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RANT Don't go too niche!

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LifeTransformer

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At the risk of preaching to the choir. (a lot of people here will know this already). I want to talk very briefly about niche.

The "follow your passion" thing gets regularly debated, and I don't see this one being done too often. So here it is:

Don't go too niche!

If "follow your passion" is one of the most over-used cliches with regards to entrepreneurship, "pick a niche" or even "niche down" must be a close second. It's one of those things you hear often. I think it has become guru-speak. Repeated by people who either don't know what they're talking about, or are just trying to sound like they do.

I used to follow this advice, but you know what? It doesn't work if you go too niche.

I've done this a few times now, too many in fact. Found nice little niches and sold a few bits and bobs. Then guess what? Put simply: Game over!

If you go too niche, you'll never get on a fastlane path. If there's only one guy/girl out there who wants what you're selling, you've not fulfilled the commandment of "Need" in my opinion. If only one person, or only a small group needs what you're selling? You've gone too niche.

There are of course exceptions! If one guy/girl wants a remote controlled pink helicopter that can shoot chocolate ammo into his mouth and he's willing to pay $1m for it and I can get it for $50k, then fair enough. (Couldn't think of a good example, sorry).

What do you think? Comments appreciated.
 

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MTF

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Generally speaking, the more niche you go, the higher your prices (and profit per sale) should be. A business catering to a a very small group of people can be Fastlane, but they better be players with a lot of money. Case in point, Frank McKinney. Check out his spec houses. He has an extremely tiny group of possible clients, but they're all extremely wealthy so one sale can easily be life-transforming.
 

SquatchMan

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If there isn't anyone buying what you're selling, then you could be too niche. You also might have bad execution.

In the book MJ mentions the snuggie. It had been invented in the 1970s and flopped. Someone took the product, rebranded it, and made eight figures. The inventor of the snuggie might have said that the snuggie was "too niche" and gave up, but we found out in the 2000s that the inventor had bad execution or bad timing.

MJ's limo directory business had competitors that were struggling when he entered the market. Those competitors might have thought they were "too niche", but MJ proved that there was indeed a large market for a limo directory.

There are of course exceptions! If one guy/girl wants a remote controlled pink helicopter that can shoot chocolate ammo into his mouth and he's willing to pay $1m for it and I can get it for $50,000k, then fair enough. (Couldn't think of a good example, sorry).
You do know that you'd lose a lot of money on this deal...

I couldn't resist
 

Jleg

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I think it depends. But i think E-Commerce is a good example on when to go " too niche "

Going " Too niche " in E-comemrce gives you a lot less head aches and less competition. And i think that is most definitely a good thing. I would rather be a big fish in a small pond, than a little fish in a big pond, wouldn't you? In E-Commerce people will be scared away by your " big fish " in in a small pond image you are portraying. Competition will come to your niche and think it is not worth there while to compete. Meaning less competition, less headaches and more money for you.

In a sub niche you are also selling to a specific customer and are focused solely on adding value to that specific customer. This creates a better brand, more loyal customers and again, more money.

Usually when you are in a huge market with massive completion, if one product has a shitty month it can throw your income off by a lot. Whereas if you are in a sub niche this isn't usually the case. If you have 40 products making you £500 a month and one or two happen to have a shitty month , it isn't really gonna affect your income. Also , competition would look at those numbers and never even think about competing as you are dominating this niche and £500 p/m products wont interest them. Most people want instant results and are not willing to put the time and effort in to building a real brand and a real business. Building a business of £500 p/m products and aiming to get 40 of them on amazon for example will take time. Years in fact. But when you get there no one will even want to compete. It will take to long to catch up with you.

Obviously this is just my opinion, as I'm sure guys in this forum have made serious $$ in HUGE markets and have never gone "too niche". But personally, i would rather be in sub-niche and dominate it than try and compete with 1000's of other sellers selling the same thing.

@SinisterLex has a good video on this, well worth the watch.
 
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LifeTransformer

LifeTransformer

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Thanks for the replies so far.

Generally speaking, the more niche you go, the higher your prices (and profit per sale) should be. A business catering to a a very small group of people can be Fastlane, but they better be players with a lot of money. Case in point, Frank McKinney. Check out his spec houses. He has an extremely tiny group of possible clients, but they're all extremely wealthy so one sale can easily be life-transforming.
That would be a far better niche to get into than my chocolate firing helicopters. Great example of it working :smile:.

I think the failure that sparked the idea for this thread is more a case of:

  • The product couldn't really be made any more expensive just because it was niche.
  • The market was too small.

I think where I want wrong with other niches was definitely poor execution. You're totally right about that @spyt .

There are just some past failures I've been mulling over, wondering where they went wrong or if they might be worth re-visiting. I'm pretty sure it was because I went for "niche" over need, and by that I mean; Too much niche, not enough of a market to sell to.

It provoked some great replies so was worth posting. :)

You do know that you'd lose a lot of money on this deal...

I couldn't resist
Changed ;)
 

TKDTyler

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1% of a billion market cap is better, more sustainable, and has more growth potential than 90% of $100,000 market cap.

You can niche down into a market as a starting point, but there should always be plans to grow and expand out vertically and horizontally.

You sacrifice margin for scale in most cases.

High margins are great for initial growth, as cashflow is the blood of most new businesses.

But at some point, scale has more weight than margins to reach a broader audience.
 

PureA

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I actually think its great to start out too niche. It doesn't even have to be the whole game plan, sometimes just a great way to start out. Once you have that super niche group of raving fan customers (early adopters) hitting the mainstream with the same product/service (even with a twist) becomes a lot easier imo. You could even argue that this is a very natural progression for a lot of successful companies.

Really nice relevant short essay related to this topic: The Technium: 1,000 True Fans
 

Denim Chicken

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I actually think its great to start out too niche. It doesn't even have to be the whole game plan, sometimes just a great way to start out. Once you have that super niche group of raving fan customers (early adopters) hitting the mainstream with the same product/service (even with a twist) becomes a lot easier imo. You could even argue that this is a very natural progression for a lot of successful companies.

Really nice relevant short essay related to this topic: The Technium: 1,000 True Fans
1000 True Fans is so dead on. Another good book is Lady Gaga: A Study of Fame in Personal Branding. It's about how Lady Gaga's truest, most hardcore fans called her "monsters" advocate so hard for her, they drove her success.
 
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LifeTransformer

LifeTransformer

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I actually think its great to start out too niche. It doesn't even have to be the whole game plan, sometimes just a great way to start out. Once you have that super niche group of raving fan customers (early adopters) hitting the mainstream with the same product/service (even with a twist) becomes a lot easier imo. You could even argue that this is a very natural progression for a lot of successful companies.

Really nice relevant short essay related to this topic: The Technium: 1,000 True Fans
Excellent read! This is why my new policy is; "post it, even if it sounds dumb or gets shot down, you'll learn something".

I think this paragraph taken from his 2008 essay (lower down) kind of confirms my theory.

But the long tail is a decidedly mixed blessing for creators. Individual artists, producers, inventors and makers are overlooked in the equation. The long tail does not raise the sales of creators much, but it does add massive competition and endless downward pressure on prices. Unless artists become a large aggregator of other artist’s works, the long tail offers no path out of the quiet doldrums of minuscule sales.
So there could also be a case for "don't niche wrong". I think that's what I done on these past failures.

Could have been execution too as mentioned above.
 

G-Man

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So there could also be a case for "don't niche wrong". I think that's what I done on these past failures.
Probably right. I think it's the difference between being the person that's an accordion master and the person that can perform life saving surgery. Both are rare, but their value added in people's lives isn't the same.
 

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