Short answer: Your target market is the group of people most likely to buy from you. Describe them by who they are, where they live, what they need and what they pay for the alternatives, then check that picture against free Census data and your competitors. Your business won’t be for everybody, and the SBA says to be specific about whom it serves.
What a target market is
The U.S. Small Business Administration (SBA) puts it simply: market research helps you find customers, and competitive analysis helps you make your business unique. Combined, they help you find a competitive advantage.
Your target market is the answer to whom your business will serve. The SBA’s business plan advice is to be specific, because your business won’t be for everybody. A plumber who serves older homes in two neighborhoods knows the market better than one who serves everyone.
People often use target market and target audience for the same thing. In this guide, the market is everyone you could sell to, and the audience is the part a given ad, post or email speaks to.
The questions to answer
Start with demographics. The SBA suggests gathering population data on age, wealth, family, interests or anything else relevant to your business, to see your opportunities and limits for gaining customers. Then answer its six questions.
| Question | What the SBA asks | Where to look |
|---|---|---|
| Demand | Is there a desire for your product or service? | Your customers’ questions and what people search for |
| Market size | How many people would be interested in your offering? | Census Business Builder for your area |
| Economic indicators | What is the income range and employment rate? | Census Business Builder |
| Location | Where do your customers live and where can your business reach? | Your own sales and service area |
| Market saturation | How many similar options are already available? | A search for your service in your area |
| Pricing | What do potential customers pay for the alternatives? | Competitors’ published prices |
Questions from the SBA’s “Plan your business” page, read on November 6, 2026; the “Where to look” column is our own suggestion.
For demand, our Google Trends guide shows whether interest in a search is growing. Our keyword research guide shows how to find the words your customers use.
Free data you can use
The SBA lists free federal statistics for market research. For demographics, it points to the U.S. Census Bureau to segment the population for targeting customers.
Census Business Builder is the easiest way in. It offers selected demographic and economic data from the Census Bureau in a simple format. Menus let you pick the location and nearly any type of business, with interactive maps, downloadable reports and a dashboard that compares places over time. It also works on a phone.
Asking your customers directly
Existing sources save time, but the SBA notes their information may not be as specific to your audience as you’d like. Use them for general, measurable questions, such as trends, demographics and household incomes.
Asking people yourself gives a more nuanced picture of your target audience, though it takes more time and can cost more. The SBA lists surveys, questionnaires, focus groups and in-depth interviews as ways to do it.
Checking your market against competitors
The SBA’s competitive analysis looks at competitors by product line or service and by market segment. It suggests assessing their market share and their strengths and weaknesses.
It also points to your window of opportunity to enter the market and to how much your target market matters to your competitors. Then come the barriers you may face and the indirect competitors who serve the same customers. Our unique selling proposition guide shows how to turn what sets you apart into one sentence.
How to define your target market
- Write down who already buys from you and why they chose you.
- Describe them by age, income, family and interests, as far as you know them.
- Mark where they live and how far your business can reach.
- Answer the SBA’s questions on demand, size, income, location, saturation and price.
- Look up your area and your type of business in Census Business Builder.
- Ask a few customers directly, with a short survey or a conversation.
- Write your target market in one or two sentences and say who it leaves out.
The steps are our method. The sentences from the last step belong in your brand guidelines, so your ads, posts and website speak to the same people. Our mission statement guide shows how to fold them into one sentence about your business.
Before you use your target market
- It names who you serve, and who you don’t.
- It says where those customers live and how far you can reach.
- You answered the SBA’s questions on demand, size, income, location, saturation and price.
- You checked your area in Census Business Builder.
- You heard it from some of your customers, not only from data.
- You compared it with the competitors who serve the same people.
RememberYour business won’t be for everybody. Describe the people most likely to buy from you, check the picture with free Census data and your own customers, and see how your competitors serve them.
In our branding service, the Growth and Pro plans start with a strategy session: who the brand is for, who it is not for, and the one thing you want to be known for. We test it against your real competitors. Send us a WhatsApp message or use the form.
Quick answers about target markets
What is the difference between a target market and a target audience?
People often use them for the same thing. In this guide, your target market is everyone you could sell to, and a target audience is the part of it a given ad, post or email speaks to.
How do I find my target market for free?
Start with what you know about your customers, then use free federal data. The SBA points to the U.S. Census Bureau for demographics, and Census Business Builder shows demographic and economic data for the area and type of business you choose.
Can a small business have more than one target market?
Yes, but describe each one separately, with its own needs and its own message. The SBA’s advice holds for each of them: your business won’t be for everybody, so be specific about whom it will serve.
What questions should market research answer?
The SBA lists demand, market size, economic indicators such as income and employment, location, market saturation and pricing. Together they tell you whether enough people want what you sell, nearby, at a price you can work with.
How do I check my target market against competitors?
The SBA suggests looking at your competitors’ market share, strengths and weaknesses, and how much your target market matters to them. Also weigh the barriers to entering the market and the indirect competitors serving the same customers.
Sources
Sources read on November 6, 2026: Plan your business (U.S. Small Business Administration). Census Business Builder (CBB) (U.S. Census Bureau).