time, but you can create good conditions for stable income.
Get an education and work from home
Many people wonder how to find a niche for a business. To do this, you must, firstly, proceed from your preferences and interests, and secondly, know the needs of the market. Of course, not every one of us can boast of a sociological education and the ability to competently assess the situation on the country’s market. But an analysis of the preferences of many people suggests that the most in-demand areas today are in the field of health (these include cosmetology clinics and offices, and fitness centers), relationships between parents and children (for example, you can open a private kindergarten or studio fine arts), business and money (from creating websites and promoting them to issuing microloans on favorable terms).
Many women, when going on maternity leave, look for a way to earn money and start baking cakes, for example. Probably in many cities there are craftsmen who are ready to pamper with delicious products for any celebration. Why not a niche for business development?
And if your hands grow from where they should be, and you know how to handle various materials and tools, try yourself in the field of creating designer toys or original jewelry. Today, when there is a trend towards returning to the past and there is a high interest in hand-made things, these niches can become quite competitive. And if you also have your own corporate identity, you can be sure: your business will go uphill!
How important is choosing a business niche at the planning stage? entrepreneurial activity, not everyone who starts a business understands. In order not to make a mistake and choose the right way- learn to build a business consciously.
Literally, a niche is a recess in the wall. Globally is a zone of convenience. In the economy there is a free place where an entrepreneur can realize his idea.
The task of a novice businessman is to choose a niche, which will allow him to find a circle of clients and sell the product (service) he produces.
Niche requirements
- Arouse interest among those who cannot find a service/product in the required volume on the market.
- Demand, market demand.
- Be free - target a specific target audience that has an unmet need for your product.
Interest, satisfaction of needs, demand - three criteria that guarantee the profitability of the business, and therefore the main goal, a niche for the business.
When a person thinks about starting his own business, he looks for ideas to implement, that is, he chooses a niche. He focuses on what surrounds him and connects his first business plans with current activities:
- trade in food and clothing;
- restaurant business, cafe;
- shoe repair or clothing tailoring services;
- pharmacy business, etc.
An enthusiast wants to cover everything at once, so that investments in the business are minimal and profits are high, but the further one dives into the economic intricacies of a certain business, the faster the activity gives way to confusion, a complete lack of understanding of what to do.
It’s easy to get your bearings and get started - follow the standard selection algorithm: narrow your search to the minimum (see this example):
- Segment (confectionery).
- Category (cakes).
- Niche (wedding cakes).
The narrowing should be maximum - identify subcategories, subniches (engage in the production of multi-tiered wedding cakes or simply make sweet figurines of the bride and groom for decoration) - the more precisely the field of activity is chosen, the more efficiently the business develops.
In which area is it better to open a business?
For a person far from business, all areas of private entrepreneurship seem profitable and in demand.
And only the business sharks themselves remember how they started from scratch, how they looked for options and ideas, how they rejoiced at their first successes and the first funds they earned. In many ways, their professional growth was successful thanks to the correct understanding of what niche to choose for business: some were determined intuitively, others were based on experience and skills, and others approached the business of life responsibly.
Determine for yourself five areas of possible activity according to the niche selection algorithm. Check the idea for viability. At this stage you will have to work hard:
Market research
The demand for one or another type of product is due to the constant need for it among a large number of the population. The consumer must want to spend money on purchasing a product, and the more money he is willing to pay for it (with a minimum investment), the higher the profit will be.
Look at the chosen service and direction from the buyer’s side - are you ready to spend money on this idea? Chat with your acquaintances, friends, relatives - make a list of their priority needs. Find out your opinion about the importance of your chosen method of earning money.
Demand and competition analysis
You can obtain statistical data on the demand for a product (service) via the Internet - enter the name in the search bar of any browser, and you will understand the approximate number of companies that are engaged in a similar business, and evaluate the possible circle of potential buyers. It is useful to get acquainted with analytical data on a certain type of business, which is published by many reputable economic and marketing publications.
Practice
Test your business idea on a test group. It can include family and friends; if you want an unbiased assessment, offer the product to a dozen random passers-by or inquire about possible cooperation with companies that, in your opinion, may become clients.
Don’t be discouraged if, after thoroughly developing your business idea, you have to look for other unoccupied small business segments. An in-depth analysis of your own will help with this. creative potential- sometimes profitable ideas appear where you wouldn't expect to see them.
How to determine which business niches are not occupied
By periodically studying statistics, it is possible to identify open niches in business in Russia and gain ideas for highly profitable business. Today, the following are considered promising small business vectors for Russians:
- Scope of services: accounting, legal, repair.
- to order.
- Online courses, tutoring ( English language, vocals, dancing, preparation for the Unified State Exam).
- Online stores of gifts and souvenirs in hand made style.
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