7 Steps to Defining Your Niche Market

In their book, Start Your Own Business, the staff of Entrepreneur Media, Inc. guides you through the critical steps to starting a business, then supports you in surviving the first three years as a business owner. In this edited excerpt, the authors explain how you can find the right niche for your entrepreneurial needs.

You’ve come up with a great idea for a business, but you’re not ready to roll yet. Before you go any further, the next step is figuring out just who your market is. There are two basic markets you can sell to: consumer and business. These divisions are fairly obvious. For example, if you're selling women’s clothing from a retail store, your target market is consumers; if you're selling office supplies, your target market is businesses (this is referred to as “B2B” sales). In some cases—for example, if you run a printing business—you may be marketing to both businesses and individuals.

Finding the Right Price for Your Retail Products

You often see or hear retailers' advertisements that promise you "quality merchandise at a fair price." Well, just what is a "fair price?" As you enter the retailing arena, you will soon learn that there really is no universally accepted definition. Most of the time the answer is "It depends. . ." It depends on how much you paid for the merchandise, who you bought it from, what your competitors are charging, your overhead expenses, your sales volume, and a hundred other variables.

How you establish prices for your merchandise will be one of the most important decisions you will make, since it directly affects that all-important variable, profit. You must strike a delicate balance, setting a price that is high enough to allow you to achieve

a reasonable profit margin and yet low enough to keep your merchandise affordable and