Hi Reader!

Where do you stand on the topic of niching?

One of my program participants told me he was considering hyper-niching his business. Almost everyone he'd talked to thought it was a great idea, and he mentioned I was the only one who'd advised him against it.

I'm not against niches. A well-chosen niche can be great.

I'm far less enthusiastic about hyper-niching, especially when someone takes every part of the business and narrows it at once. That can create a very fragile business, especially in an economy like the one we're dealing with.

What worries me is the idea that we can make a decision like that once and assume it will keep serving the business indefinitely. Markets change, client needs change, and we change right along with them, which means some of our most important business decisions need to be revisited more than once.

You'll need to ask some questions over and over

I think we sometimes treat business decisions as if we're sitting an exam. (I still remember those days with anxiety.) We gather the information, choose the correct answer, check the box, and move on to the next question.

• What do I offer? Answered.
• Who do I work with? Answered.
• How do I price it? Answered.
• Should I specialize? Answered.

That would certainly make running a business, and our lives in general, easier, but it isn't really how any of this works.

The answer that made sense when you started your business may not be the answer that makes sense after five, ten, or fifteen years of experience. A service that was profitable three years ago may be difficult to sell today. An industry that once had healthy budgets may be going through layoffs, consolidation, regulation changes, or some new technology that completely reshapes what its companies buy.

Your own business and personal needs change too. You gain skills, get bored with work you once enjoyed, develop new interests, and sometimes decide that a service requires far, far more energy than you want to give it.

And let's not forget those times when you made the best possible decision with the information you had available, and then the information changed (hello AI!).

You run a business in an ever-changing market. Treating one answer like it gets to rule everything is a big weight to take on your shoulders, especially when you're just trying to make a living.

I recommend breaking the big question down into smaller chunks:

• Know what question you're answering.
• Understand why you chose this particular answer.
• Think about what would make you answer it differently in the future.

Let's start with that big question everyone seems to have strong opinions about.

Do I niche or not?

Niching advice has been around for as long as I can remember, and the argument for it truly does make logical sense. If your marketing speaks to a specific person with a specific problem, that person can recognize much more quickly that you may be the right choice.

It's easier to refer "the person who develops fundraising strategies for small arts nonprofits" than "the person who does a bunch of business stuff."

Specializing can also make the work easier to deliver profitably. You encounter similar problems, develop better processes, build relevant examples, and become familiar with the patterns in that market.

You don't have to begin every project by learning an entirely new industry. There are some big benefits here, and I'm not arguing with them.

The problem starts when we take "make it easy for people to understand why they should hire you" and turn it into "make your entire business dependent on a tiny section of the market."

A niche can be based on:

• Your service
• The client you serve
• The industry they operate in
• The problem you solve
• The stage of business they're in
• The way you deliver the work

A hyper-niche often stacks several of those together.

You write one specific type of content for one specific type of company in one specific industry at one specific stage of growth.

That positioning may be incredibly effective if enough of those companies exist, if they have the budget for your work, if you can reach them consistently, and if their need for your service remains strong.

When considering a hyper-niche, the question you should always ask is: What happens if one of those conditions changes?

What happens if the industry collapses? What happens if your primary service becomes easier to automate? What happens when companies at that stage stop receiving funding? What happens if the platform responsible for most of your leads changes its algorithm or falls out of favor?

Every condition you add to your niche becomes another condition that has to remain true for the business to keep working.

You've heard me talk about diversification before. I think it's a must with our current marketplace. I did a bit of research on small firms and found out that diversification can support performance, but it tends to work best when the business has already developed a strong foundation in its primary line of work. Diversifying without that foundation can spread a small business too thin. (You can read the study here.)

That sounds a lot more useful to me than either extreme.

You need enough focus to build expertise and enough range to adapt when the market moves.

Niche your message enough to be understood. Diversify your capabilities enough to remain useful. Those are not contradictory goals.

That need for balance and coordinated motion makes me think about a game I used to play.

Have you ever played cat's cradle?

Cat's cradle is a string game usually played by children.

The game begins with one continuous loop of string stretched across two hands. The string is picked up, crossed, and transferred from one player to another. Each movement changes the pattern shown in the strings.

The same piece of string can become a series of different shapes. Some are relatively simple. Others require more complicated movements and cooperation between both players.

That's how I think a strong business can work.

The continuous string is your core body of expertise. The two hands holding it might be the service areas you lean into most deeply or the cooperation between you and your client to solve their problem. The different shapes you get are the ways you ultimately solve those problems.

From there, your choices can create a variety of offerings using the same services.

You might offer a simple audit or consultation for one offer. Another might combine strategy, implementation, and ongoing support. A third might use the same expertise to solve a related problem or implement the solution you offered in your consulting.

Do you see how the shape changes, but the string remains connected?

Back to diversification for a second. Diversifying your business doesn't mean grabbing every loose piece of string you can find and throwing it into a drawer. Adding a random service because one person asked for it isn't a diversification strategy. Neither is building five unrelated offers that require five separate marketing plans, five sets of systems, and five different kinds of expertise.

That gives you more to sell, but it may not give you a stronger business. Useful diversification grows from what you already know and what your clients already need.

A strategist might add an audit that helps clients identify the right priorities before committing to a larger engagement. A writer might learn more about providing research, messaging, and content strategy because those services improve the quality of the writing. A designer might offer brand strategy because their visual work is more effective when the positioning is part of the process.

Those services all reinforce one another. The knowledge you gain while delivering one improves the others. They're all part of the same piece of string.

