How to Analyze a Niche To Become a Successful Entrepreneur

In this article, I’ll provide you with some useful tips to Analyze a Niche and Pick the right one which is going to be profitable in the long run.

So read the full article carefully.

Quick Note: If you haven’t found yet your dream niche then refer to my article How to Get Profitable Online Business Ideas. This guide will help you to find a profitable niche that would be able to put money in your pocket.

In marketing, analytics is the main tool to get success in business.

If you are good at analysis, you can literally PRINT MONEY.

On the other hand, if you are not good at it, you are leaving a hell lot of money on the table.

Check out my recommended Tools and Resources which help you in your online business.

However, analysis is the main tool of any business and you need it in every stage of business, the importance of analysis in choosing an idea is much more important from other stages.


Disclosure: This post may contain affiliate links, which means we may receive a commission if you click a link and purchase something that we recommended. Read more about Affiliate disclosure here.


 

Analyzing the right niche for your business is like making the root stronger.

If the root is not strong, how can you aspect a fruitful tree?

So, before diving into the ideas you got by the methods that I’ve shared in the previous article “How to get Profitable Online Business Ideas?“, do MARKET RESEARCH AND ANALYSIS, if the product or service is really profitable for your business or not.

Other useful articles,

Here in this article, we’ll learn about 4 most important market research factors by which you can test your niche (Idea) if it’s fruitful for a long time or not.

Remember, Only a tree with a strong root will give us fruits. So you’ve to make the root of your business as stronger as you can.

First off…

Market Gap and Competition

business competition niche

Products, that are not available in the market but are in huge demand sell well. Let me show you an example.

My friend Ganesha when went to Udaipur, Rajasthan in India, he saw many foreigner tourists were interested in buying local jewelry items.

He got an IDEA to sell those jewelry items direct to abroad countries.

He targeted the United States as he knew, there were not much sellers in the United States selling Rajasthani Jewelleries.

Now he opened an online store as well as created the social profiles and pages related to that business.

He researched the targeted keywords and placed Google ads targeting the United States as location and 18-50 females as demographics.

Now he is one of the biggest sellers of local jewelry items in the United States, operating from India.

Now, let us see the market gap he observed.

He saw the travelers were interested in jewelry items, he researched the United States market for those jewelry items, by the method of keyword researching.

When he researched the keywords, he saw that there was a huge market gap between supply and demand. And the result is a successful business.

You can also do that by keyword researching.

There are several keyword researching tools available in the market.

I have listed 4 best keyword research tools for your convenience, 3 are free and 1 is paid. Obviously paid one has much more features.

  1. Google Keyword Planner – Its a free tool by Google which you can use under the Google ads account. It provides the competition and search density of keywords. You just have to provide your seed keyword and you get tons of other keywords with competition and search density reports. It’s a great tool by Google and absolutely free, but the limitation is it’s optimized for Paid Keywords, not for organic keywords. It’s good for those who already using Google Ads.
  2. Uber Suggest – Uber suggest is a new launch in this category. It’s created by Neil Patel the best ever digital marketer in the world. Most of the features of Uber Suggest is free to use. It gives much more keyword insights. You can also use it for competitor analysis and site audit. But it’s a new tool and continually developing. So you can’t just rely only on it.
  3. Keywords Everywhere – Basically it’s an extension for Google chrome. It helps us to find keywords when we type search queries in search engines. It’s really useful if you want to find LSI Keywords. But the features are limited to only keyword ideas.
  4. SEMRush – It’s my favorite SEO and digital marketing tool. It’s a paid tool but the features it provides are much more worthy of its price. I have been using it for 4 years and got tremendous results in my SEO goals. It provides several tools such as Site audit, competitor analysis, keyword research, social media optimization, traffic analysis and much more of it. I always recommend SEMRush as it provides several insights about your research and analysis. Register here for SEMRush 14-day trial 

So how would you use these tools to find the market gap?

