Finding a Niche Market Can 10x Your Business. Here’s How:

Having a clear niche market and target customer is the fastest way to double, triple, or even 10x your business. If your business is focused on serving a particular customer with excellence you:

• Can charge a premium for your expertise.
• Make your offering perfect for your target customer.
• Improve ROI on pre-sales by marketing to a niche market.
• Streamline your operations and simplify your business.

Sounds great, right? Well, there’s a catch. By targeting a market you have to do the unthinkable. You have to focus. For entrepreneurs, this is almost a dirty word. Wait, they think, I have to do just one thing? What about all the other stuff I do? What about all the customers I’ll lose?!

Indeed, for business owners who are struggling or just making a little bit of money, it can seem plain stupid to turn away business. Because that’s the cost of finding a niche market. Before you write off picking a target customer or a niche though, let’s look at the story of two businesses and see how a niche changes their performance.

The Tale of Two Desks: How Target Customers Change Everything

Jeff and John decide to make a bet with each other. They want to start the same business and see who can build a better one. They give each other one year to work on their businesses before they compare. Here’s what happened:

The Anything and Everything Desk Company

Jeff starts a company he thinks will be great: The Everything Desk Company. And at first things are great. Jeff puts together a few generic desks and makes some good sales. He manages to break even on his costs and even has a little left over to expand. But he isn’t sure what to invest in given the one-year time limit. Then, an opportunity comes his way.

One of Jeff’s first customers loved Jeff’s desks and wants to have fewer vendors. They ask Jeff to make them office chairs too. Jeff thinks this is a great idea, but he doesn’t have the tools or skills to make chairs. So, what does Jeff do? He takes his hard-earned investment capital and invests in a new hire and some tools. Jeff manages to fill the order for the chairs. His client doesn’t love the chairs, they aren’t as good as the desks were, but they’re mostly fine. They pay their bill and everyone is happy. Well, everyone except Jeff.

Because Jeff realizes after they pay their bill that he doesn’t have as much money left as he should. See, the margins on chairs aren’t quite as good as they are on desks. They have more parts, and Jeff has to manage his new team member. Plus, the billing for chairs is different so it takes more time for Jeff to manage the finances now. But that’s okay because he can sell two kinds of things! As long as everyone buys desks and chairs, Jeff will make up the difference with volume.

About halfway through the competition Jeff has another opportunity. A client who really liked his desks wants desk lamps. At first Jeff wants to turn this down, but his margins are so small it feels dangerous. He doesn’t want to lose to John, but right now Jeff is having trouble even making payroll. He feels like if he doesn’t take this job for lamps, he won’t be able to pay his bills. So, Jeff agrees to make the customer some lamps.

The only problem is, Jeff doesn’t know anything about lamps. He has to hire someone and buy the equipment to make lamps. But Jeff is on razer thin margins. He’s forced to get a loan to pay the new hire’s salary and buy the new tools. Jeff manages to fill this order for lamps. The lamps aren’t very good and they don’t look great with the desks so the client is fairly unhappy. They still pay their bill but they pay it late so Jeff has to take out another loan to cover the payroll in between. But there’s worse news.

When they pay their bill, Jeff realizes the overhead has gotten even higher. There’s more errors, more billing issues, more time managing, fewer positive reviews, and less sales coming in. Jeff spends the rest of the competition trying to juggle his disparate revenue streams and manage them all. He’s forced to play a shell game with his bills to keep the company afloat. At the end of the competition Jeff is worn out, dead broke, and sick of managing  a failing company. Sound familiar?

If so, see how John’s company did things differently.

Wheelchair Accessible Desks, Inc.

On the first day of the competition, John cracks his knuckles and sits down at his desk to do some planning. He knows there are many people who make desks so he’s entering a crowded market. John thinks about how he can make his desks different from other company’s products. He has an idea.

What if he made desks that were just for people in wheelchairs? He’d sell fewer desks, but he could probably make a better desk for that target market. John used to work with a veteran’s physical therapy group so he reaches out to some old contacts. They tell him the issues they have with their current desks. John spends his first month doing research and planning customizations.
In the second month John develops his first prototype. He takes it to a few people who need wheelchairs and have them test it. They give him some good feedback and it has some issues he hadn’t considered. John spends the rest of the second month improving his design. By the end of the second month John feels like he’s ready to go to market.

It takes a while for the first sales to come in. His desk requires more work so it’s a bit pricier than generic options on the market. At first, John is worried his strategy isn’t working. In fact, he considers going back to regular desks to try and catch up to Jeff’s early success. But then he gets an order!

John ships the desk out and a few days later he receives gold: a perfect, gushing 5-star review on his store page. The review talks about how the desk meets every need someone in a wheelchair has. It’s easy to use, comfortable, and more. John goes to bed that night with a satisfied smile – at least one person got some use out of his mess. Overnight the miraculous happens.
That customer didn’t just leave a review on John’s store page. The customer also went on a forum for people with disabilities to talk about John’s desk. John wakes up to five more orders for his desk. Suddenly things look much better. Over the next few months more and more people get John’s desk, are amazed by it, and spread the good news. In fact, John gets so much attention that an opportunity comes his way.

A company that makes computers accessories for people without arms approaches John. They are impressed with his wheelchair accessible desk and want him to make a desk customized for people without arms. This is a tough choice for John. He wants to help these people and it could be quite a large revenue stream. This other company has an existing client base they would market his desks to. He wouldn’t need to do anything except make the desks. But there are a few problems.

John would need to spend a significant amount of time doing research to make this new desk. It took him two months to do the first design, after all. At about half way through the competition he would have time to make the new desk and probably get some sales. But John is concerned he won’t be able to make as many wheelchair desks if he takes this new opportunity. Plus, he wants his quality to stay at the very top level. Eventually, John decides to turn the opportunity down and focus on his primary target customer.

John spends the rest of the competition enjoying the fruits of success. He’s able to scale his operation efficiently, hiring and training new people to build the specialized product. In fact, John is so successful that after 12 months he has several investment and buyout offers for his thriving business.

Niche Beats Everything Every Time

That exaggerated story shows the benefit of finding a niche market, targeting that market, and focusing on your ideal customer. You’ll get:

• Consistency in your work.
• The ability to refine your product.
• Happy and satisfied customers.
• The right to charge a premium price.

Sounds great, right? That’s why the most successful companies find a niche market and focus on it. But how do you pick your target customer? And once you know them, how do you target a market? Well…

Read Our Next Blog to Find Your Niche Market

This is the first in a three-part series on niches. You just learned why niches are important and how they can help you. In the next blog we’ll look at how you can select your niche market even (or perhaps especially) if you have many offerings. Then in the final blog we’ll show you exactly how we target niche markets with digital marketing.

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God be with you.