Exploring the rationale for niching in your business and how to do it (despite its inherent challenges).

We’ve been picking up pace in this 3-month company building newsletter series; from how to build from your strengths, aligning your life to your business’ vision, developing a winning strategy and defining your business model.

In this post: How to pick a niche so that you can position your business with clarity and confidence. By understanding why we niche, unpicking the counter-arguments and resistance to niching and how to go about picking yours.

The definition of niche

A niche can be a verb “I’ve found my niche'“ or an adjective “I’m going to niche”.

Niching is aligning what your product/service does with the customers who need it.

You can niche on a type of customer (demographic/psychographic traits); on a type of problem (the pain point that you customers have) or the product itself (building something with very specific features).

Some business’ niches are easier to spot than others.

TomBoyX creates products for the LGBTQ market, but alongside the garments themselves, they have created an entire community where messages spread.
Josh Spector writes and consults on how to be a successful creator, for an audience of aspiring creators.
Sales Impact Academy offer sales education for B2B SaaS companies.

The end goal of niching? Gaining confidence that you can execute upon the promise of your business. Both confidence in yourself and consumer confidence in return.

If you’re reading this still unclear of your niche, know that you are not alone. And know that the process of niching gets easier the longer you’ve been in the game as you can draw conclusions based on real-life experiences you have had with customers. When you’ve just started you are making decisions from theory rather than from practice, which can get complicated and our brains can create a bit of a mess.

But you should still try. Here’s why…

What’s the point of niching, again?

‘Find your niche’ is such tried and trodden business advice largely because it works. I believe it is also a synonym for advice such as ‘stay focused’ and ‘get really good at what you do’.

To find a niche requires discipline. It means that you are saying ‘no’ to almost everything except this one thing, which itself means that you incur a loss.

The resistance to niching is typically based on loss aversion because niching requires closing the door on so many other ideas, people, and problems that you could pursue. Entrepreneurs are visionary people with big ambitions. They don’t want to just build for ‘mums of two living in Windsor who watches Strictly Come Dancing every weekend. They want to help everyone.

Yet the reason that you should niche is so that you can corner a market segment. So that you can gain traction and make waves with your product/service.

Traction creates ease and flow because business begets business. If you have a foothold in a certain area, mums in Windsor (?), then all the other mums in Windsor get to know you faster and your business is seemingly ‘everywhere’ to them and gains credibility faster.

When your business serves only a specific group of people it becomes more memorable and sticks in their minds. Stickiness is a result of people ‘getting it’ and having something to cling onto because in the noisy world we live in specificity stands out.

Niching builds momentum and creates more opportunities due to network effects. Other people become your messenger boys. My website designer Hannah from Grow Create Studio has built her business almost exclusively through word-of-mouth referrals since her target customers have come from her past life as a yoga teacher where she built a community of wellness instructors, coaches and practitioners. This has evolved to life and business coaching but the niche has stayed narrow enough that she’s the go-to brand and web designer for these business owners. Not only does she help build websites, but she can also offer business insights that other web designers wouldn’t be able to.

Choosing a niche is also a forcing function for focus.

If you’re anything like me, you’ll have business ideas a dime a dozen. Ideas that are not entirely random either, but could quite easily be considered part of what I’m already building. Yet deep down I know that they are a wolf in sheep’s clothing because they are just distractions.

They offer alternative avenues to pour energy into that would distract me from executing against my current priorities.

Whilst it could seem ambitious to want to take on more it can also be an avoidance tactic. To make your business truly work you have to give it the time and space to succeed, and that requires zeroing in on your priorities.

Focus becomes easier with a niche, as it removes decision fatigue about what you could be pursuing, and means that you can align yourself only to the opportunities that make sense rather than get pulled in every direction imaginable.

So niching is actually serving your purpose more fully so that you can say you’ve done everything possible to make your business work.

Focus also speeds up the process to mastery. Whilst you might pick a niche with limited knowledge or experience in to begin with, soon you’ll have plenty domain knowledge and context because the same problems and ideas will keep cropping up again and again.

It’s only from only working with early-stage founders that I continue to gain so much context about their biggest pain points.

As an ICF certified coach, I got trained in the discipline of coaching (structuring conversations so that people gain more self-awareness and belief in their ability to change). This means I could coach anyone. But after working under Founders for a decade in my career I knew a fair amount about their struggles to begin with. Now after 18 months coaching Founders week in and week out, I know a lot more than had I just coached anyone.

Sales Impact Academy is a client I’ve worked with. Their own customers are some of the biggest names in the SaaS industry so if they share rave reviews of Sales Impact Academy’s courses the word spreads and other B2B SaaS businesses want in too. Their revenue has gone from $1m ARR to $4m in 4 months so something is going right! Sales training is something most businesses need but if Sales Impact Academy offered sales training to butchers, bakers, and candlestick makers then their message would not spread so organically.

With a niche products become easier to build. So long as you are properly listening to the customer (more on that next week from Alicia Carney).

Why is the process of niching so damn hard anyway?

So you grasp the benefits of niching. But something inside of you is still resistant to it.

Let’s explore where that resistance is coming from and why getting clear on your niche is so challenging for many people.

As I mentioned, entrepreneurs are ambitious and want to work on big problems. We see companies like Amazon, Google, and Tesco creating and selling thousands of products and know that everyone is a potential customer. Therefore it feels counterintuitive to say you can’t create a breadth of products and services for different people. Surely there is more business available by doing this?

