Small Business

What is a niche, and why do you need it if you want your small business to grow faster?

by Michaela fong

Small Business

What is a niche, and why do you need it if you want your small business to grow faster?

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Chances are, you’ve heard different advice online when it comes to niching your business. Some people say you need a niche, while others say you don’t.

Personally, I’m a big believer in having a niche for your small business. In 2015 when I first started my small business, I didn’t niche down because I was afraid I’d limit myself. But turns out, not having a niche made it hard for me to make consistent sales. On the other hand, once I niched down to selling wedding gift boxes, being more focused helped me achieve exponential growth.

That’s why I want to explain and simplify what it means to have a niche and why you need one. But more importantly, I’ll also share tips on how to choose a niche, whether you’re in the early stages of business or later on in your business journey while struggling to see the sales you’d hoped for.

Are you ready? Here we go!

What is a niche in the first place? 

The definition of niche is “the specific focus you choose for your small business and the products or services you offer.”

Instead of viewing it as a single type of product (even though it could be), I like to think of a niche as the central “theme” that defines your shop or business.

By choosing a niche, your goal is to serve a specific segment of the market, positioning yourself as the go-to expert for that product or service. This allows you to establish a stronger online presence and attract customers more easily, especially compared to those who try to sell to a broad and general audience.

Let me share some examples to illustrate what it can look like to “niche down”.

There are three different ways to niche your small business 

01 – A specific technique to creating your product 

This niche works especially well if you’re a product-based business. For instance, you can choose to focus on hand lettering, laser cutting, embroidery, or knitting just to name a few. With this niche type, you can offer a diverse range of products while still maintaining the theme that ties them all together.

For example, if you focus on a knitting niche, you can sell scarves, hats, pillowcases, and much more, all centered around knitting. 

Now, imagine you choose a hand-lettering niche instead. You can showcase your hand-lettered designs on jackets, shoes, handbags, wooden signs, wooden stationery, and still, so much more. 

Let’s move on to the next example.

02 – A product for a specific category of customers

By “category of customers”, I mean a group of people who share similar experiences, needs, or interests, and tailoring your business specifically to them. 

For example, let’s say you’re a nutritionist, but you decided to specialize in helping clients with hormone balancing for fertility. That’s a brilliant niche because you’re focusing on a specific need where you can make a real impact.

Of course, you’d have your regular 1:1 service where you provide custom plans to address their unique needs and goals, but you could also take it a step further. You can create digital products like grocery shopping sheets. Or even an entire digital membership where you share exclusive content, meal plans, and exercise routines, all along with a supportive community where members can share their experiences around hormone balancing and fertility. 

Starting to see what I mean when I say niching gives your business a “theme”?

03 – A specific cause or aesthetic style behind your product 

The goal of this niche is to align everything you do, create, and sell under the category of a certain cause or aesthetic

For example, maybe your cause is all about promoting eco-friendly practices, and you’re passionate about creating beautiful scents. So you decide to specialize in crafting eco-friendly candles. And by doing this, you not only offer products that resonate with your values, but you also attract customers who share that same passion for candles and protecting the environment. 

Similarly, if you’re a blogger or lifestyle shop owner, you might have a minimalist aesthetic that you love. So you curate and sell decor and lifestyle items that fit perfectly into the minimalist home aesthetic. This helps you create a cohesive and appealing brand that attracts like-minded customers who appreciate the same simplicity and clean design.

The ultimate magic of niching down is that it helps you differentiate yourself in the market, become a true expert in what you offer, connect deeply with your audience, and accelerate the growth of your small business. 

But why do you really need a niche? Can’t you just sell what you like?

That’s a valid question, and exactly how I felt when I decided to niche in my own business. It’s totally normal to feel hesitant about narrowing down your focus, especially when you have a variety of things you love to sell or help people with. Well, here’s the problem if you decide to go without a niche. Actually, two main problems: 

Without a niche, you’ll get DISTRACTED

Becoming an expert in something requires a lot of practice and focus. We only have 24 hours in a day, right? So without a niche, you’re constantly on the hunt for new ideas and never have time to give your full attention to one thing. It’s easy to get sidetracked and end up with a bunch of unfinished ideas for products and services you didn’t get the chance to promote, all while forgetting about the products and services you already have. Shiny-object syndrome!

Having a clear niche is crucial to avoiding these pitfalls. 

Especially as a product-based business, more variety means more inventory, more techniques, more machines, and more space — all things that require more time and money.

Without a niche, marketing gets messy 

You probably know by now that just because you have a great product or service doesn’t mean the sales will start rolling in, right? Sales come when you consistently market a product or service. 

But the more products you have, the more complicated your marketing gets because you need to understand your customers, their needs, and objections. All of that takes time to create a marketing message that will convert followers into customers. 

Not to mention all the content you need to create just to market one specific product. Without a niche, you’re bound to confuse your audience. It makes your Instagram account confusing too because people won’t know what to expect from your account.

On the other hand, choosing a niche guides you on what products to make or services to promote. It helps you understand your customers and their needs better. And it helps you position yourself as the “go-to” person in your space. 

