Identifying Gaps in the Market for Your Small Business
Market gaps are opportunities disguised as voids. A gap in the market is a place or area that current businesses aren’t serving. For example, Netflix has filled several market gaps over the years. First, with its initial mail-order movie rentals and then with its streaming platform. Whole Foods fills the market gap that occurred when health-conscious consumers wanted a central, convenient place to shop for organic, healthy, and natural food products. In fact, every successful business you can think of has served some sort of market gap.
Use these tips to identify and take advantage of the opportunities around you.
- Assess Your Strengths: It’s not just the right idea you are looking for -- you must find the right idea for the right person. It doesn’t do you any good to find a gap in the market that you can’t take advantage of. So before you start to look for market gaps, it only makes sense for you to know exactly where your strengths lie.
Start by making a list of your perceived strengths. Use past experiences to guide you. Think about what you’re most happy doing. Think about what you have the most success doing. Revisit old critiques or performance reviews to pick out anything that might give you some insight. Reach out to colleagues for honest feedback that can help you figure out what specific strengths you could bring to the table. Consider taking a professional aptitude test, which could identify areas of strengths you can explore in a small business environment.
- Consider Niche Markets: Small business owners often think too broadly when it comes to the market. However, it is always better to think small when it comes to gaps in the market. The more specific your market, the more likely you’ll be able to target them effectively.
How niche is too niche? Well, you want to make sure that the market is big enough to sustain growth. It should have many existing products because that shows you that there is demand in the market. There should also be an easily identifiable customer base. Without those things, your niche market is not big enough to support a small business.
Niches markets are also great places to copy a market gap. If you see that someone has successfully filled a gap in the market in one industry, you could recreate that success in a similar one. For example, if something has worked in women's clothing, consider applying that to tweens or children’s clothing. If something has been successful in one subset of medical supplies, try it in another one.
- Follow Pending Legislation: Sometimes an industry can go through big changes because of legal reasons. Local, state or federal legislation can create market gaps because they can force an entire industry to make changes it wouldn’t have done otherwise. If you can successfully forecast those changes, you can identify market gaps early and do it in time to take advantage of them.
Keep with proposed legislation by staying abreast of industry laws. You can also sign up for updates from trade organizations, which often track pending legislation and send out analysis to subscribers. At the very least you can create Google alerts for certain keywords. You’ll get emails each time they appear in the news.
- Identify Unsolved Problems: When you boil a market gap down to its very essence, it is an answer to a problem that’s not currently being solved. Solving an existing problem will endear you to consumers and cause your products to practically sell themselves.
A straightforward way to find those hidden gaps is to ask your potential customers what they are missing in the current market. You can do that by researching industry trends. Customer surveys may provide a lead in the right direction. You could also do some research into current customer gripes by simply going over the worst reviews of the competitors. That can give you some insight into what your competitors aren’t doing right and give you the chance to do it better.
Focusing on a market gap also helps you make sure you avoid diving into a market that is already oversaturated. After all, a saturated market is often a dead-end for new businesses. So with these tips, make sure you identify and describe your target market and reasons for choosing it in your business plan.