or something like that, but what is a niche exactly?
Well according to our trusty Webster’s dictionary, a niche is “a specialized but profitable corner of the market.”
There are a couple of words in that definition that we should focus on, “specialized” and “profitable” when it comes to finding a business niche.
Noah Kagan uses a great analogy for this… if you are having chronic knee problems, who do you want to see? A doctor? Or a knee specialist?
Of course the specialist.
The same is true in business as well.
Far too often (and especially on the internet) entrepreneurs are too broad in both their target market and their offering.
I’m going to beat that old drum again; people buy from people they know, like, and trust. The best way to gain any of those is by being the authority in a marketplace. Demonstrating your knowledge on a specific subject that helps people will make them know, like, and trust you.
If you started as a real estate agent tomorrow, could you dominate real estate in 12 months? Highly unlikely
But what if you only sold houses that were on golf courses, in Arizona?
Could you dominate that niche in a year? Absolutely! You would be far better off than being the “general” real estate salesperson, the world is full of those.
How Do You Boost Profits?
Increasing your profit comes from only two market mechanics; you either sell more of something or you sell it for a higher price. That’s it.
Of the two which is more realistic to achieve consistently?
If you demonstrate your authority and your unique position in the market it is far easier to sell for a higher price.
Why do serious chefs pay $200 for a knife instead of buying ten $20 knives?
Because we value premium products more than cheap ones, it isn’t about the economics, it’s about belonging to something bigger than ourselves. We all want to be a part of a tribe.
What an Old Lightbulb Salesman Can Teach You About Market Leadership
Jack Welch, the famed CEO of General Electric (GE) in the late 20th century had a very unique approach to markets for someone who led a business as big as GE.
See, GE was in every conceivable market you can think of, home appliances, jet engines, finance, food products, nuclear power, etc.
What Jack did was treat each business unit as it’s own separate entity and then roll out this simple but laser focused rule to determine whether to keep that business alive or not.
Jack’s rule was… Can we be #1 or #2 in this market? If so we invest the time, money, and effort in order to get there. If not, we close it down, sell it off, etc.
This is a powerful way to look at your market.
People Take the Wrong Lesson
I have used that analogy before but sometimes people focus on the wrong thing. They want to be GE and have 100 different business units.
Listen, GE wasn’t “GE” for the first 10+ years of its existence and you aren’t GE… yet.
But… you can use that lesson to focus your niche. Can you be #1 or #2 in your niche within 12 months? If so great! Pour your attention there. If not you need to select a better niche.
The Hardest Lesson to Learn
This is the toughest rule of authority marketing to accept for many people, hell it was for me.
You will want to reject this idea, I did at first.
It is scary as hell to take your business, product offering, or approach to market and divide it, again and again until you have a piece small enough for you to dominate. Unless of course you have investors running down the street throwing money at you, then by all means go BIG.
You will resist it, tell yourself all sorts of fanciful lies like “that would never work in my industry” or “I am looking to take over the world, not just a small corner of it”.
Everyone wants to think they are the next Elon Musk looking to dominate multiple industries at the same time.
Some Tough Love
There are companies that are far better capitalized and organized to do that (think Walmart or Amazon).
Sometimes it takes failure to truly accept this concept. Hopefully you will be smarter than me and learn from others rather than having to learn the “hard way”. Smarter people than you & I that have had FAR greater triumphs (Noah Kagan or Tony Shieh) owe most of their success to this dogged determination of doing one thing and doing it well.
Why it Works
If you don’t know of Dan and his business partner Ian’s work, check them out with a few of their thoughts on this subject…
Dan is a huge proponent of be “THE XYZ guy or gal”. e.g. Be “The Autoresponder Guy”.
The idea is that in order to be referred you need to be easily referable.
If you are just another marketing agency, consultant, or business coach how can I promote you to other people?
How do I know if I belong as a part of your tribe as a potential customer?
If you try to appeal to everyone, you appeal to NO ONE.
You Can Always Branch Out Later
Here is something to focus on if you are still struggling with the idea of finding your business niche.
You can always branch out later.
But they didn’t start out that broadly.
They launched a site called Adsense Flippers first and focused exclusively on building and selling their own sites that were only monetized by Adsense. This made it very clear who they were, what they do, and who should be interested.
It was this commitment to a narrow niche that allowed them to build a $250k a year business in less than 2 years and then expand into selling other products, services, and now even other people’s sites in their own marketplace doubling revenues every year along the way.
Would they have had so much success, so quickly if they started more broadly as the Empire Flippers?
If you ask them they would say no, and I agree.
How to Find Your Business Niche
OK you have taken this niching until it hurts idea to heart, but how to start?
Step One: Talk to your business peers and ask them what they think you do?
Ask them if they can explain what you do, how you do it, and whom you do it for in as few words as possible. Do they already see you as “The XYZ guy”? If not, you’re probably not niched down enough and you have some work to do.
Step Two: Poll your best customers on how you deliver them the most value
Is there a specific product or service you sell them that they can’t live without? How do they compare you to your competition? If you asked them for the one thing you do that they couldn’t live without, what would it be?
Step Three: Define your ideal client profile (persona) what is the BIGGEST problem you can solve for them
The best businesses solve problems, in psychology circles it is well known that people run away from pain far more than they run towards pleasure. What does your ideal client look like? Is it a single college student? a married housewife? What can you do to make their life easier? Save them money? etc.
Step Four: Test it by I’m the blah, blah, blah guy
Once you think you’ve found your niche start testing it out on your customers, partners, and peers. Say I am “The XYZ Gal” did they laugh in your face? Probably not a good sign. Seriously though, did they “get it” right away? That’s what you want.
Step Five: Stay on message
I am not saying that whatever business niche you choose must be the only thing you sell. But it should be the only one you actively promote and talk about until you become the clear #1 or #2 in your marketplace
Let’s Do This Thing!
I know it’s scary and goes against some of our long held beliefs on market opportunity, but if you want to grow your online business faster then you need to learn how to find your business niche.
I’ve planted my flag and staked my territory, have you?