Overall, and I mentioned this before, choosing a niche helps you stay focused. 

When we niche down in business, are we really “missing out”? 

As business owners, we often look at other successful businesses ahead of us and try to follow their path by offering a wide variety of products from the start.  At least, that’s what happened to me a lot in the early stages of starting my business. I wanted to sell baby gifts, wedding gifts, housewarming gifts, birthday gifts, Mother’s Day gifts — literally all kinds of gifts!

When I tried to sell a huge variety of products from the beginning, it not only felt like a huge disaster from an inventory standpoint, but it totally skewed my pricing as well.

What I didn’t realize was that the established businesses I looked up to didn’t start with a huge variety of products — that’s how their business evolved over time. 

That’s the great thing about having a niche: once you establish your customer base, you’ll discover new ways to serve them and offer complementary products down the road that still fit within your business “theme”. 

Choosing a niche doesn’t limit your customer base, it attracts a more targeted, and passionate customer base already looking for what you sell! 

And these are the customers more likely to resonate with your brand and buy your products because it feels like it was made just for them. 

By the way, just because you choose a specific niche doesn’t mean you can’t attract customers outside of it. It simply means you’re choosing one clear marketing message that makes it easier to film reels, write captions, and draft up product descriptions because you’re always talking to the same person.

How do you find or choose your niche? 

Finding your niche is a process. It’s okay to take your time and explore different ideas. Research, experiment, and allow yourself the space to figure out what resonates with you.

I went through the same experimentation phase when I started my wedding gift box business, and even when I started the Small Biz Babes Community. So I want to share some questions you can ask yourself that were just as helpful for me:

Step 1 – Reflect on your own personal brand 

You never want to start a business that doesn’t align with who you are because you won’t be passionate about growing it in the long run. Plus, it’s naturally easier to connect with potential customers who share similar interests and values as you. Here are a few questions you can ask yourself to start thinking about your own interests and values.

  • What are some important roles in your life? Ex. — are you a mom? Dog mom? Wife? nurse? Housekeeper? Do you have ADHD? 
  • What are your values? Ex. — do you value family, health & wellness, or eco-friendly items? Do you hold a belief system (ex. Christianity) that is meaningful to you? 
  • What are you good at/ what’s your expertise or education? Back to the nutritionist example, did you go through your own diet or weight loss journey? Was it something you went to school for? 
  • What are you passionate about and enjoy making/doing? Ex. — do you consider yourself a neat freak and excel in home organization? Do you love graphic design? Do you love making jewelry? 
  • What styles do you like and what’s your personality? Ex. — Do you love vibrant colors? How about minimalist neutrals? Also, are you playful and sarcastic or more calm and reserved? 

Some examples of niches I’ve seen work really well include digital downloads for ADHD moms, sarcastic mom apparel & drinkware, and minimalist clay earrings.

Honestly, the list can go on and the possibilities are endless. Let the prompts above guide you and it’s likely a couple of categories will spark your interest. If you feel stuck, these questions are a great place to start. 

Step 2 – Define a niche that is profitable & scaleable 

Another thing to consider when choosing a niche is choosing a profitable niche. And of course, I’ve got more questions for you to work through that should help clarify.

  • How much does it cost to make the product or deliver the service?  Every business has costs. Keep track of yours so you can price your products with profit in mind. 
  • How long will it take to make the product or deliver the service? Can you deliver it in larger quantities? Don’t just think about the price of your product, but also the time it takes to get it to your customer. Because remember, time is money! 

For example, if you charge $80 for a custom-knit sweater, but it takes you seven days to make one, from a financial standpoint, see how that time constraint could cost you in the long run? 

  • Is the product or service already in demand by your target audience? You can figure this out with a quick Etsy, Google, or Instagram search to see how well a product or service is doing out there in the market. 

Ultimately, you want to choose a niche that makes it easier to hit your financial goals, so you can earn the income you deserve. 

Don’t feel like your niche has to be “perfect” 

I get it, choosing a niche can feel scary. And that makes it tempting to feel paralyzed or avoid the decision altogether. It will take some time to experiment and find what really works, and it’s okay to be in this phase for a while. But I would challenge yourself to set a deadline so you can make a timely, and well-informed decision. And as a reminder, you can always pivot your niche down the road.

Overall, here’s what a niche is and why you need one to grow your business fast: 

Niching down speeds up your business growth because it keeps you focused on a specific target audience. It helps you become an expert, gain credibility, and creates an opportunity to expand or pivot your business later on. 

Choosing a niche isn’t just about selling what you like. It requires a strategic approach with market research, while considering what you’re good at, what you enjoy, your personal values, and potential profitability, so you can set your business up for success. 

Whether you’re choosing a niche for the first time or pivoting your niche to something new, learn more about how to niche in today’s podcast episode here 🎧.

Until next time,


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DISCLAIMER: Some of the links you'll find in my blogs are affiliate links. If you happen to love something as much as I do and decide to give it a shot through one of these links, I might earn a small commission at no additional cost to you. This helps me keep creating my podcasts and blogs that I hope you enjoy and find valuable. I promise to only recommend products and services that I've personally tried and absolutely LOVE.

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