Niching Down to Grow Your Business: How to Find a Profitable Niche

What’s the #1 thing you can do to charge more, build authority, and get better customers for your business?

It’s not running Facebook ads. It’s not adding more products. It’s not appealing to a wider audience.

It’s finding a profitable niche.

Having a profitable niche means you know exactly who your audience is, what problem they have, and how you solve that problem.

You can go from:

Before: I'm a vacation planner; After: I plan once-in-a-lifetime two-week trips to Peru for working couples. Before: I'm a CPA; After: I provide complete financial audits for biotech companies; Before: I'm a master gardener; After: I teach suburban families how to grow delicious food in their backyards.

You might have these nagging doubts about niching down, such as:

  • Won’t the market be too small?
  • Will I be locked into one business model forever?
  • What if I pick the wrong niche?

We’ll address those in this post, but know that if you follow our exact steps to find your niche:

  • You’ll have more customers than before.
  • Your product will be just specific enough to excite your audience.
  • You won’t get boxed into just one business model.

So how do you find the right niche?

In this post, we’ll give you the exact process for niching down that we’ve used with hundreds of coaching clients:

This won’t take you months of research. It will take a few hours of your spare time. But the results can transform your business.

Before we dig into the tactical details, we’ll look at an example of what niching down did for Neha Premjee, who now earns $5,000 per month in coaching fees because she niched down correctly. After her story, we’ll address three misconceptions about niching down then walk through our four-step process.

How Neha Premjee Went from “Health and Wellness” to “Ayurvedic Weight Loss” — And Started Hitting $8,000 per Month in Fees

A photo of Neha Premjee

Before starting her business, Neha went through a transformative journey of her own to lose 70 pounds. She wanted to share her process with others, so she became a “health and wellness coach.”

There was just one problem.

There are thousands of other “health and wellness” coaches out there. She had great advice but no way to reach the right people.

She tried rebranding as a “weight loss coach.” It didn’t help much. So, Neha thought through the exact methods she used to lose weight and gain confidence. She examined exactly who she was best equipped to teach. And then she tested her ideas.

Now she’s an Ayurvedic weight loss coach for women.

Can you see the difference?

You might think she doesn’t find many clients that way. It’s a fear Neha had herself. But what actually happened was that Neha:

  • Attracts more clients.
  • Books $5,000/month in coaching calls.
  • Works with only her ideal clients.
  • Doesn’t need to work with clients who object to Ayurveda.
  • Has more energy to put back into her business.
  • Finds it easy to build partnerships with brands in her space.

That’s the power of choosing the right niche.

Neha is one of our business coaching program clients. In the program, our coaches will give you step-by-step instructions so you can focus on doing the most impactful thing for your business. Interested? Book a free 1:1 strategy call with us today.

3 Common Misconceptions About Finding a Profitable Niche

Some of our clients come into Growth University with pre-formed opinions about niching down. These are the three most common misconceptions we hear:

  1. Niching down boxes you into one business model forever.
  2. Niching down means you have fewer customers to attract.
  3. Niching down means choosing a really narrow target audience.

None of those are true. And believing them will keep you from finding your niche.

Misconception #1: Niching Down = Boxed In

We get it.

You didn’t become an entrepreneur to get locked into something you don’t enjoy.

No one’s asking you to.

Pick a niche you enjoy. Hit it hard. Become the best at what you do.

When you do that, something funny happens. You start getting customers who want to know, “Can you help me, too?”

In other words, fine-tuning your messaging for one niche can naturally attract new customers from another niche. Why? Because you paint such a clear picture of your audience that those new customers can see themselves in your existing customers.

Here are some examples:

What you offer, Audience you serve, "Me, too!" Audience

You could generalize it this way:

  • Everyone can see that you know how to do ‘X’ really well.
  • You teach ‘X’ to ‘Y’ people.
  • ‘Z’ people raise their hands and say, “Hey, if you can teach ‘X’ to ‘Y’, can you teach me, too?”

The specificity of your offer will attract people you didn’t intend. And it gives you a way to expand your niche without any extra research needed.

