7 Reasons why you should niche down your business

Niching down is the single most important thing you can do what you can do to increase the success of your business.

Still, a lot of people including myself are struggling with this concept.

When starting out with my agency, I thought that I needed to upsell my clients with more services. So, if a client wanted SEO, I tried to sell Google Ads and a brand new website as well.

I was regularly successful with upselling, but I didn’t know at the time that these successes were Phyrus victories.

This was because I ended up doing all kinds of stuff for my customers, without feeling competent in the things I was doing. I was a jack of all trades, but a master of none

Instead, I should have niched down drastically from the beginning.

However, trying to be a generalist rather than a specialist is all too common in most business areas.

When strolling through my home city of Vienna at night, you will frequently see food stands that are selling everything: Pizza, Noodles, Kebap, Sausages, and so on.

Those food stands are normally located at busy corners, in front of metro stations or in other places with a lot of foot traffic.

This business model works because over the course of a day, a huge number of hungry people will pass those stands and some will give in to their temptation.

But don’t expect customers to actively search for those stands. They don’t have loyal customers, simply because their food is at best mediocre.

However, there are some stands that specialize just in offering one specific category of food to their customers. Ironically, those stands are seldomly located in busy areas of the city. Still, you will always see a queue of people in front of them.

Customers love those food stands because niching down allows them to offer better food and cater to a specific customer segment.

And you could benefit too.

This is the reason why I will now share 7 concrete benefits you will get from operating out of a clearly defined niche.

Are you ready? Let’s dive in!

1. You will hone your skills

Getting good at a particular skill requires a lot of deliberate practice. The more you act as a generalist, the less time you will have for practicing the specific skills needed to complete your work.

You might be aware of the 10.000 hours rule:

Although this rule is an oversimplification, it goes back to the work of swedish psychologist Anders Ericcson, who found that the time someone spends practicing a skill is highly correlated with competency.

So, if you always switch between different tasks, you will inevitably be less competent than the person who can exclusively focus on only one skill.

2. You will face less competition

It is simple: The more general your business is, the more competition you will face.

Niches allow you to leave the shark-filled red ocean, where everybody is competing with each other, and find an untouched blue ocean, where customers are waiting for offers tailored to them.

In general, big companies don’t niche down: In order to be big, they need to be generalists. However, you as a solopreneur can go small without limiting your income, because even small markets will generate more than enough revenue for you.

3. You will find better customers

Niching down will also increase the quality of your customers. It allows you to target the buyer persona of your dreams. This way, you will connect more with clients that share common values compared to clients you can find on the general market.

4. You won’t squander your energy

Imagine a lightbulb: its light radiates in all directions, but if you focused it you would have a laser and now that same energy could penetrate walls.

Niching down will give you the ability to focus your work because you can concentrate on fewer skills, interact with better customers and face less competition.

All those factors will lead to less resistance when doing your work. You will get more things done, by grinding less at the same time.


5. You will have an easier time with marketing

Knowing your customers and focusing on a narrow niche will also help you save marketing money.

In some cases, you will be one of a few businesses offering a particular service, which will lead to a lot of word-of-mouth marketing.

And if you go all the way, you might even establish your personal monopoly, a niche that is fully dominated by yourself (see number 7)

6. You will make more money

Business owners that think about niching down often fear that they will earn less money as a consequence, because the market volume of a niche is smaller.

However, given all the reasons listed above it should be clear that you will in fact make much more money. Due to the limited competition, you will also have the opportunity to charge higher prices for your services.

7. You will have the opportunity to create your personal monopoly

If you’re the only person doing what you’re doing, you have a personal monopoly.

According to writer David Perell, a personal monopoly is defined as

“your unique intersection of skills, interests, and personality traits where you can be known as the best thinker on a topic and open yourself up to the serendipity that makes writing online so special.”

David Perell focuses on online writers, however, his concept can easily be transferred to the world of business.

In the past, having a personal monopoly was impossible, because differentiating too much, would have eliminated all of the potential customers in your region.

However, due to the advent of the internet, you can now offer your services worldwide. This changes everything. It makes it possible for you to target niches, that would have been too fringe just some years ago.

So, what are you waiting for?