I've spent my life building new businesses in niche markets, especially highly fragmented markets. They always seem to have a great need for organization and consolidation. The information often flows freely and the opportunities are great.
If you can improve on a transaction that is already happening on a regular basis, you're job just got easier as you don't have to create awareness to the customer. Sometimes you are even at an advantage if the other vendors are not delivering.
Finding an opportunity is really fairly easy when you begin to look in areas that are important to you. Think of all the times that you thought of something that would improve your life in a particular area.
What if you actually did something about that product or service, instead of just voicing your opinion? That's essentially what an entrepreneur does. He puts his thoughts into action and produces the product / service.
Producing a product / service in a niche market also gives you another advantage that many entrepreneurs do not consider. Building your product / service specifically for the niche market allows you to increase the price you are selling your product / service for.
The cost to market a product / service in a niche market is often significantly reduced when you can target your customer. That allows you to increase your profit margin, often making niche market products / services more profitable overall than trying to cater to a more general market.
One mistake that many entrepreneurs make is building a product / service that the end user is not interested in buying. This can be costly and can be avoided through research.
You're learning curve is often shortened when focusing on niche markets due to the reduced complexity in a product / service. This allows you to spend even more time getting to know the industry.