There’s an old expression that “there are riches in niches,” and it’s true; domination of a niche can increase entrepreneurial businesses’ results by an order of magnitude. A great example is Nebraska “experiential branding” agency SecretPenguin, which specializes in developing and launching innovative restaurant concepts. In the coming weeks I’ll be interviewing Dave Nelson, owner of SecretPenguin, so you’ll be hearing more about how he landed in this niche. In the meantime, take a look at their beautiful website.
So why carve out your own niche? Why would any business want to shrink their potential client base? Wouldn’t it be better to be more versatile, throw a wider net?
If you’re reading this, you probably already know that a wider net doesn’t necessarily mean a bigger catch. But how do you stand out in a field where everyone is selling the same thing? Well, the best reason to specialize is to create a competitive advantage. If you sell the same product or service as all of your competitors, you have zero control over price and profit—the customer sets the price.
The key to carving out a niche that’s rich in profit is to de-commoditize what you’re selling. The narrower the niche and the fewer competitors you have, the greater your pricing power. This gives you more control over profit.
In the case of SecretPenguin, they have enough experience (and wins) in their niche that they can speak the language of their customers. These guys know restaurants, they know the challenges that restaurateurs face, and they don’t have to go out and do a bunch of research to understand the specifics of their niche. They can say, “This is our business: We focus on that little point in the compass where you are, and we can help navigate where you want to go.”
When your company adds exceptional value, you no longer need to dominate the whole market; you can dominate your segment and set your own price.
So how do you accomplish this? How do you distinguish yourself from the competition? There are a few things you need to know.
Start by finding out what people want. Talk to your clients, find out what they want more of and what they want less of—what do they hate, what do they wish they didn’t have to deal with? It might seem obvious, but you’d be surprised how many people sit around in meetings trying to figure out what their customers want without ever actually asking.
And ask yourself where in your business does your passion lie? If it wasn’t about money, where would you specialize? Where have you experienced the most satisfying wins? What problem is no one solving in this niche? What do you know about this niche, because of your unique interest, that no one else is aware of? This kind of passion has paved the way to many successful niche businesses.
Helping business people hone their vision and create competitive advantage is in my niche. If you need any help figuring out what yours is, shoot me an email at email@example.com and we can set up a time to talk.
photo credit: Gold/Mica?