Working with professional services firms that want to build their business, I meet partners who want to grow their business in specific ways. One practice development tactic that is perennially popular is to declare and build a niche. This is a very good way to grow your business – but only if you do it in the right way.
I frequently come across firms that have four clients in the same industry or the same area of the non-profit sector, who then post something on their website about serving that group. Too many firms believe this is all it takes to build a niche for their business. This is a very good start. But it is only a beginning.
Building a niche involves a little bit more than simply declaring that you serve a niche. Serving a niche also involves more than simply having three or four clients in a specific sector. Declaring a niche before you are actually able to serve a niche can amount to shooting yourself in the foot because your declaration sets up expectations on which you cannot deliver.
We all know the first rule of business: Never over-promise and under-deliver; always under-promise and over-deliver.
There are three excellent reasons for building a niche for your firm. These are probably among the reasons some firms leap to declare a niche before they are positioned to serve it.
- If you are perceived as an expert, you can charge premium pricing. Experts in every field of knowledge and every line of work garner higher fees or salaries because of their expertise. They are presumed to possess some inside knowledge or to have access to the movers and shakers of the industry. Making more money with less effort is an ideal way to improve your profit margins.
- If you are an expert – if you have built a niche – business will come to you. This alone is a great reason to become an expert serving a specific niche. You can reduce the amount of time and money you must invest in sales and marketing. The word gets around quickly in the industry or sector when you begin to be recognized as an expert. The years of cold calls to try to drum up business will be over. You can sit back and let the new clients come knocking on your door.
- If you are an expert, you can differentiate yourself in the market. Whether you
are an accountant or an attorney, you are almost certainly not the only game in
town. You compete with other accountants or attorneys every day. Building a
niche and becoming a recognized expert will set you apart from the competition.
Instead of being lost in the crowd, you will stand head and shoulders above the
The struggle for many professional services firms is the perceived competition between various options for the niche you will try to develop. There is certainly something to be said for an approach that chooses the niche to focus on by just deciding that you like a particular industry or a particular type of work best.
I tend to believe, however, that the world tells you what you’re good at. If you have a ten-year-old firm, a better way to decide where to build a niche might be to look at your book of business and see where there is a large cluster of clients. Then you carve out your niche by building upon what the world has already recognized in you.
Having determined your niche, you are then ready to start doing the work that will enable you to do the carving. Here are the steps in growing any niche.
- Identify how big the niche is. How big is the industry? How much is it growing or declining?
- Identify how much of the niche you can hope to own. How many businesses in the chosen sector are located near you? How many of those businesses can you hope to bring into your firm? Can you do business with others in the niche
outside your city? How many can you reasonably expect to make your clients?
- Conduct a SWOT analysis of the competition. How many competitors are there? What are the strengths, weaknesses and opportunities of each? How does your firm compare to the competition? What competitor weaknesses can you capitalize on to grow your place in the niche? What tactics will be necessary to do so?
- Plan your messaging and your marketing. It is important to start with the message. Clarify what you want to say before you start down the road of how to get the message out. To some degree, the message determines the medium. How will you define or characterize your firm and your expertise over and against your competitors? Then determine how you will spread the word.
- Grow your niche. Get busy, get out there, and get the clients. If you accomplish each of the first four steps, you will have everything you need to build your niche.
By clarifying how you can/do serve a niche, by considering what you hope to accomplish by carving out a niche for your firm, and by following the five basic steps to building a niche, you will be well on your way to growing your business. Practice development is like anything else in life – if you do your homework, focus your attention in the right ways, and
step out knowledgeably, you can earn your right to claim expertise in a particular industry or segment.