Niching down is one of THE most talked about positioning practices for entrepreneurs. Everyone and their mother is telling founders to niche, niche, niche. But is that really the best approach for every business? In my opinion, there's more ways to stand out and build a successful business and niching down can actually limit your growth. Let's talk about it!

First things first:

◯ What is a Niche?

In short, a niche is a specialized segment of the market for a product or service. Niching down is a positioning strategy that narrows your target market as much as possible, so you can become the go-to expert in that specific market and solve the problem of that specific customer base. Sounds great, right? And it can be, so let's take a look at how it works (if it does).

Much more important is that your logo conveys the vibe and the quality of what you do. Just because a logo is literal, doesn’t mean it communicates that.

◯ Why it Works – The Benefits of Niching

When working with founders, I often hear something along the lines of: “I want my product/service to be for everyone!”

The problem with that is that not everyone wants and needs the same things. Every customer and every target market has different pain points you need to address with your products or services.

Often entrepreneurs are scared of defining their ideal customer because they are afraid of chasing people away.

It seems counterintuitive to say, 'I want my pool of potential customers to be smaller'. But here’s the thing: if your pool of potential customers is huge, there’s going to be a lot of competition in that pool with you. Picture it like an actual pool: it’s crowded, it’s huge, it’s noisy. You will have a hard time drawing attention to yourself and making yourself heard.

Now if the pool is smaller there’s going to be much less competition and noise. The people around you are much more likely to see you and because they generally are more likely to want what you offer they are more likely to listen to what you have to say.

So niching down is really about getting clear about who your ideal customer is.

You’ve probably heard the saying “if you try to please everyone, you’re going to please no one”. That is true in life and business. Your brand can’t be for everyone, and neither should it be. Rather than trying to be everything to everyone, focus on the people who really want what you offer and address their specific needs.

Another advantage of niching down is that you can focus your business and marketing efforts. Instead of trying to appeal to everyone, you can focus on your specific niche, which gives you a clear direction and helps to streamline your branding and marketing to help you attract your ideal customers. It makes it easier to become an expert in your specific field because you can focus on targeting this specific area.

To learn more about this, check out my free Masterclass, which dives deeper into how to find your ideal customer and position your brand:

◯ Different Ways to Niche

Often, niching down is simplified to working with just one type of industry or person. So often the focus is on superficial factors, like demographics.

But there are more ways that you can niche:

Focusing on a specific industry or target audience ➔ this is usually what people mean when they talk about niching
Narrowing your offerings within a particular service or product category
Geographic niching, catering to a specific location
Tailoring your offerings to a unique customer experience, experimenting with unique personalized services or events

And you can mix and match and expand these to go even more narrow.

◯ The Disadvantages of Niching Down

Niching down is often hailed as the key ingredient of success. Except it’s not. If it were that easy, we’d all be millionaires, right? So let’s take a look at some of the downsides of niching down.

Going too niche

The obvious one is, yes, you can niche down too far. Your niche needs to be big enough to be viable. Let’s say your niche is “baby photographer in small town XY” – you will probably struggle to fill your calendar. If your niche is too focused and too specific, you don’t have the opportunity to scale your business.

Greater dependency

Another downside can be that you’re more vulnerable to shifts and changes in your niche. While the pandemic and cost of living crisis are extreme examples, they perfectly illustrate that it can be a risk to put all your eggs in one basket. You are dependent on the economic success of your niche. Even just a change in trends can make you vulnerable if the demand in your specific niche trickles out. Focusing on a niche then potentially leaves you high and dry.

Less variety

This is probably one of the most underrated disadvantages to niching down, but especially for small business owners and service providers, this one can hit hard: niching down can make you feel boxed in.

The main reason why I don’t niche down by industry – which is arguably the easiest way to niche down as a brand designer – I know I would get bored sooner or later. Getting to work with a variety of people from different industries and backgrounds is one of my favorite aspects of my work. I love deep-diving into new topics and getting to know different industries through my clients. It's keeping me on my toes and makes me expand my horizon with every project, and I would've missed out on these experiences if I had said I only work with industry XY.

Just recently, I talked with a service provider who felt pressured to niche down further (which prompted me to write this in the first place). She, too, is a person who thrives on variety. She has a deep understanding of her target audience, and although they come from a variety of backgrounds, there is a thread that unites them. I would therefore argue that therefore she has her niche. But the common advice in her industry is to niche down in a very specific way by offering only a small set of services for a very specific subset of people. So she’s worrying about not being specific enough, while at the same time being reluctant to narrow her services down even further because she doesn't want to feel trapped.

Especially as service providers, it is important that we factor in our own personalities.

→ Niching down should feel like shedding dead weight, not like it’s going to stifle you and bore you to tears.

◯ So how do you know whether to niche down further or not?

Niching down is a valid and important concept, but it's not the end all be all of success. And I'm not a fan of this blanket advice that there's just one way to niche down correctly. Building and scaling a business requires nuance and ingenuity and not following a reductive handbook, that ignores that many ways lead to Rome. Niching down can be a successful and useful approach when done right for yourself and your business. So don't let yourself be talked into a box that you don't even want to be in.

To help you figure out whether niching down is for you or not, ask yourself the following questions:

Do you know who your ideal customer is? Do you know what unites them?
Do you attract your ideal customer?
Can you earn your living with your ideal customer?
What risks is your niche subjected to?
Do you prefer having variety in your work?
Look at your offer: are there any parts of your offer that are dead weight?
Can you niche differently than the typical approach?

Don’t forget that there is not just one way to niche down. Finding your niche can be incredibly helpful in sharpening your brand’s positioning, but there are other ways to position yourself (for example through your style, a different approach to your competitors). There’s not just one recipe for success.

If you feel like your positioning isn’t as sharp as it needs to, reach out, and I'm happy to help you find how you can find your niche.