Ever heard the saying “the riches are in the niches”? The more time I spend working with successful businesses, the more I realize how true that statement is. Establishing your business as the domain expert in a particular niche is a huge driver of value creation.
Some people might argue that a niche is too small for you to be successful. At a certain scale, I accept that’s true. It doesn’t make much sense for Apple––one of the world’s most valuable companies––to launch a niche product in a tiny market. When your revenue is counted in billions, it’s probably not going to move the needle.
But if you’re a first-time founder, family business owner, or CEO of pretty much any non-publicly traded firm, focusing on a niche is often a great strategy. Niches are often far larger than you might think and can sustain substantial businesses.
The Value of Owning a Niche
There are few things worse than when a prospective client tells me their target market is “everyone”. Creating branding, a website, marketing strategies, content, sales scripts, and all the other assets a successful business needs is hard enough. But when they need to appeal to everyone as a target customer? Forget it – it’ll never work.
Some (rare) businesses do have mass market appeal. But they normally start in a niche. Take Amazon – it started as an online bookstore, 25 years later it’s now an online everythingstore. Or Uber – it started as an on-demand luxury car service for wealthy San Franciscans, but these days you can Uber just about anything: yourself, your packages, or your dinner.
There’s nothing wrong with ambition. I’m sure it’s great to ring the bell on the New York Stock Exchange. But you know what else is cool? A highly profitable niche business.
Now, if it’s your life's goal to own a megayacht, you can probably stop reading now. But if you’re content with creating a sustainable, enduring business that affords a great quality of life for your loved ones, a successful niche business can definitely give you that.
Owning a niche creates a defensible position. Sure, it takes an investment to get there, but once you’ve established yourself as the go-to company in whatever niche you choose, business growth becomes a lot easier. The impact of owning your niche compounds. Over time, you get really, really good at what you do. That creates a flywheel effect that drives even more growth.
How to Choose a Niche
Okay, so I like niche businesses. Maybe you’re starting to come around to my way of thinking. But how do you pick a niche? Here are a few tests to think about when considering if a niche is a good fit for you:
- Are you good at it? This is a basic test. If you’re serious about owning a niche, you have to be better than others who serve the customers you hope to attract. If you’re not already better, you need a clear path to becoming better, whether that means hiring new employees, investing in new equipment, or deeply immersing yourself in the niche.
- Is there a substantial, growing market? Niches can be pretty small, but they can’t be too small. After all, you’re never going to own 100% of the customers in that market, and you have a business to sustain. Ideally, you’re targeting a niche market that’s growing – that way, you can scale your business as the market expands.
- How well is the market being served right now? Ideally, the customer for your niche business is terribly underserved. Maybe the customer experience sucks or there just aren’t any firms that answer their pain points. If that’s the case, there’s an opening for you to swoop in with your custom-built solution and start capturing market share right away.
- Are there favorable long-term trends? Your goal should be to build a business that you can sustain for years to come. Preferably, that means not hitching your wagon to a dying industry. Find a niche with multi-year tailwinds instead.
Some people, especially successful people, will tell you to follow your passion. That’s easy to say once you’ve made it, but following your passion doesn’t put food on the table. Instead, focus on what you’re good at, identify where you can add value to your customers, and pick a niche that’s going to grow and challenge you for years to come.
Commanding Your Niche
Alright, so you’ve picked a niche. Now, you’ve got to figure out how to show everyone that you and your business are the experts in that niche.
This takes time: you can’t build credibility overnight. But all of your efforts compound. The earlier you start, and the more committed to the process you are, the sooner you’ll be on top. Here are a few strategies you can adopt to start commanding your niche:
- Know Your Audience: to build a successful niche business, you must deeply understand who your customers are and what they need. Do an audience segmentation exercise and build customer profiles to get a better understanding.
- Deliver Results: this one is non-negotiable. If you want to be successful, you have to make your customers successful. Marketing can only get you so far: the best niche businesses are phenomenal at what they do.
- Build Relationships: the most enduring niche businesses get plenty of repeat custom: they don’t just survive on one-time jobs. Relationship building is the currency of repeat custom: take the time to get to know your customers, under promise and over deliver, and position yourself as a long-term strategic partner.
- Be a Thought Leader: the leaders of your company should be at the forefront of thought leadership around emerging issues in your niche. This has to be visible, so empower them to create meaningful content and then publish it widely: blogs, media pieces, podcasts, conferences, and more are all great mechanisms for this.
Remember to be patient. Building a market position that you can defend for years to come is a long-term, often multi-year process, but it’s an investment that will reap dividends.
Need some help producing content that showcases your niche expertise to the world? Reach out to the team at Hire A Writer: we’d love to partner with you.