One of the big problems some designers have is narrowing that down. "I want to design for all women!" is a common refrain. Unless you have unlimited money and resources, it's simply not a reality to start a business targeting everyone. (It's also highly unrealistic even if you are one of those rare people with unlimited resources.) Even Wal-Mart has a niche - it's in their mission statement - "To give ordinary folks the chance to buy the same things as rich people."
So what, specifically is a niche? According to About.com: "A niche market is a focused, targetable portion of a market." See - TARGETABLE is the key. Without a niche, you can't target to find your customer (and they can't find you).
As I'm always telling my class - it doesn't mean you have to turn away business that doesn't come from your niche! You do custom alternative culture wedding dresses - someone comes to you to do a very traditional dress - not your niche, but you don't have to say no. But without the focus of a niche, your marketing message gets lost in the myriad of noise out there and your best potential customers won't be able to find you as easily.
Another way to refine your niche, and your marketing messaging is to research your competition. I always get the students who say, "I'm so original I don't have any competition!" They're wrong. There is competition, you just haven't found them yet. No, they probably aren't selling exactly the same thing you will design, but they are selling to your target market, at your price point, in your apparel category. Find them, research them, figure out how you are different than them. Analyze what they have going for them that you don't - how will you combat that challenge?
This is a very hard business. Make your start easier by doing your homework. Research your niche, your customer and your competition. Even Ralph Lauren started out with a niche line of men's ties!
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