This also gives you several ways to respond when the market goes wonky. If clients reduce their budgets for large implementation projects, they may still buy strategy or advisory support. If demand for one deliverable falls, another service may address a need that is growing.

That flexibility just might be the difference between adjusting your business and rebuilding it from scratch.

How much concentration is too much?

When you think about niching, I suggest you take a look at some of the risks of over-concentration too.

Your business can be concentrated in several different ways:

• One service produces most of your revenue.
• One industry supplies most of your clients.
• One or two clients supply most of your income.
• One lead source supplies most of your opportunities.
• One platform, such as LinkedIn, controls most of your visibility.
• One type of engagement, such as large one-off projects, determines whether you have a good quarter.

None of those automatically creates a problem. A large, long-term anchor client can absolutely provide stability. A specialized service can command excellent rates. An industry niche can help you build an outstanding reputation.

I've done all of these, and will probably do most again. You just need to understand the tradeoff you're making.

Let's look at what happens when a large percentage of your revenue comes from a single customer or a small number of customers. Losing one client can then affect revenue, cash flow, and the overall stability of your business. That's happened to me. More than once. After the second time, I decided that no more than 30% of my revenue should come from one client.

The same basic principle applies to other forms of concentration.

If most of your clients come from one industry and that industry experiences a downturn (hello SaaS), having ten clients may not protect you as much as you think. All ten may cut their spending at the same time.

I was talking to someone last week who lost three of her five clients in two weeks because of layoffs and increased AI use in-house. That's not an ideal situation for any of us.

If you offer several services but every lead comes from one platform or one person, you've diversified the work without diversifying the way work reaches you. You might need to focus on your client attraction system.

If you serve several industries but all your revenue comes from one type of deliverable, a change in how clients value that deliverable can still hit the whole business. I remember when white papers were the big thing. Now researched industry reports hold that spot in my industries.

You don't have to eliminate every concentration. That probably isn't possible, and trying would create its own mess. But you do want to know where the concentration exists and what would happen if the condition supporting it changed.

Ask yourself:

• Which client, service, market, or lead source would create the largest gap if it disappeared?
• Do my different revenue streams respond to the same market conditions?
• Could I adapt an existing capability if demand for my primary offer dropped?
• Am I concentrating deliberately because the return is worth the risk, or did the business simply evolve this way without my noticing?
• What signs would tell me it's time to make a change?

Those answers will tell you far more about the health of your business than an argument over whether everyone should niche.

What problem do I expect a niche to solve?

Before you narrow your focus, you need to know why you're doing it.

Sometimes a niche really is the solution. Your marketing may be so broad that potential clients can't tell that you solve their problem. You may be competing with thousands of people because you haven't given clients a meaningful reason to choose you. In that case, a narrower focus may help.

It won't solve every business problem, though.

• Lead generation: If you aren't generating leads because you rarely market the business, rewriting your positioning statement to serve a narrower audience won't automatically create a pipeline.
• Pricing: If your prices are too low because you're uncomfortable charging more, choosing a niche won't make that discomfort disappear.
• Profitability: If your projects are unprofitable because the scope is poorly defined, you'll carry that problem into the niche with you.
• Outcomes: If your service isn't producing the outcome clients need, making the potential market smaller won't improve it.

"I need to niche" sometimes means "I need to fix my marketing." It can also mean "I need a better sales process," "I need to stop offering an unprofitable service," or "I need to decide what I want to be known for."

Those problems require different solutions.

Before you rebuild the business around a hyper-specific market, ask what you expect the decision to fix. Then look for evidence that a niche is actually the right tool.

Which shape does the business need next?

The point of the cat's cradle isn't to make every figure at the same time.

You make one figure, then the next player takes it and creates another. The current shape determines which moves make sense next.

Your business should work in a similar way.

You don't need to launch every related offer because clients may need them someday. Pursuing every market that could use your expertise will leave you with very little time to actually work. And you don't have to display every skill and capability on your homepage.

You do need to know what your core expertise can become.

You need to recognize which adjacent services make the business more useful and resilient, and which ones distract you from the work you want to do.

You need enough structure so clients can recognize the shape of your business and enough flexibility to respond when their needs or the market change.

That's why I don't think "Should I niche?" is a complete question.

Try these instead:

• What do I want to be known for?
• Which part of my business needs to be specialized, and which part needs flexibility?
• What risk am I creating through this choice?
• Does this additional service strengthen my core work or distract from it?
• What might happen that would tell me it's time to revisit my answer?

You may answer those questions today and love your answers, then discover a year from now when you ask them again that some of the answers have changed.

My point is that your business structure isn't a static decision you make once. You keep shaping it as your knowledge, clients, goals, and market change.

As in the game, the string stays connected, but you aren't required to hold the same figure forever.

Your turn

Take a look at your business this week and identify the continuous loop running through it.

What are the one or two skill sets or capabilities you understand most deeply? What problems can you solve with them? Which of your current services are connected figures, and which ones feel like unrelated pieces of string you picked up somewhere along the way?

Then look at your concentration.

If one client, industry, service, or source of leads changed tomorrow, how much of the business would change with it? Try to understand the shape you've created and decide whether it still supports the business you're trying to build.

Remember that focus helps people understand why they should hire you, and flexibility helps you continue serving them when the circumstances change.

A healthy business needs both.

Cheers,

Treasa

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P.S. If you're trying to decide whether to niche down, broaden your services, or change it all up, that's exactly the kind of decision we can work through in a 90-Minute Strategy Session.

We'll look at what is and isn't working, the risks and opportunities in your current model, and what makes the most sense for your business.

Interested? Book your 90-Minute Strategy Session.​