We also see in the world of social media how big audiences and more likes and followers equals more success. You’ve ‘made it’ if lots of people know about you. So why would you pick a small group of people and exclude the rest? Surely that’s leaving money on the table and not taking full advantage?

These concerns are forgetting that most businesses begin niche.

Successful businesses tend to dominate one market segment first and then go onto tackle others.

Amazon began with books, Google ranked the importance of webpage links (for internet users who at that time were in the minority) and Tesco began selling surplus groceries for locals shopping at Well Street Market, in Hackney East London (that’s right by my house!).

Screenshot from Amazon’s Website in 1997 (Wayback machine)

But how do you decide on the niche?

In the age of the internet, we are no longer bound by restrictions of location and so if your business has an online presence you truly can reach almost anyone. As Kevin Kelly in his seminal essay 1000 True Fans explains you can make a living from a small number of fans (aka customers) who can be located anywhere.

With eight billion people in the world how do on earth do we decide which small percentage to focus on helping?

Choosing a niche is actually answering two questions at once:

1) What is your purpose?

2) What will customers pay for?

Independently these questions are not easy to answer. Answering them at the same time is even harder.

Knowing what customers want is not enough, because you need to be excited, willing and capable of creating that thing for them. The business building journey is no easy feat so you need to go into it with passion and purpose.

It’s like the Ikigai equation. Finding the intersection between what you love, are good at, and what the world needs. As a business owner you are also concerned with the mechanics of the market and what level of supply and demand exists and so you have to stress test your assumptions to see if you’re correct.

Not only are you combining multiple needs and questions at once, but another point of resistance I hear about niching is the fear of boredom.

The fear that once you have chosen, that the world becomes a bit repetitive and you’ll tire of the thing that you committed yourself to.

Again, an entrepreneur’s disposition is inclined toward opportunities and taking on lots of challenges - it feels antithesis to do the same one, small thing. If you wanted to do the same thing over and over you’d get a job, surely?!

And what about picking the wrong niche?

You might worry about putting all your eggs in one basket and making a mistake.

Perhaps other niches were easier, more profitable, less competitive?

Niching is hard because it is antithetical to some of the reasons to become an entrepreneur in the first place: to build an empire, to solve the world’s problems, to wear many hats and work on different projects, to be expansive, creative and opportunistic.

You don’t want to put yourself in a box when the world feels so full of other possibilities. I know. I’ve been there.

So how do you overcome these doubts and fears, and find a niche that allows you to bring your whole self into your business, and still make an impact?

Follow These Steps To Find Your Niche

Finding your niche is a journey.

It’s one that can get sped up through deliberate trial and error, or with the help of someone objective. I worked with brand designers, strategists, and coaches at the start of 2021.

I used to offer career coaching for people pursuing courageous careers and now I coach early-stage founders who are lacking clarity about how to make their business successful and feel fulfilled in the process.

That evolution required some outside help to get me to. I remember going on a frustrated walk around the park during a moment of forced decision to make up my mind.

Whilst the niche has evolved, the foundations have always been the same: people in entrepreneurial careers who have a tendency to overthink.

Why?

Because that’s me.

And very often we solve problems for a version of ourselves so that we can create a service that we wish we had when we needed it.

When I’m on a hype myself moment I often marvel at what a good coach I am and how I would have loved the session I gave a client, for myself.

So one piece of advice is to scratch your own itch and create a niche around exactly what you know: yourself.

Image Credits in today’s post: Adrian Pickett

But this isn’t exactly groundbreaking advice. Nor does it help if your customers are businesses.

So here are some other ways to find your niche:

In contrast to the above, get out of your own head and into the head of your customers. Create multiple different types of customer personas and spend as much time getting to know them. Interview them, observe and study them. Figure out what they are looking to solve or change in their lives and explore the current solutions available. With enough research, you’ll start to draw conclusions about the biggest opportunities or most interesting subsections.
Forget a type of person and zone in on a problem. Get very clear about how this problem shows up in different peoples’ lives and in different contexts. Really dive deep into how it is showing up, so that you can direct your solution to this very specific problem that people are having. No need to pick a mum of two in Windsor here, instead, niche on something that goes wrong in their life that many others experience too. By approaching the specific problem in a unique way (better, faster, cheaper, more aesthetically pleasing) you can pick another axis upon which to niche.
Combine your interests to carve a personal monopoly. As David Perel explains, it is hard to be an expert in one thing, but that process becomes easier when you combine a series of interests or skillsets so that the unique pairings of these create new worlds to explore and find your true fans. Examples would be Steph Smith who combines side hustles, remote work, and indie making to write, and build digital products for people who have similar goals and interests to hers. You can learn more about both David and Steph in this post I wrote on their business models.
Discard options from what you know so far. Rather than choosing your favourite thing, pick your least favourite. Rule out projects, people, or problems that have not given you energy or enjoyment and start to find themes around what you can leave behind. The clues will start to add up and you can choose from what’s left, looking for anything that unites them.
Use the tools online. Search engines have a rich history of data that shows where market opportunities lie. Go nuts exploring themes and ideas that are already proven and match your own interests to them. This article has plenty of niche ideas and outlines a data driven process to go through.
Your own career history. Combine what you know and can already do and stay focused on this, which is basically what I’ve done to build my own business and (very meta) is a process that I help clients with, alongside other ideas explored here. The consultation is free and designed to support you to get clear on what you need to do, and explore how coaching can speed up the process.
Book in here, there’s still a handful of spaces left for 2021.

Why is it so hard to pick a niche?