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5 Ways to Find a Niche for Your Startup

ByBrian J. Roberts,
business.com writer
|
Aug 16, 2019
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Here's how to identify your niche and find a market need to base your business on.

The road to startup success is long, but the start is clear. To reach success, you must first find a market niche with potential value in an unsolved problem, an undiscovered need or an untapped desire.

As tech pioneer Jaron Lanier has written, true utopia is impossible, which means that there will always be flaws to profitably exploit by new innovators, entrepreneurs and startups looking to provide value.

Humans and the systems they create are messy and complicated. Each new innovation, whether incremental or radical, creates change that ripples across industries and economies in unpredictable ways, creating new problems for innovators to solve.

The industrial revolution brought the world into the modern era, but the fossil fuels used to power it now threaten the world's climate. The internet connected the world, but that connection can be exploited by terrorists and foreign governments that want to cause trouble.

Finding niches of potential value before everyone else is easier said than done, but the startup that gets to that innovation first will have an incredible edge.

Many entrepreneurs get their start when they notice an untapped niche of potential value by accident, but market niches are also waiting to be found by smart entrepreneurs following these five methods.

I got my first taste of what it was like to earn money online by keeping "an ear to the street" and tracking trends. I started a six-figure business from home that went on to be featured in Forbes because I tracked trends.

Beyond simply searching your own life for unsolved problems, needs and desires, expand your search outside your own little bubble to see what other people are talking about. The world is full of problems needing solutions, and the internet lets everyone complain about their problems and unmet needs.

Keep your ear to the ground. Pay attention to what people talk about in the media, both by using trend-tracking tools, such as Google Trends, and by simply watching for patterns in media coverage.

Remember to read more than just tech news. There's a whole world out there, and even popular books and movies might hold the seed for innovative ideas. Fiction might seem an odd place to look, but it's often where people go to vent their frustrations with the status quo.

For example, in a society obsessed with techno-dystopian fiction, perhaps what people really need is more human connection, which could be fulfilled by smart startups.

2. Focus on human needs and desires.

Unfortunately, innovation doesn't happen just where people know they want it.

Most people in the 1980s had no idea that in two decades almost everyone would be connected to an entire world of information across the internet.

Instead of solving an obvious problem, the internet developed out of emerging technologies as people noticed it could help solve the innate human need for connection and information gathering.

To find a market niche for your startup beyond the problems that people already know they have, look for new ways to meet essential human needs such as hunger and thirst, and also more esoteric needs such as connection and belonging.

Already known problems are often still problems because they're hard to solve, but by exploring the possibilities of a changing economy, you can keep a lookout for new ways to solve problems and fulfill needs. 

There is a lot of room in the world for different ways to meet human needs and desires. For example, Meetup and Facebook both fill a need for connection, but in very different ways. The pure convenience of Facebook doesn't negate the more organic human connection of the in-person gatherings that users organize on Meetup.

3. Apply innovations from one industry to another.

Following the line of technological progress is a good way to find innovation across industries, but be careful not to get caught up in played-out trends and bubbles.

Uber popularized gig work with efficiency and lower costs for consumers, and countless imitator apps popped up trying to be the "Uber of X." Unfortunately, most failed, often because they didn't provide real value in the way that Uber did with taxis and delivery services.

Not every innovation works in every market. The dot-com craze of the late 1990s met a similar fate, as did the video game bubble that popped in the early 1980s.

Applying innovative approaches from one industry to another is still a great place to look for innovation, and certainly, someone is going to try it. Look for outside-the-box solutions to find the highest potential value, such as applying new solutions from one industry to a radically different industry to see if they make sense.

But be realistic about whether you've missed the boat or not, or you risk creating another buzzword-friendly, dead-end startup.

4. Find radical innovation in bottlenecks and hard places.

Instead of just following the technological trends, look beyond what's popular now to what might be popular in the future. While this strategy contains the highest risks, it also provides the highest rewards to a select few.

Incremental innovations, such as applying the innovations of one industry to another, already have a lot of legwork behind them. They are already primed and ready to implement.

Startups working on truly radical innovations, such as the telephone or the internet, are much less likely to succeed. But when they do succeed, they radically alter the economy and often make their pioneering innovators and entrepreneurs wildly rich.

This potential in radical innovation is why some Silicon Valley entrepreneurs and investors are looking beyond the digital-tech bubble for more radical innovation opportunities.

For example, former Facebook VP Chamath Palihapitiya has turned his investment attention to long-term, hard-to-solve problems in high-value fields such as education, energy and healthcare, telling Fast Company that he looks for startups that are tackling the most difficult problems.

5. There are niche markets waiting in every industry if you think creatively.

It's very rare, if perhaps impossible, to find any industry or market where every niche has been permanently filled. In one instance of an unanticipated problem now being solved, society is so connected that simply getting away from that connection has value for many people, and new startups offer digital detox retreats for people hopelessly attached to their technology. As people increasingly grow wary of the potential for digital addiction, there is room for many startups to copy this simple model with numerous variations.

Despite the narrow purpose of digital detox retreats at first glance, there are many smaller niches even within the industry. For example, many retreats focus on heavily planned and programmed schedules. But not everyone wants to go to a retreat just to be shuffled around from activity to activity. And as for the activities themselves, while some people might like to go to digital detox retreats focused on mindful meditation, others may prefer retreats focused on intensive professional skills development.

Because society is constantly evolving, even the most impenetrable markets are never inaccessible indefinitely. There are niches of potential value out there just waiting for a new startup solution, and there are niches of potential value that yet to be discovered. Even within existing industries, there are many untapped niches just waiting for a new creative approach. For startup success, don't just copy everyone else. Instead, find a new market niche that provides people with value.

Brian J. Roberts
Brian J. Roberts
See Brian J. Roberts's Profile
My former fashion brand shipped tens of thousands of products to customers in over two dozen countries, and was featured in dozens of mainstream media like Forbes, Inc., Time and others. Since then I’ve been invited to speak at several universities on entrepreneurship and write regularly on business and youth entrepreneurship.
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