What’s the best way for small businesses to identify their target audience?

learn from existing customers

Your strongest tool is the ‘eyes and ears’. The cheapest, most accurate way of identifying your target market is by observing who are your most valuable customers and listen to why do they choose you/keep coming back

identify ‘patterns’ or shared interest

Everyone is unique but as the saying goes: ‘We are more alike than we are different’

Often, people (including strangers) share similar interests, which is often why they 'end up in the same place'—or in this case, frequent the same business.