How to spot a gap in the market for a startup
Finding a strong gap in the market is what separates a great idea from one that fizzles out.
The challenge is not just finding gaps but finding the right ones – those that are big enough to build a business around but small enough that they’re still overlooked.
This process isn’t magic. It’s a skill you can develop by learning to observe, analyse, and test the world around you. Here’s a step-by-step guide to help you spot and evaluate gaps in the market.
1. Kick off with frustrations
Problems are everywhere, but we often overlook them because we’ve adapted to them.
Pay attention to what frustrates you. When something feels harder than it should, you’ve found an inefficiency. Those inefficiencies are the raw material for startups.
For example:
- Long lines at the grocery store sparked the idea for delivery apps.
- Expensive and opaque fees for money transfers led to fintech startups.
- Confusion around work schedules inspired scheduling tools.
Make it a habit to notice these moments of friction. Write them down. A long list of frustrations is a goldmine for startup ideas.
People hate friction, and they’ll often create their own solutions to deal with it.
These workarounds are clues to needs not yet met. When someone has gone out of their way to solve a problem themselves, it’s a sign they’d pay for a better solution.
You should look for opportunities where people are using:
- Spreadsheets: If someone’s managing a complex process with spreadsheets, they likely need a dedicated tool.
- Manual processes: Anything people do manually could be automated.
- Hacks: When people cobble together multiple tools to get a job done, there’s room for improvement.
For example, early project management tools replaced spreadsheets that teams were using to track tasks. Stone & Chalk startup Sitemate builds user-friendly software which thousands of industrial companies use every day to streamline their paperwork and processes.
2. Observe trends and changes
Markets change when the world changes. New technologies, shifting consumer behaviors, or emerging regulations create opportunities.
Look for trends that are just beginning to take off. Examples of trends that created new markets:
- The rise of smartphones led to mobile-first apps.
- Growing environmental awareness created opportunities for sustainable products.
- Remote work accelerated demand for collaboration tools.
- The rise in AI is shaping all sorts of new industries
Ask the question: what’s new in the world, and how might it change what people want or need?
Look for early signs of shifts in behavior, such as new products people are talking about or growing dissatisfaction with old solutions.
Look at industries or products that are growing fast. Growth often creates gaps. As a market expands, its needs become more diverse, and no single product can meet them all.
This opens space for specialised solutions. For example:
- The rise of remote work led to a surge in video conferencing tools, but it also created demand for adjacent products like virtual office platforms and asynchronous collaboration tools.
- E-commerce growth created opportunities for tools that optimise shipping, returns, and product recommendations.
To do this, keep an eye on growth metrics like:
- Industries with rising revenue or investment.
- Products with increasing search interest or sales.
- New categories of jobs that are being created.
This will leave you poised to tackle problems in better ways and find new problems set to be solved.
3. Chat to people
You can’t find gaps in isolation. Talk to people and lots of them. The goal is to uncover pain points they deal with every day.
Start with these groups:
- Yourself: What problems do you experience in your own life or work?
- Friends and family: What do they complain about? What tasks do they dread?
- Professionals: Ask people in specific industries about inefficiencies in their work.
Dig deep. When someone mentions a problem, ask follow-up questions like:
- “Why is that frustrating?”
- “What do you do to solve it now?”
- “What would make this easier for you?”
If you hear the same frustrations repeated by multiple people, you’re onto something.
Patterns will start to emerge. You should also be looking to solve for the outcomes they are trying to achieve, rather than fixing the task itself. For example:
- People don’t buy a drill because they want a drill; they buy it because they want a hole. But if you’re stuck asking questions about drills instead of holes, you may be missing your market opportunity.
- People don’t pay for meal kits because they like cooking; they pay to save time and avoid meal planning. But if you’re asking about meal kits, you could be missing a great opportunity in meal-sharing or neighbour food networking.
When you focus on the outcome, you can spot opportunities where existing solutions don’t fully satisfy the customers’ pain.
4. Focus on niche audiences and problems
Most startups aim for the broadest market possible, leaving some groups underserved. Look for audiences whose needs are overlooked by existing solutions.
Common underserved groups include:
- Small businesses: Many tools are designed for large enterprises and don’t scale down well.
- Emerging markets: Products built for Western countries often ignore the unique needs of other regions.
- Non-technical users: Complex products can alienate people who aren’t tech-savvy.
For example, Squarespace gained traction by offering a simple website builder for people without coding skills. Likewise, big markets often feel saturated, but they’re made up of smaller niches with unique needs.
Instead of trying to solve everything for everyone, focus on a specific group of people or a specific type of problem.
For example: Stone & Chalk startup Littlepay tapped into a huge opportunity when it started serving public transit providers, instead of the mass payment market.
Niches are powerful because they let you start small and grow as you build traction. Look for gaps where existing solutions are too broad or not tailored enough to a specific audience.
5. Look for competition gaps
Gaps exist even in competitive markets. Look at what competitors are doing, and more importantly, what they’re not doing.
They often appear when incumbents ignore certain features, price points, or customer segments. To find these gaps, you can ask these questions:
- Are there complaints about existing products? (protip: check their reviews!)
- Are competitors too focused on one type of customer, leaving others out?
- Is there an opportunity to offer a simpler, faster, or cheaper alternative?
You don’t have to reinvent the wheel. Many successful startups are just better versions of what came before.
Some gaps are too small to support a business on their own, but you can combine multiple small gaps to create a larger opportunity.
Look for ways to integrate related problems into a single solution. For example:
- Amazon started with books but expanded to become the “everything store.”
- Square started with small business payments but now offers loans, payroll, and more.
- Notion combined note-taking and team task management into one platform.
Think of gaps as puzzle pieces. The more pieces you connect, the bigger the picture becomes.
Final thoughts
The most important skill for spotting gaps in the market is curiosity.
Always ask “why” things work the way they do, and don’t accept inefficiencies as inevitable. The best startup ideas often come from questioning what others take for granted.
Keep learning. Explore new industries, try unfamiliar products, and talk to people outside your usual circles. The broader your perspective, the easier it becomes to see opportunities others miss.
The secret is to stay alert and keep asking questions. The next great startup idea might be hiding in plain sight, waiting for someone – someone just like you – to notice.