But even if you never get the “Me, too?” additions to your audience, remember the increase in your close rate with your niche will more than make up for any reduction in market size.

Plus, there are plenty of ways to grow your business further after you niche down.

  • You can make a new product for another pain point your audience has.
  • You can offer different types of solutions for their pain point (e.g. book, course, high-end coaching, paid membership community…).

Your niche won’t limit your success.

Misconception #2: Niching Down = Fewer Customers

When you niche down, the market size you appeal to gets smaller.

So what?

Even massive, billion-dollar companies aren’t capturing 100% of the customers in their market. You’re competing for a fraction of all those customers.

So what if, instead of being on the same playing field as your current competitors, you could position yourself as the far-and-away best solution for that fraction?

If you do that, your ability to close those customers (aka your “conversion rate”) goes way up, and this is how you can massively grow your business by niching down:

"Weight loss coach" has a tiny close rate while the more niche "Ayurvedic Weight Loss Coach" has a much bigger close rate.

In other words, you aren’t losing any customers by niching down. The higher close rate you are bound to get can dramatically increase your total customers (blue bars above).

And it gets better. The customers you have when you niche down? They like you a whole lot better than before. And that means you’re more likely to get strong testimonials and useful feedback from your target audience.

Those testimonials help you make more sales. And the feedback? Just what you need to keep improving your product.

Look at how one of Neha’s clients talks about her in a testimonial. The specific messaging she saw (Ayurvedic method, individualized plans) is what drew her in.

Testimonials from Neha’s clients prove that her niche Ayurvedic method was a well-welcomed niche.

If Neha had still been a “weight loss” coach when Pari found her, do you think she would have become her student?

Not likely.

Misconception #3: Niching Down = Choosing a Really Narrow Target Audience

Choosing a target audience isn’t the same as finding a profitable niche. A true niche is based on three things:

  1. Who your audience is.
  2. What problem they have.
  3. How you solve that problem.

Sometimes, a client we’re coaching will come to us and say, “Oh, I already know my niche. It’s 30- to 40-year-old moms who live in Michigan.”

This isn’t a real niche. This is just an arbitrary limit on their target audience.

If you target middle-aged moms, it needs to be because your solution is only relevant for their specific pain points.

For example, if you sell relaxing, floral-scented bath soaps, you wouldn’t target just moms. But some people do this just to feel like they have a niche. In reality, slapping a headline like “Floral-scented bath soaps for busy moms!” on your website is a poor marketing strategy. You’re just guessing who might like your product. In fact, you might struggle to sell to mothers (how many of them have the time to take a long, soothing bath?!).

You’d need to find a demographic that:

  1. Has the desire to relax.
  2. Has the time to do it via a calming bath.

If you do find that, then that’s your niche audience.

On the other hand, if you’re selling a system for managing work and motherhood, you would only target working moms who struggle to balance it all.

Niching down isn’t about demographics. It’s about what real people need and how you help them meet that need.

4 Steps to Find a Profitable Niche

So now you’re sold on the benefits of niching down? Good.

Let’s dig into the four steps to finding your niche:

1) segment your audience; 2) dig into the problem they want solved; 3) decide how you do and don't solve that problem; 4) test your niche

Step 1: Segment Your Audience

This step is going to look different based on whether you have an existing audience or not.

  • If you don’t have an audience and you’re picking your niche for the first time, start here.
  • If you do have an audience and you’re clarifying your niche, start here.

If You’re Selecting a Niche for the First Time

Finding a profitable niche is harder for someone who doesn’t have an existing business.

Before you can even think about your target market, you have to first examine yourself. This self-examination has three steps:

1. Write down your interests, passions, and skills. Stuff like:

  • Gardening.
  • Planning vacations.
  • Auditing budgets.
  • Organizing information in user-friendly ways.

2. Jot down problems you’ve solved for yourself or someone else. Here are some examples to kick off your brainstorm:

  • Set up a budget system you actually stuck to (even though you love spending).
  • Got quality sleep even with a newborn in the house.
  • Created recurring reminders for all your home maintenance chores.
  • Helped your kids research and get into amazing schools.
  • Organized volunteers at a local animal shelter.
  • Streamlined your team’s morning standups.

