You have to find your niche and dominate it. Have you ever heard this piece of advice? I’m pretty sure you have because it’s been everywhere.
I think it all started with Pat Flynn who said that “the riches are in the niches”. The full quote is:
“The riches are in the niches but the fortune is in the follow-up.”
But we don’t get caught up in details when we peddle trite advice, do we?
As with most blanket statements, this one is usually either misunderstood or downright wrong. Why? It’s all in the word itself.
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Niche = very small
In its original meaning, the word “niche” refers to:
“something (such as a sheltered or private space) that resembles a recess in a wall.”
This is what it looks like:
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Unless you’re a statue, that doesn’t look too comfy or spacious, does it?
I don’t want to get too caught up in semantics; I only brought it up to illustrate why niching is misunderstood: we seem to have turned finding an audience and a market for what you’re selling into a teeny-tiny thing.
Niches are VERY small by definition. Does this mean that you should only cut a very thin slice of a market for yourself?
Why does niching down sound like a good idea?
There are two main draws to niching down: clarity and lower competition.
Both of these are problematic, though.
Uber, Apple, Samsung, and Coca-Cola have no problem creating a clear message for their brands even though they are not catering to a highly-specialized and tiny audience.
Finding a niche is not a pre-requisite for having clear messaging.
As for lower competition, it’s tempting to think that this means:
- Easier marketing (it’s not — you’ll still need to convince people to buy and to have a clear message)
- More money for you (only if your niche is severely underserved)
- Easier to gain traction (not unless your messaging is clear and your audience is underserved)
Niches aren’t inherently bad, though
If you’re building a lifestyle business, it’s probably a good idea to niche down. If you’ve identified an underserved niche audience with a throbbing pain that you can solve it would be a shame not to solve it, wouldn’t it?
Similarly, niches are very profitable when they are but a fraction of your business. Case in point: fitness coaches, business coaches, therapists, and more who pivoted to digital products during the pandemic.
Some of them built thriving new revenue streams from pivoting to digital — so much so that they haven’t reopened their brick-and-mortar businesses anymore.
Restaurants, on the other hand, adapted and delivered their food when their customers couldn’t get to them. But as soon as the restrictions were lifted, their cash cow went back to being their physical locations.
When the niching down advice can hurt you
Very, very few 7-digit and above companies are “niched”. In fact, you’ll rarely find VC funds backing companies that go after tiny markets. The bigger the market, the better the chances of getting funded.
Venture capital funding isn’t for you? I get it, I rarely recommend it myself. But I follow VCs’ lead because I know they follow the money. And BIG money is rarely in the niches.
You know what else is rarely in the niches: real scalability. If you choose to serve a tiny slice of the market (especially if your product or service is localized), the ceiling is usually lower than you think.
Trends and fads are enticing, but also dangerous
As I see more and more people jump the AI bandwagon and build businesses around it, I’m reminded of my own story with the blockchain and cryptocurrency niches.
You may remember how two years ago, crypto was all the rage and the niche for the (nouveau) riche.
Having a digital marketing agency with no niche and a spin-off that caters to the tech industry, it was fairly easy for us to get clients in the crypto/blockchain space. In mid-2021, this niche accounted for 70% of our revenue.
It was glorious: month-old startups would get funding and spend most of that money on marketing. We did so well that my top blockchain writer at the time suggested we focus on this crypto alone.
The growth was so spectacular that you’d have been excused if you thought that the niche had become a full-fledged industry.
He came up with a (very good) plan for our rebranding. I won’t lie: it was tempting. Who doesn’t like easy money?
But I ultimately discarded the idea and decided to ride this trend for as long as we can and, in the meantime, focus on building revenue streams from other industries. It was the right choice: by the end of 2022, our revenue from crypto clients was exactly $0.
Today, crypto borders on fringe.
It was a good wave to ride but not a good long-term business.
Just to make it clear: I’m not Nostradamus, I did not see the crash and burn of the crypto space coming (at least not at this magnitude). But I did see a lot of media outlets choose between going all-in on crypto and offering a more diverse perspective on investment opportunities.
You know me, I’m all about building a sustainable business, not a one-hit wonder. So I went for the latter model.
I don’t know if the crypto world will bounce back and see another bullish season like the 2020-2021 run. If it does, my business will be equipped to ride the wave once again, despite the thick layer of NDAs our past work is buried under. But we’re diversified enough to not need to hold our breath for it.
The AI industry may have a similar fate. I don’t think its winter will be as cold as that of crypto but I advise you not to bet everything on it.
Ride technology waves but make sure you can move on to the next wave before the first engulfs you completely.
Addressing the creator’s niching dilemma: step outside of your bubble and take a deep breath
If you spend a lot of time on LinkedIn these days, you may feel like everyone’s a creator or a solopreneur these days: no one wants a 9 to 5 anymore, and most people shy away from leading a conventional business. Everyone favors the freedom of a single-person business model.
If you’re on Twitter, you may feel like everyone’s hustling harder than you in a conventional business, with a strong team in place. The hustle culture, along with its hustle bros (a few of which are reformed crypto bros) is thriving there.
Here’s the kicker, though: none of these things is true.
