One of the biggest decisions an entrepreneur can make is whether to sell their services to general clients, or whether to specialise in serving one industry.
The advantages of picking a niche are clear:
1. Many clients in that niche assume that because you specialise in their niche, you must provide a better service.
2. It separates you from all the other generalists.
3. You can often charge more as a specialist.
The arguments against focusing on a niche are equally clear:
1. You have a much smaller potential client base.
2. You turn away clients who are not in that niche.
3. There may not be enough work in that one category of client.
So we have a dilemma. Good arguments for and against.
So how do we decide whether to go general or specialise?
The answer is different for every company of course, but here are some powerful questions to assist you in making your decision.
1. Are several of your competitors growing strongly, without resorting to a niche? If so, maybe you need to just market better and keep your generalist model.
2. Are there large sub-markets that are virtually untouched by specialists? If so, exploring one of them makes a lot of sense.
3. Is it easy to try out a niche and if it doesn’t work return to your generalist model? If so, it’s probably worth a try.
4. Are there examples of firms in your industry but overseas that have made niches work? If so, perhaps you should consider copying what they do, in your country.
5. Would working in the niche excite you or bore you? People often don’t consider enjoyment when they make strategic corporate decisions, but they should.
There’s no definitive blueprint for deciding whether to go niche or not. But I think you’ll find answering these 5 questions carefully can be very useful in helping you make the right decision.