There are hundreds of reasons why you may be looking to go self-employed or start your own business: greater autonomy, getting away from office politics, pursuing a passion etc. But for some people, excitement can get the better of them, and they forget to check whether there’s even a gap in the market for them.
After all, you aren’t always able to just quit your job and immediately get going as a sole trader or a limited company: you have to start from scratch, identifying your target audience, deciding on the problem you want to solve for people, and explaining to your potential clients why you’re the right person for the job.
So how exactly do you find your gap in the market? How do you identify your niche among the self-employed community, and how can you test whether your idea is likely to succeed before you can commit to taking the leap? Let’s explore.
Don’t forget, when you’re done here, head over to our “10 ways to stress-test your small business idea“.
How to decide what to do
At Crunch, we’re always encouraging people to do what they love – to follow their passions and make a career out of their favourite pastimes. There are pros and cons, of course, all of which you can read in more detail in our “Should you turn your hobby into a career?” article, but as a wise man once said, “Choose a job you love and you’ll never work a day in your life.”
Maybe you’d like to keep your hobbies to yourself, though, and keep them as a special end-of-day treat to help you relax and unwind after a long day of work. You could always find a way to use the talents, abilities, and expertise that you’ve developed over your years in school, university, and/or the workplace, and make those your full-time vocation.
If you did well in English classes as a youngster, maybe becoming a freelance copywriter, editor, or marketeer is the way forward. If you became the resident expert on a content management system or data analysis program at your last place of employment, perhaps that expertise is your path into the wonderful world of self-employment.
What problem do you solve?
The main question you need to answer is this: whether you’re following a passion or selling your expertise, what problem are you solving? What do you bring that others don’t?
We go into detail on this in our Take the Leap episode “Should I go Self-Employed”.
It can be difficult these days to find a genuine gap in the market – it does happen, of course, as we were reminded in 2020 during the coronavirus pandemic, where a sudden demand for face masks, PPE, and ventilators saw a surge in people starting new businesses, opening Etsy shops, and expanding their businesses to meet the rising demand.
If you’ve spotted a genuine, “no-one is solving this issue” gap in the market that you know you have the ability to fill, then fantastic news! But the odds are far higher that the problem you’re looking to solve is already being solved by hundreds of other people. So, ask yourself: how do you do it differently? What unique angle do you tackle the problem from? Is your solution stronger, more reliable, more cost-effective, more customisable?
These differences are your “gap in the market” – you might not be answering a problem that no-one else is, but you’re answering it in a way no-one else is.
Do you have an audience?
So, you know what you want to do, and you know what problem you’re solving with your product or service. The next big question is, do you have an audience you can sell to? After all, you might think making waterproof scarves for goldfish is a great idea, but if no-one else does, you’re on a hiding to nothing!
Of course, there’s a small chance that an idea as “out there” as neck-wear for aquatic pets could take off, but it’s probably not a risk worth taking. You need to be sure that the service you’re providing has an audience who are willing to pay for it, and that people are looking for someone with your skillset.
The easiest way to find out is to scope out your potential competition. Search for the people who are currently doing – or are doing something similar to – what you’re planning to do. How long have they been running, what’s their social media presence like, how many testimonials do they have? These are excellent metrics to consider – after all, a company that’s been running for 10 years with 500+ reviews and a couple of thousand Twitter followers would suggest there’s a market for your potential venture.
If you genuinely can’t find competitors, that could mean that your idea isn’t commercially viable, or of course, that you’re onto an absolute winner with a unique solution no-one else has thought of! So, how can you check whether you’re headed for riches or the poorhouse?
Stress-test your idea
The process of stress-testing your business idea can be a tricky one. You’ll basically need to think of all the ways it could go wrong, and decide whether you’re in a position to handle those problems or not. Some of this stress-testing has already been undertaken, since, by now, you’ll have a clearer idea of what your target audience is and how much appetite there is for your product or service.
There are plenty more considerations to take into account before you start branding pencils with your new company logo, though. Here are a few of the other questions you need to answer before you make any important commitments:
- Is your market being dominated by a competitor? A next-day delivery service is a great idea, but love them or loathe them, you’re probably not going to be dethroning Amazon any time soon.
- If your idea isn’t an instant success, and times are tough for the opening few months, do you have the financial resources you need to ride it out?
- Do you have a growth plan? No company grows by standing still, so does your business idea have staying power? Can it develop and evolve over time, or is it too one-note?
- Are you self-motivated enough, and do you have the self-belief to make it work?
You can check out our “Becoming self-employed – 13 things to consider before going freelance” article for more examples of the types of questions you need to answer before you can have confidence your small business idea will succeed.
How Crunch can help
Of course, the only person that can decide whether you’re ready to go self-employed is you, but that doesn’t mean Crunch can’t help you make the decision. Our award-winning Knowledge section is choc-full of insightful articles that can help you reach a decision, and lay the early foundations for your new business. Here are just a few:
- How to start a business – what do you need to know?
- 10 ways to stress-test your small business idea
- Sole trader vs limited company, or umbrella: what’s best for you?
- How to set up a limited company
- Freelance on the side: what tax do I pay?
- How much should I charge clients?
- Generate leads for your small business – the ultimate checklist
We also have dozens of free business guides available to download and keep, covering a range of important topics, including:
- How to start a business in six easy steps
- Setting up as a sole trader
- How to write a business plan
- Sole trader business expenses
- Limited company business expenses
If you’re ready to get started, our expert advisors, client managers, and Chartered Certified Accountants are on hand to help you create the small business of your dreams. We offer a complete accountancy service with unlimited support for limited companies and sole traders.
We also offer a completely free, entry-level accountancy solution for new businesses and those who handle their own accounts. It’s a super-helpful tool for limited companies and sole traders, and you can get Crunch Free right now!