3. Ask yourself these questions:

  • Who might pay me to teach them how I do [item you’ve listed]?
  • Who might pay me to do [item you’ve listed]?

For example, if you’re an amazing vacation planner, maybe stay-at-home parents would pay a modest fee to learn your methods. Or maybe you should market your planning services to high-powered executives who aren’t happy with run-of-the-mill concierge services.

But that’s assuming they’ll pay you … and you don’t know that at this stage.

Your answers from this exercise will form a hypothesis you can test as you progress through the rest of this guide.

If You’re Zeroing in on a More Specific Niche

If you already have an existing audience, finding a profitable niche is much easier. You’ve already done half the work. (And if you have existing customers, that’s even better.)

To zoom in on who is buying from you and why, send your past customers a survey. If you’re worried they won’t respond, offer an entry into a giveaway for three $20 Amazon gift cards to all survey respondents. Put a week-long time limit on it and see who responds.

Put these questions into a Google form to collect answers:

  • Your name (optional).
  • Your email (optional, but required if you want to be eligible for our Amazon card giveaway).
  • What product(s) did you buy from us? (Create boxes they can check vs. typing the answer.)
  • Did it/they work?
  • What problems did our product solve for you?
  • How would you describe what you bought to someone else that also needed help like you?
  • How would they describe our company?
  • Anything else you want us to know?

Once you’ve gotten responses, see who is buying from you and why. Create audience sub-categories based on the answers.

For example, if you sell piano lessons, you might end up with these categories:

  • Retirees who wanted to learn but never had time before.
  • Children whose parents bring them (whether or not they want to learn).
  • Dementia patients whose caregivers read that piano lessons would slow their mental decline.

Save these for step two, where we’ll dive deeper into the problems you solve for your audience.

What if you haven’t actually sold anything, but you do have an audience?

You can still poll your audience. But instead of asking people what they bought, ask them things like:

  • Why did you follow me/subscribe to my list?
  • What have you learned from me?
  • What did you want to learn from me?
  • How would you describe my content to someone else who you think would enjoy it?

Ask for details, and don’t be afraid to follow up with more questions based on their answers.

When you’re done, you should have two to three types of people who might be your target audience.

Step 2: Dig into Their Problem

From step one, you should have:

  1. Some options for who your audience is.
  2. A general idea of the problem you solve for them.

In step two, it’s time to dig deeper into their problem.

You’ve heard stuff like “know their pain points” and “speak their language” before. But what does that actually mean?

This:

What people say, what people mean, example

This brings us to a really important reality:

The way YOU describe the problem/solution is not always how YOUR AUDIENCE describes it.

Let’s do an example.

One of our clients helps people in the IT industry become project managers. One of those people’s big pain points is that they don’t know what to do about certifications.

They don’t know which ones they need. They don’t know how to study for them. And they fear that they can’t become a project manager without most of them.

But our student knows something they don’t: Most of those certifications are worthless. They don’t need them. In fact, most people don’t need any.

Initially, he didn’t address certifications in his messaging.

But that’s not the headspace his audience is in. They are absolutely convinced that certifications are keeping them from becoming a project manager.

So in his course description, he tells them he’ll cover which certifications to get and how to get them. It’s true. He does do that. It’s just not as important as they think.

Missing the problem - Audience states: "We need certifications" and you respond "No, you don't."

Addressing the problem - Audience says "We need certifications" and you respond "I'll show you which ones and how to get them."

So what’s the key to understanding how your audience sees their problem?

We’re going to do two things:

A) Find their “If I just had ______, life would be better” statements.

B) Research demand for a solution to the problem.

A) Find their “If I just had ______, life would be better” statements.

See if these statements sound familiar:

  • If I could just lose 10 pounds, I would wear the clothes I want.
  • If I could just get paying customers, I would quit my boring day job and live the life of freedom I always dreamed of.
  • If I could just get to sleep on time, I’d feel so much better.