Yes, there are more and more people trying out the solopreneur model and more and more people hustling hard (recession fears got to the best of us).
But they’re not as many as you think.
People still have regular jobs and run regular companies. The business world doesn’t change overnight. More importantly, we are still in the validation phase of these new business models.
Creators are usually faithful to one platform and one platform alone. This is the surest way to give yourself a neat pair of horse’s goggles and think that the entire world moves just like your bubble does.
Sure, some successful business models have emerged from social media pods. But they are the exception rather than the norm.
Before you go all-in on a trend, a niche, or a solution you see on one or two platforms alone, do a reality-check. Step outside the bubble: does the air feel different there?
It’s easy to get caught up in a platform’s jargon and think it’s normal speak. It’s not.
Beyond bubbles, please consider the width and breadth of the topic you plan to make your niche. I’ve noticed a lot of creators follow this pattern:
- Pick a narrow topic
- Write about it for a couple of months
- Run out of ideas
- Get frustrated
- Consider broadening only to realize it’s tough
- Give up or start from scratch in a new niche.
On the flipside, there are a lot of creators who don’t talk about a single topic or cater to a narrow audience:
- Mr Beast started with gaming videos but his “niche” is now everything that’s spectacular or entertaining. He’s also involved in a lot of ventures and has a lot of different revenue streams.
- Lilly Singh talks about equality, racial biases, relationship problems, and pretty much anything your can think of. She does it as a comedian, as a speaker, or as “regular” creator.
- Tim Ferris had his major break through his self-help/entrepreneurship book, “The 4-Hour Work Week”. He then published “The 4-Hour Body” and “The 4-Hour Chef”. You may think his niche is the 4-hour window but he actually speaks about entrepreneurship, productivity, health and fitness, lifestyle, and more.
How to apply this to your business
First off, look at the difference between niching down and finding your ideal audience: you won’t be able to serve the entire population of the Earth, so you do need to make choices. Don’t cut too deep, though.
Here’s a quick framework to settle on a niche that’s neither too tight nor too loose:
- Start with what you’re selling: let’s say you have a system to help entrepreneurs over 50 start a new business/get an additional revenue stream.
- Start counting: how many entrepreneurs over 50 are there? Use statistics websites, government estimates, anything with hard, cold data.
- Does it make sense to go more granular than this? For instance, should you be helping only female or male entrepreneurs? Should you restrict it to a geographical area? Typically, the answer is only if one of these segments has a very, very specific need that’s incompatible with the rest of your sample’s needs.
- Did some more cutting? OK, now count again. What is the audience you’re left with?
- Now assume you will be able to reach between 0.1% and 1% of that audience. Out of this, another 0.1% to 1% will convert.
Let’s see it live:
- There are 31 million entrepreneurs in the US.
- 30% of them are over 50. That means 9.3 million people in your broad target audience.
- If you can reach 0.5% of them, you’ve got 46,500 pairs of eyes and ears on your product.
- If you convert 0.5% of them, you’ve got 232 clients.
Is this enough to meet your goals, considering your prices?
Of course, more prospects will be added to your audience every day, as they near their 50th birthday, just as some of them will outgrow your segment. Perhaps you can also get a much better conversion rate, so things may look cheerier. You can also choose to reach a global audience, which will significantly increase your initial segment.
The example above is just to help you put things into perspective: did you see how fast you can go from millions to hundreds?
Consider this whenever you plan to niche down yet again.
A few other things to ponder:
- Zero in on your ideal buyer persona but don’t get risibly granular. I’ve seen a lot of people build solid businesses by serving “entrepreneur moms over 50”. But “vegan entrepreneur moms who like to do yoga” is pushing it. I’ve seen similar bylines it out in a wild — it’s what I call extreme niching.
- If you’re only just beginning, start broad. Give yourself some time to identify a niche you’re comfortable with and that you can properly serve. The biggest mistake is to stunt your growth by choosing a narrow path. The beginning is always a time to explore.
- Think about churn and customer lifecycle: can you/do you want to consistently chase leads and clients? The “entrepreneur moms over 50” can be a lucrative niche but they will eventually grow out of your audience and you’ll have to repeat the lead generation/lead conversion process.
- Before you go all-in on a niche, ponder this: can you create a spin off your existing company to serve a smaller audience WITHOUT killing off your current business completely? It’s feasible in more cases than we think.
If there’s one thing you remember from today’s issue, make it this one: count the people in your audience before you cut them out.
Want to build a small business that stays small? Niche down!
Want to go to 7 digits and beyond? Broaden your horizons!
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Adriana’s Picks
- Kim’s newsletter, Making Words Work is a must-read for any writer and marketer out there. Kim is a published author and an authority on writing — I’m still learning from her after 15 years in online writing. You’ll also love her curated resources — she can spot some real gems. Subscribe here!
- This LONG Twitter thread has the most comprehensive perspective on AI’s (probable) future I’ve ever seen.
- Don’t have Twitter Verified? Too bad, your content will stop appearing on the For You page and you won’t be able to vote in polls anymore. Yes, Twitter is now pay-to-play.
That’s it from me today!
See you next Thursday!
Here to make you think,
Adriana
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