Simple, just type in the niche (Idea) or related search queries in the keyword analysis tool >> select your desired location >> get the results.

If the keyword density is more then the keyword competition, means that will be the right keyword or niche to target.

In Ganesha’s case, we have to type Rajasthani Jewelleries, Traditional India Jewelleries or anything like this.

If the target keyword has competition below 20 and density more then 10000 for a specific location and demographics, then that niche will definitely give you a huge profit in the long run.

Note: Keywords everywhere doesn’t have any location setting, you have to use VPN service if you want to find the market gap by Google search and keywords everywhere.

Niche Audience Analysis

Whatever you sell, you need the right audience that is interested in your niche. If you served a beard shaver to women, then your business will fail. The fact is, women don’t use beard shavers, and you are targeting the wrong audience.

That’s why you need to do audience analysis before choosing your niche.

There are some criteria you should look for when you are analyzing your niche audience.

  • Demographics
  • Age group
  • Gender
  • Buying power
  • Language etc

Country

To sell your products successfully, you need to know which demographics people are more interested in your products. You can’t sell a shoe dryer to a hot country’s people like Africa.

Well, it’s not hard to research for right demographics. You can do it with SEMRush with just a few clicks as I did.

demographics research semrush

You can see how much searched the keyword “Shoe dryer” is getting in the United States in the image above.

You can select different countries to see the search volume. The more search volume means the country is more interested in your product.

Age group

Age group is also a very important metric in researching for a niche audience. You have to choose the age group which is most suitable for your products.

It’s very easy to research for the age group.

Look, when you are researching for a “beard shaver,” it’s common sense that it is popular among 18+ people. That is how you can decide the age group of your niche.

Gender

Gender is another important metric for audience research. It is also simple to decide which gender is suitable for your niche.

Just look for the use of the product. Such as a “beard shaver” is suitable for males, where a “nail polish is ideal for females.

Similarly, you can decide the gender for your niche.

Buying power

Buying power of the customer is very important to sell something to him. If they don’t have money, you can’t sell anything to them.

That is why I always suggest my readers target tier-1 countries because people there have the buying power to buy products.

USA, UK, France, Saudi Arabia, Canada are some of the countries which have more buying power than other countries.

Language

If your website is in English and targeting Russia, where most people don’t know English, you won’t get good sales.

So always prefer those countries who are familiar with your website’s language.

It’s better to start separate websites for different countries in their native language so that you get sales from multiple countries.

But always serve your content in thier native language.

These are some of the metrics you have to decide on when analyzing your niche audience. Now let us see the future demand, which is another important factor when analyzing a niche.

Future Demand: Sustainability

future demand for product

Do you remember CDs and DVDs? How much popular they were in the nineties? Then why they vanished from the market today?

Because of the demand…

We don’t need them in today’s world. We have now things like mobile and video streaming services, so we don’t need them at all.

Technology changed and replaced CDs with video streaming services and mobile phone.

Much handier then CDs. Right?

So, what you learned from the above lesson?

Not any product can help you sustain your business for a long time. But, there was another lesson which probably most of you didn’t notice.

Cds and Video streaming services all belong to one category – Entertainment industry. So the learning is you must modify your products and services as per future market demand.

The “Core” won’t be changed but you need to change the “Shell” and serve your products and services with a new one. So that your customers could relate to it.

So how do you measure the future demand of any niche?

Here’s one and only tool which I use each and every time when I need to.

Google Trends

Method

  1. Write your niche in the search box in Google trends.
  2. Set the desired location.
  3. Set the time period for 5 years.
  4. Draw a straight line from the start to last (as shown in the image below)
google trends analysis

The line gives you 4 insights.

  1. Slightly inclined – It’s a very good niche to start your business.
  2. Slightly declined – The niche is not in demand and people losing trust in it. Don’t use those niches.
  3. Highly Inclined – Very volatile market. Don’t pick the niche otherwise, chances are you can lose your capital in a very short time period.
  4. Highly declined – Same as insight 3.

