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7 min read

Identifying Gaps In The Market: A Step By Step Guide

Want to start your own business? “Find a gap in the market”, they cry, as if it was as easy as finding a needle in a knitting shop. But actually, when you know where to start, finding your own business idea complete with ready-made unique selling point won’t be so hard.

Coincidentally, we have eight places you can begin looking for your own gap, plus how to define your niche if you’re already an established business.

 

Don’t ‘Mind The Gap’

Every successful business has found a gap in the market, whether they realise what it is or not. Better that you recognise your niche so that you can continue to work on owning it. 

When a business is new it will often generate interest and appeal but as the novelty wears off there needs to be something to keep customers returning. Chase that gap, not the competition.

 

Do find the gap 

This is an exercise you can do yourself. Make your own list of successful businesses that you know, small or big, local or international, and then work out what gap they are filling. Often we’re predisposed to accept that the way it is is the way it has to be. This will train you to start seeing businesses from the perspective of the problems that they are solving.

Wave
Simple, free accounting software for small businesses.

Uber
Cheap and easy to order, track and pay for your ride via an app.

Lyft
An ethical version of Uber and the price quoted is the one charged.

Deliveroo
Giving restaurants an easy way to set up the delivery arm of their business and customers the freedom to order whatever type of food they want to their door.

Whole Foods
Revolutionising the supermarket experience focusing on health and offering a really wide range of fresh produce.

Mailchimp
Free, simple to use email marketing provider. 

Canva
Free design software for people with no design skills.

Squarespace
No code website builder with beautiful templates. 

Just Eat
Online ordering for local takeaways.

Monzo
Set up a bank account online in 10-minutes and easily manage your budgeting, spending and savings.

Airbnb 
Online marketplace for people to rent out their spare accommodation and to host experiences for holidays. 

Megabus 
Low-cost long-distance travel. 

Dollar Shave Club
Affordable new razor blades posted to you when you need them.

Finisterra
Born from the need for warm, ethical and technical clothing for year-round surfers.  

Screwfix
A wide range of fittings for trades available by mail order, then online, in bulk at a good price. 

Lovefilm
Remember Lovefilm? Films delivered to your door… the most convenient way to get them…. for a very short space of time before…

…Netflix
The easiest and cheapest way to stream a huge selection of on-demand and original movies and TV shows.

Sheilas’ Wheels
Focusing on the car insurance needs of women

Blaze
The safest light for your bike.

Jackson’s Spa
The first people to bottle ‘pure’ water (in Boston in 1767).

When most of these ideas were launched there will have been a lot of people saying, “you can’t do that” or “it’ll never work”. Dream big. 

And so we can use the association of ideas, a combination of ideas, extraction of principles, and application of those principles to areas where they were never applied before. We need to be open-minded. We need to be fluent. Look for alternatives, and not for the correct answer. Because when you think creatively, there’s no single correct answer. There are many possible alternatives.

Giovanni Corazza Founder, Marconi Institute of Creativity

8 steps to identifying a gap in the market

 

1. Identify your strengths

What are you good at? What are you passionate about? Be unashamedly immodest and write everything down that you can think of. Ask friends and colleagues who you trust what they could see you doing. An outsiders’ perspective can be really helpful. And there’s no use finding a gap if you don’t have the skills to fill it.

 

2. What problems do you see around you?

What would make your life easier? How could you make people happier? How many people have this problem and what are they spending on it? Remember you could solve a problem for businesses or consumers (or both). Find a problem and own it. 

“Only build something valuable if you’re solving a problem you know better than anyone else.”

Emily Brooke, Blaze 

 

3. Is there a better business model?

Subscription services for everything from makeup to pet supplies, recipe boxes to toilet roll, have grown exponentially over the past few years. Dating, banking and taxis are now done via an app. How could you take an existing product or service and deliver it differently and more effectively? 

 

4. Copy and improve

Do something better. Remember this doesn’t necessarily have to be a product improvement, it could be to do with the marketing, sales, suppliers, manufacture or delivery. Maybe you think you could it better than the company you currently work for. Make it quicker, easier, cheaper, higher quality, more environmentally friendly, or really focus on a specific demographic.

 

5. Make an idea travel

Spotted a brilliant business on holiday that you’re convinced you could set up at home? Are there reasons (for example, weather, culture) why it works well in that country? Give yourself some time when you get home to think further and make sure you didn’t have your rose-tinted holiday sunglasses on. The Fork was started in Sydney when the Aussie founder lived in London and realised that Australia didn’t have the online restaurant booking systems that were growing in the UK. 

 

6. Study trends

Absorb yourself in current market trends and research them. Google Trends is a good place to start for business idea inspiration and to test your theories. You can also see how keywords are performing by region, how many searches they get seasonally and find related topics and queries.

Google Trends backpain

Current UK search term trends include: back pain, meditation, plus size clothing, beard oil, phone cases and dogs.

 

7. Keep up with legislation

What’s coming up in terms of changes to the law? How can you offer assistance and how is the market likely to change with the new legislation in place? As a recent example, the introduction of GDPR hugely increased the demand for data experts. Looking ahead, Brexit is likely to bring huge changes – how can you monetise your skillset and expertise in a changing landscape? 

 

8. Look to the consumer

Look and listen! What are customers saying (and what are they thinking)? Ask them what they want and be genuinely interested. Read reviews – what do your customers like about you, what could you improve? Read your competitors reviews. Read reviews from the industry you’re interested in and see where they’re currently falling short.

 

Test before you invest

Hopefully, now you have a whole host of ideas and gaps identified. Which ones should you pursue and which to put on the back burner or throw straight into the fire? Gut instinct will go a long way here but don’t rely solely on this. 

Before you invest lots of time and money, conduct some market research and test the viability of your product. 

  • Do you have the skills and strengths to start this business? 
  • Have other people tried to set up the same business in the past or tried to solve the same problem?
  • What assumptions are you making and how can you test them?
  • Write a business plan – it will greatly increase your chances of success. 
  • Launch a minimum viable product.

 


 

Three great books for further reading on finding your gap:

  • Purple Cow, Seth Godin
  • The Lean Startup, Eric Ries 
  • Start With Why, Simon Sinek
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Sophie Cross

Sophie Cross is a freelance writer and marketer specialising in business and travel. She is the editor for London Revealed magazine and her clients include lastminute.com Group and Merlin Entertainments.

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