Three years ago, when I started telling accountants that they needed to niche down, I was met with a lot of disbelief and stubbornness.
“I don’t see the point. I want to work with everybody and do all the things.”
I still get that sometimes. I have a family member who, when I told him that I’m creating a marketing course for accountants, he was all impressed. But his next question was: “Oh, so you can teach that same course to plumbers, right?” No. Accountants are my peeps. When I tell accountants that I’m creating a course specifically for them, they’re intrigued, because it’s tailor-made for them and they can see the value in that.
When we’re on the receiving end, it’s much easier to see why narrowing your niche is a good thing, but when we need to choose a niche, we’re always afraid that we’re going to exclude a group of people who might have bought from us.
A question that has come up a lot lately is about choosing a niche. But now, the question is not “should I choose a niche?” but rather “how do I choose a niche?”
So, I want to share a bunch of guidelines to follow and tests that you can run your chosen market through to see whether you’ve chosen the right niche. And, of course, if you’re still in the process of deciding who your ideal clients are, these guidelines will help you to choose the right niche from the start.
Choosing Your Niche: It’s Emotional, Sort Of
You can select a niche based purely on whether you can make money from that group of people or not, but I believe that there needs to be a bit more soul behind your decision. When you wake up in the morning, and you’re thinking about your business and your clients, does it light you up? Is there a spark that helps you to jump out of bed, excited about starting your day and spending time with your clients?
If not, then you may have chosen the wrong peeps, and I promise you, if you work with the wrong people every day, you will start to hate your business at some point.
But let’s put the emotional side away for now and let’s tackle this question in a more logical way.
You, under the Spotlight
First, let’s look at you.
When choosing a niche, you need to keep your skills, experience, and strengths in mind. For instance, you can’t add tax planning to your repertoire if you’ve never touched tax before unless you hire or partner with another expert who does have those skills.
But a lot of your skills and experience can transfer nicely into another niche. For instance, let’s say you have lots of experience drawing up business plans for clients in the medical industry. If you’d rather work with tech startups, that skill can be transferred to your chosen industry, even if you haven’t done any business plans for tech companies yet. It may take you a few business plans before you get comfortable, but it’s definitely doable.
So, to sum up:
- If you don’t yet have a specific skill or experience with a service that you’d want to offer, you either have to partner with someone else who do have those skills, or you should learn that skill first before you start to sell it.
- You don’t need to stick with one industry just because you have experience in that. Your skills are transferable to other industries.
External Forces at Play: The Market
Next, let’s look at the market itself – things that are outside of your control.
The first thing to look at is the market size. You don’t want to choose a market that is too big or too small.
When the market is too big, you’ll have to compete with a lot of others to get noticed and break through the noise. That also means that it would be expensive to advertise, and the biggest players in the market would scoop up all the nice clients. You may find that the only way you’ll be able to compete in this large market is on price – lowering your fees to a point where you hustle 24/7, but you still don’t have money to pay for your kid’s field trip next week.
On the other hand, if you choose a market that is too small, there won’t be enough demand for your services, and there won’t be enough potential clients for you to sell to. Similarly, you may want to offer something to your market that they don’t know they need yet. If that’s the case, it will take a lot of education to convince them that they need this service. A warning sign that your niche is too small is if there aren’t a lot of competitors in the market (yes, competition is good).
Let’s look at an example, starting with a market size that is too big, and then narrow down until it’s too small:
- Small businesses: There are still a lot of accountants who say that their niche is ‘small businesses’. Well, that’s too big. There are lots of small businesses and lots of competitors. Even the Big 4 firms have divisions working with small businesses.
- Small law firms: Let’s narrow it down to ‘law firms’. That is a much smaller group with fewer competitors, so it will be easier to get into. If you want to stop here, you can, but I’d take it a bit further.
- Helping small law firms with managing costs and financing growth: You can narrow your niche down by helping them with a specific problem, in this case, ‘managing costs and financing growth’. That is a problem that lots of small, growing law firms have (according to a survey by Law Firm Suites) and they’d gladly pay for your services. You also won’t have as many competitors.
- Helping small law firms keep their operational costs low: You can take it a step further, focusing only on operational costs. That, however, is too small a niche, in my opinion. How many lawyers do you think are only concerned about their operational costs? Everyone wants to make money, so just focusing on the ‘cost’ part won’t win you many new clients.
We tend to cast the net too wide. So when you’ve set your eyes on a niche, see if you can narrow it down more. It’s not always easy to know when to stop, and often times it’s something that you’ll figure out over time. My niche started out as small accounting firms. But now I have a list of criteria they need to meet to be the right type of small accounting firm. (If you’re wondering what kind of small accounting firms I love to work with, check out my home page to see if that sounds like you.)
Analysing the Market
Let’s look at a bunch of questions that you can ask yourself when trying to figure out if your niche is too big or small, and whether it could be a profitable one for you:
1. Is the market growing and expanding, or is it declining?
You want to choose a market with long-term potential, so ask yourself, are they going to be around for a long time? You always want to choose a niche that is either growing or stable.
2. Are there competitors and do they spend money on advertising?
A good way to check whether your niche is profitable and not too small is to check whether your competitors run ads. If they don’t, or you can’t find any competitors, your niche may be too small.
3. Are your competitors charging decent fees, or are there lots of cheap services?
The more competitors there are, the less you can charge for your services, and you run the danger of becoming a commodity. Take ‘bookkeeping for small businesses’ for instance. Not only do you have lots of people in your own country (or town) competing for this market, but you also have cheap service providers from other countries that can do the same job at a much lower price.
You do NOT want to compete on price.
4. Do people spend money on solving the problem that you want to fix for them?
Let’s say your speciality is helping peeps with drawing up business plans. Do people actually pay for business plans, or do they just download a template from the internet and DIY it?
5. Is the problem they’re facing an ongoing issue? Can you solve more problems for the same client later on?
It’s expensive (time and/or money) to acquire new clients, so you don’t want to market to new people all the time. You typically want to help the same people on an ongoing basis, and they’re also more likely to say yes to another service or another month because you’ve already won their trust.
Solving ongoing problems can be in the form of a recurring service, like doing their bookkeeping every month or their tax returns every year. Or it can be other services related to the first problem they’ve had. Let’s look at our business plan example again. Let’s say you’ve helped them with drawing up a business plan, how can you help them further? Maybe the next step would be to help them secure funding. After that, you can help them on a monthly basis to check their financial health, and you can advise them on improvements they could make so they can reach those goals that they’ve set out in the business plan.
Logical & Emotional: Is It a Match?
Okay, now that you’ve looked at your niche in a logical way, let’s get back to the emotional side again: How does it feel? Is this a group of people you could spend your whole day, every day serving?
COURSE: Tailor-Made Niche
Your step-by-step guide to honing in on your niche – without a sweat
In this course, you’ll…
- Uncover your strengths and what makes you different from your competitors
- Learn how to choose the right niche that is aligned with your strengths and values
- Dig deeper into understanding the challenges and goals of your target clients so that you can serve them better
Ready to attract the right clients?