Choosing to limit your potential customer pool can feel like a risky business decision. But being a niche business may be a great strategy. Sure, your prospect base is smaller, but selecting a business niche can give you the opportunity to better define what you do—and for potential customers to find you.
As a strategist, I've always felt that I could walk into any type of organization and industry and help them connect the dots and improve their business. But I also struggled to clearly define what my agency does. We recently decided it was time for a full rebrand, complete with a new name: Tote and Pears!
But before I could go through the branding strategy process, I had to define my business, our services and our target audience. I had to answer the question: Would we have a niche?
Here's a look at the pros and cons I discovered during my exploration—and where I landed.
Pros of Selecting a Niche
Focus. Direction. Client synergies. There were a variety of pros that led to me taking my agency niche. Here are are a few.
1. You can create a clear marketing message.
You may be clear on what you do, but that doesn't mean potential customers are.
Having a niche business can make it easier for you to create a clear marketing message that speaks to the direct needs of your target audience, and a direct message is key to helping them find you.
2. You can put your money to smarter use.
A niche business allows you to home in on where you put your marketing spend. Instead of spreading your dollars across multiple campaigns targeted at different personas, you can put your money toward retargeting efforts that help emphasize your message.
If you're like most business owners, you probably don't have endless amounts of cash. The more you're able to stretch your marketing budget, the better.
3. You can weed out poor-fit customers early.
Creating a niche business can help you find your target customer faster by weeding out the customers who aren't a good fit for your business early. This can help save you time and money along the way.
In my case, my team and I had the skills to take on lots of different projects, but that didn't mean that all projects (and customers) were the best fit. Some projects required more time, were harder to deal with or their value didn't align with ours and as a result, cost us more money.
By centering our marketing efforts around our niche, we're able to be direct about what we do and allow those individuals who align with our offering to find us—and the others to self-select out.
4. You're able to focus on your strengths.
One of the biggest pros for creating a niche business has been how it's allowed my team to focus.
By doing the same thing over and over, we're able to get to a level of depth that we've never been able to do before—and that is helpful not just for me as a business owner, but also for my team. Repetitive processes and services allow my staff to build upon each engagement and broaden their experiences. It also makes it easier for us to train our new staff.
This level of focus allows us to stand out in a way that we just couldn't do before. In turn, this has saved us not only time and money but given us a level of expertise that brings double the return.
Cons of Creating a Niche Business
A niche business isn't for everyone. Before you change directions, consider the impact limiting your scope could have on your business.
1. You may limit your potential customers.
When you create a niche business, you're going to leave some customers on the table. And that isn't always an option for everyone.
Depending on the stage of your business and your cash flow, sometimes it's more important that you keep your options open. And if that's the case, then, by all means, do so.
However, I will say that taking on a niche doesn't mean you don't take on business that falls outside of that window. It just means you're specific about where you spend your time and marketing resources.
2. You may limit your growth potential.
Another possible con when going niche is that it may limit your growth potential.
If you're focused on just one industry or one vertical, then that may not give you an opportunity to learn different things or expand your services. And as a service-based or small business that may not be something you can do.
3. You may risk putting off some people.
Deciding to build a niche business might mean that you're going to turn some people off. And in some cases that could be a con.
For example, we've decided to convert our agency from being a general consulting firm to one that's focused on women. Making the decision to only work with brands that are trying to connect with women was hard at first, especially since my network was full of men—some of whom I knew wouldn't align with the new direction. However, after careful consideration, it became clear that we'd be gaining more from the decision then we'd be losing.
In many ways creating a niche business can be limiting, but for us, those limits have all led to growth in other ways. We're more focused than we've ever been before, and my team and our customers are excited about the new direction—so much so that we've already hit half of our revenue goals for the year, and we haven't even launched yet. We go live in August, and if things continue to progress as they have, going niche will be what I attribute Tote + Pears' accelerated growth to.
Read more articles about pivoting.