Keep in mind that people don’t write down concise descriptions of what’s wrong and why. It’s often a rambly post with lots of extra information.

Like this one:

"I lost all motivation!" A facebook post from someone trying to lose weight with a lack of motivation.

She talks about how frustrated she is with herself and her weight. If only she were motivated…

Let’s rewrite what she said into an “if only” statement:

“If only I were motivated/had accountability, I wouldn’t hate the way I look and feel.”

So where do you look to find these statements?

Facebook groups and online forums are the best places to start. In general, you need to:

  1. Identify two to three Facebook groups and forums that have the same audience you’re testing.
  2. Search for threads where someone asks about the issue you would solve for them.
  3. If you can’t find anything, just ask.

Here’s what it looks like if you search for Facebook groups on sustainable weight loss:

Facebook groups can be extremely useful in finding your niche

Next, click into the group and start digging. We found the motivation example above in the “Weight Loss Groups for Women.”

To get the best statements and information, you will have to join private groups. These groups have admins who care about what gets posted. And that means you must never, ever break the cardinal rule:

Never try to sell something to someone else’s Facebook group.

Got it? Good.

If you’re looking at forums, then the threads people start can be golden. For example, this woman clearly stated what she wants and how she wants it:

A post from someone looking to lose fat

She wants to lose fat (not weight), and she needs to do it at home.

Let’s move on to part two.

B) Research Demand for a Solution to the Problem

No matter how much you like a niche, your business will fail if you don’t have customers.

You need hard evidence that people are willing to buy your solution.

This stage of research does not provide that hard evidence (we’ll get to that in step 4 and beyond). But it does keep you from wasting your time building a product that nobody cares about.

There is a ton of advice out there on how to gauge interest in your niche. “Research affiliate marketing categories on Clickbank.com!” “Look at best sellers on ecommerce platforms like Amazon or eBay!” “Swim through Google Trends data for hours!”

Rather than waste your time with 12 tactics, here are three anyone can do:

  1. Browse Google Analytics data (if you have a website).
  2. Do some keyword research.
  3. Look at Quora questions.

Google Analytics (GA) can show you what your site visitors are most interested in. If you’ve been blogging, you’ll follow the steps below to look at traffic to your pages. If you’ve been running ads, look at your most successful Google adwords keywords.

For traffic, go to your GA page → Behavior → Site Content → Landing Pages. It will show you which posts have gotten the most traffic. Change the date range to look at different time periods.

Google Analytics: GA page > Behavior > Site Content > Landing Pages data

Use SEO tools to explore keyword searches and their search volume. Ahrefs is only $7 for a 7-day trial. If you don’t want to pay for a keyword planner, use Google’s search engine for search term suggestions or use Google Keyword Planner (intended to help with ad topics).

If you use Ahrefs, head over to the Keywords Explorer and type in the problem or problem + solution. For example, “ayurvedic weight loss” gets 90 searches per month.

You can see questions that people ask about Ayurvedic weight loss lower on the page.

Ahrefs: ayurvedic weight loss

Search Quora to see what questions are most frequently asked in your target niche.

Type your niche topic into the Google search bar and include site:quora.com at the end.

Google search: ayurvedic weight loss site quora.com

When you’re done researching, you’ll have:

  • A list of questions people ask about your topic.
  • The reasons they want a solution.
  • The parts of the problem they struggle with the most.

And that means you can finally decide how you will solve that problem for them.

Step 3: Decide How You Do and Don’t Solve That Problem

The solution you provide needs to be the best solution for your specific audience.

To get there, you have to know two things:

  • What you do.
  • What you don’t do.

Let’s use Neha’s business as an example.

Do: Allow desserts and other favorite foods; Do not: restrict calories. Do: Offer sustainable food plans; Do not: Offer weight loss supplements and herbs. Do: Incorporate healthy exercise; Do not: Eliminate macro-nutrient groups.

Some people will want to try losing weight with pills. Neha’s coaching is not for them. She knows that her best-fit clients are women looking for a permanent solution to their weight issues. Her clients don’t want to starve and they don’t want to give up their favorite foods, but they are willing to change their diet if it means achieving their goals.

