If you are an Entrepreneur, I have a question for you.

What is the most important step one should take when starting a business?

No it's not creating a business plan.

Neither it's finalizing the investment strategy.

The most important first step is talking to your target audience. If you don't know your target audience, none of the things above are going to help you.

Having the right target audience is the most crucial part for the success of your company.

Another thing helps a lot in the initial stage of your company is having a NICHE TARGET Audience.

Your niche target audience is your smallest viable audience. When starting a company, if you targetted the largest set of audience, the chances of your success are extremely low.

Take all the successful companies we know today.

  • Facebook was started for Harvard Students not the whole world.
  • Amazon started with delivering books not everything that they deliver today.
  • Paytm was started with just the prepaid mobile and DTH recharge.

Why do niche markets work for startups?

We all humans are different. We see the world through different lenses. We have different prefrences when it comes to buying things. Not all of us like black or blue color. Not everyone has a same preference for brands or the products.

Since we all have different preferences, it's very hard to build product for mass markets. Some of the audience might like certain feature, while another portion of audience might hate the same feature.

When we create products aimed at masses, we are always running in cirlces with the product iteration. It makes it impossible to move through and create a good product which could satify any segment of the audience.

When you try to solve everyone's problem, you fail to solve anyone's.

Underserved Niche Markets

Even when your have decided a niche market, your search is not going to end there. If you are serving a niche market that doesn't have any problem, you are again doomed to fail.

The most common mistake that Entrepreneurs make with niche market is choosing a market where big players are already serving.

Let's take an example. Let's say that you are starting an ecommerce business to buy socks - only socks. That is a fairly smaller segment of ecommerce purchases. It's an example of a Niche market.

But unless the other ecommerce websites are not serving the audience well, you don't have a chance to succeed. Amazon sells socks, so does the Myntra or any clothing ecommerce website.

If you want to succeed with this market, you will need to target a sub-group of the people who buy socks online. You could target people who wants the printed patterns. You could get their name printed on their socks.

The new target market is of people looking for "customized socks". In this market is not well served, then BINGO. You have got your niche market.

The idea is to keep on narrowing down your target audience untill you find your underserved segment of market.

How to choose your target audience?

To find my target audience, I use the below framework. First I start with finding the problem we'll be solving and then group the people who face the problem into a similar target audience.

How to find the problem?

  1. Always start with a problem. The most successful entrepreneurs are those who have experienced the problem themselves or the people near them.
  2. Look for the solutions for the problem. If you're satisfied with the solution to the problem, there is not point in starting a company around the same problem.
  3. If you couldn't find a solution or the existing solution doesn't work for you, then find more people who face the same problem.
  4. Ask them if they tried anything. What works or what doesn't works for them. Talk to more and more of these people.
  5. When you are sure that the problem exists and a large segment of people are facing this problem, you have found the problem that you'll be solving.

How to group into a target audience?

  1. Start by finding the Industry in which the problem exists. Your target industry is the broader scope in which a lot of similar problems exists. E:g ecommerce, productivity applications, messaging tools. This is the category in which your company lies.
  2. Now start with finalizing the key elements like who is your user(The interviews from above exercise will help here) and what kind of sub-category do you fall in. Like in case of ecommerce - What kind of ecommerce and what product do you sell?
  3. Look for all the competitors in your sub-category. Who provides the similar product or services as you do. What do you people like or don't like about them.
  4. This last step is an iterative step. Keep on narrowing down your target audience, untill you have found an audience which is not served well. Often in any industry we can find an audience which is too small - that they are ignored by all the large companies.


In the end I would say that finding your target audience takes a lot of experimentation. And the right way to experiment is by starting with a small segment of people who is not served well.

The easiest way to find that smallest segment is by starting with a problem that you or the people near you have face.