Question of the Week
Why Niching is Critical For Your Business
Happy Friday, all!
I hope you’ve had a fantastic week. I’ve had a lot of conversations around growing income this week with both established and new business owners. And the topic that continues to come up is the idea of niching your business.
This week, I dive it what niching is and why it’s the most critical business decision you’ll make.
What is niching?
In short, niching is specializing. It hones in on a specific set of products or services rather than trying to sell a wide variety or do many different things.
At first, niching seems counterintuitive: don’t you want to do a wide variety of things, so you have the chance at getting the most customers? Nope!
There are a ton of benefits of becoming specialized and focusing on what you do. Keep reading to learn more.
Benefits of niching
While it’s scary to limit your client base, doing so opens up many more possibilities for you.
First, it allows you to focus. It focuses your message, marketing, and offerings. You concentrate your message on what those clients want and need by speaking to a specific, small audience. And by focusing on their needs and solving your problem, your business becomes one of attraction rather than promotion. In other words, your people seek you out because you provide solutions to the issues they need resolving.
Second, it gets you better at what you do. By repeatedly working on and getting into the details of your specific client set, you become more skilled and efficient at what you do. It also allows you to strengthen your offerings as you adjust and fix problems in your process in ways that most benefit your clients. And as a by-product, you become established and an expert in your field.
Lastly, you can quickly establish your network and a loyal client base. As the cliché goes, birds of a feather flock together. By focusing on a specific flock, you can find groups, events, and spaces that will eventually get more clients and referrals. Ironically, the smaller the niche, the tighter and more well-connected the group.
How to define/refine a niche
Now that we’ve established why niching is important to your business. Let’s talk about how to define or refine your niche. Here are four steps you can go through to do that.
1. Find your passion, vision, and values
To help with niching, I first take my clients through the Visioning process to get a sense of their passion, vision, and values. These three principles will be the foundation of your business and give you the lens you use to make future decisions for the company.
One of my questions comes from the Kinder Three Questions, developed by the father of Financial Life Planning, George Kinder. We want you to imagine that your company is financially secure, that it has enough money to take care of its needs, now and in the future. How would you structure that company? If you already have a company, what would you change? Let yourself go. Don’t hold back on your dreams.
Finding your passion and establishing the values for your business allows you to clearly focus on what you hope to achieve and then help you find your ideal customer.
2. Identify your ideal client.
Next, I take clients through another exercise that clearly outlines who they see as their ideal client. We dive deep into that person’s stats (age, location, race/ethnicity, etc.). We reflect on the brands and experts they love. And we outline their needs, wants, and motivations. Identifying your client allows clarity on what problems they face and how your product or service can solve their problems. I give actual exercise here if you’re interested. And if you already have an established client base, you can analyze them to get even more precise on who you want to serve and the problems you’re trying to solve.
3. Research the competition
Is there anyone else out there that does what you want to do? Take some time to research your potential competition. With a defined niche, you can quickly identify them and will likely see the competition is limited. Just because other people are doing what you want to do doesn’t mean that you shouldn’t do it. You’re unique and can bring your spin to your product or service. Researching your competition allows you to gain insight into strategies and tactics that already work to build the business, gaps in the market that you can fill, or ways you can bring your twist to the product or service.
4. Build, measure, learn
Lastly, you want to test your product or services. I’m a huge fan of the Lean-Start Up method of building a business. This method has several versions, but I’m partial to the one outlined in Eric Ries’s book The Lean Startup.
Overall, the concept favors experimentation, feedback, and repeated adjustments overelaborate, rigid planning. This method allows you to work smarter, not harder, by developing a minimum viable product for your niche that will enable you to begin learning about your process or service as soon as possible. In turn, you end up continually testing your vision and improving your product or service. It’s a type of “validated learning” or a rigorous method for demonstrating progress amid extreme uncertainty.
Quote of the Week
“We are all experts in our own little niches” – Alex Trebek
Task of the Week
Can you define your niche? Can you clearly identify your ideal customer? Is your current niche fueling your passion, vision, and values?
Take some time this week to reflect on your niche. Then, you can go through some of the exercises above to help you get a better sense of whether it’s time to hone your niche and refine your business.