Make your own “Do” and “Do Not” table.

Fill it with what you would offer and what you would not offer to customers to solve their problem. Use the research in steps one and two to inform which problems you need to tackle and how.

If you can’t think of a solution to the problem, then it’s not the niche for you. Stick with problems you know how to solve (or at least have a workable business idea for how to solve them).

Step 4: Test Your Niche

To get to step four, you’ve:

  • Identified your top two to three audience possibilities
  • Dug into the problem they’re facing
  • Decided how you do and don’t solve that problem

… all in excruciating detail.

There’s one last thing you need to do before you’re ready to invest more time in your niche idea: Test it.

If you’ve been following our content, you might think it’s time to validate (i.e., collect money for) your niche. It’s a good thought, but we’re not there yet.

Instead, it’s time to talk to strangers on the internet.

You heard me.

Go back to the best Facebook groups and forums you found during step two. Use this template to post and ask them if they’re interested in your solution:

“So many [ideal client type]’s have been asking how to [achieve goal]. And so many of them do [#1 mistake], and that’s just [backwards/wrong/inefficient]. So I’ve been thinking of creating a free [product type] to help [accomplish what?] without [something they hate/have already discredited/don’t want to let go of]. Would that be of any interest to you?”

Or, you can craft your own statement by riffing on this shorter version:

“Finally a way to [achieve goal] without [something they hate/don’t want/have already tried].”

The responses you get will tell you if you’re on the right track or need to pivot.

For example, we’ve been working with a sleep coach who needed to refine her audience. Her passion was to help working moms, and her experience was in helping busy people get better sleep.

She decided to test the niche Sleep Specialist for Working Moms.

Right off the bat, this sounds like a workable, profitable niche market. So she drafted the statement we described above and put it in a handful of Facebook Groups with busy, working moms.

She received zero responses. The audience she expected to have a strong need for sleep coaching showed no interest in her help. It was a good sign that she needed to pivot.

After brainstorming, we landed on a new target audience for her online business. She repeated the exercise with the new target audience. Her problem (sleep issues) and her solution for them were the same, but the audience was new.

Seven days after posting, she still saw comments and messages roll in. We knew then that she had a good hypothesis.

This niche testing method works for anyone, even folks without an audience. But if you do have an audience, there’s no reason you can’t tinker with your content. Post some information related to your potential niche to see how they respond.

For example, Neha did this on Instagram to determine if her followers were interested in the Ayurvedic method.

Here’s what her engagement numbers were before and after she made a few posts about the Ayurvedic diet:

Instagram post insights before and after. Finding a profitable niche doesn't mean you have to change all your messaging right away: Instead, test it with your audience first.

 

She tested a new approach and saw a clear increase in engagement, even though the topic was more specific than before!

You can do the same thing regardless of what platform you’re using. Stick to whatever social media channel you already have a following on. That could mean:

  • Posting a short video or series of videos on your YouTube channel.
  • Testing some new podcast or blog topics.
  • Asking your LinkedIn followers for feedback.

Once you complete this step, you’ll have a clear idea of whether your new niche is good for your business.

Got Your Niche? Run a Presale

After all those steps, you should just build your product and launch … right?

No!

Don’t do all the work of building your product without incontrovertible evidence that it will sell.

For that, we recommend running a presale with your existing audience. It’s best to use email if you can. Get your list to 100 or 1,000 subscribers (whichever number is next for you), then offer them a discounted price and early access to the product you’re building.

We coach clients through this process all the time at Growth University. And we’ve used the process ourselves.

For example, our client Jacob McMillen made $11,000 pre-selling his course on how to become a freelance copywriter. And Hiba Balfaqih recently made $675 from five pre-sales of her self-love mastery bundle.

It’s a win-win: You prove your niche selection is correct beyond any doubt, and you get funds to help you devote the time and resources into doing it right.

Neha is one of our business coaching program clients. In the program, our coaches will give you step-by-step instructions so you can focus on doing the most impactful thing for your business. Interested? Book a free 1:1 strategy call with us today.