So you are now clear which niches (Ideas) you should pick and which ones you should avoid.

Note: If any niche is not popular in one country that does not mean its also not popular in other countries. You can try the same topic for different countries and if it’s popular in any country, you can target that particular one.

ROI (Return on Investment)

return on investment

Any business needs some investments called capital. Forget those articles and YouTube videos in which scammers say “start a business without investment”.

Those are all scams. In reality, you need capital to start a business “small or big”. And the capital not just be money.

The time and effort you invest in building your business also count in the capital.

So choosing the right niche is crucial for you otherwise you not just only lose your money but the time and effort too.

The money you lose on a failed business can be recovered but how would you recover the time?

Time can not be recovered at all.

Calculating the ROI or Return on Investment is very important in any business. If the ROI is not good, you shouldn’t give your potential to that business and it’s better to choose the other niche.

Why ROI is as important? You would better understand it by the below example.

Scenario 1

Suppose you have a product below $10 and the competition for that product is high.

When you advertise for that product you see Google charges $1 per click for highly competitive keywords.

You started the advertising campaign. Now 100 visitors clicked on the ad.

the calculation is,

Click spend: $1 X 100 = $100

If the Conversion is 4% then,

Sold products: $10 X 4 = $40

ROI = $40 – $100 = -$60

You are in loss.

Scenario 2

Product price: $100

CPC (Cost Per Click): $1

Ad Spend: $1 X 100 = $100

Conversion rate %= 4%

Sold PRoducts: $100 X 4 = $400

ROI: $400 – $100 = $300

Now which product you choose for your business?

Obviously the second one. SO, ROI is very important for every business.

However I’ve shown you the importance of ROI with Google Ads, It’s not just applied in Google ads but in all types of ads, product manufacturing costs, inventory charges and other bills of your business.

Simply ROI can be calculated by,

The profit you get from your business – The Investment you made on your business 

You have to develop a step by step planning and strategy to make your products and services profitable, otherwise, you are just going to lose your time, money and effort.

Always pick a niche which can give you much more then you invest in it.

By calculating the ROI systematically, you can side by side compare your niches(Ideas) and pick the most profitable one.

Product Availability

available product

Last but not least, product availability.

Doesn’t matter f you have found the most profitable niche from the methods described in my previous article How to get Profitable Online Business Ideas?

And analyzed with the above 3 factors, if there is no product available for the niche you are not going to make money.

However, there is an approach to create a product if it doesn’t exist, I never recommend to my readers “if it’s a physical product”.

You need much more time, expertise, manpower, and capital to develop a product.

Developing products is the later approach for businesses who are already established, but as a new business, you don’t need to.

If it’s a digital product, you can think about the development as it doesn’t cost you like physical products, but digital products need manpower and time also.

So, it’s better to approach to make sure if there are products already available for your selected niche.

If products are available for your niche then you will win the half battle.

Now you just need to contact the manufacturer or any middle man to buy that product and sell online and offline.

If you want to start a business in which you provide services, then make sure you are expert in providing such kind of services.

In the end, you have to understand that products and services are the base of a business. When you have them, you sell them and make money.

Conclusion: How to Analyze a Niche to Start a Business

So, here were the 4 very important factors to analyze is your idea (niche) is profitable or not. The end goal is to pick an idea which gives you better ROI on investment.

We all start a business to make money. If the end goal, ie; making money can not be achieved by this, it’s just wasting your time and money on a failed work.

Fortunately, Smart Income Sutra is with you always sharing the knowledge of entrepreneurship. You can subscribe to our blog and Facebook page to be updated with the online business world.

We always share the latest tips tricks and technique for online business and marketing so that our readers could get help seamlessly grow their business.

If you like this article, share with other entrepreneurs.

Afterall sharing is caring…Right?

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Gautam Roy is a recording engineer and a blogger from India. He loves music, writing and travelling. He is also an active investor and a successful entrepreneur.  

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