“Be specific!” Really? Don’t let a niche market kill your big dreams.
You probably have heard lots of gurus saying that you should start a business for a niche market.
Well, the story about how we bootstrapped our startup tells me that this is NOT always the right approach to grow.
So here are the facts.
Today LeadsBridge employs a team of 25 talents, but I launched it with my friend Alex alone.
That was two years ago.
At that time, we had no idea about the true potential of this project. But even more importantly, we had no idea about how to position ourselves on the market. We simply launched our product to solve a specific problem, without thinking too much strategically about it.
But, as our project kept growing day after day, we eventually had to ask ourselves an important question:
How should we position ourselves on the market?
Should we aim for the mass or do we keep targeting a niche of consumers?
We were full of doubts.
I was reading about many marketers and business entrepreneurs online endorsing the latter: “Be specific!” — they said — or you won’t make it.
But are they right? What about the downsides of targeting a niche market?
Not many people talk about them, but we have found several in our own experience.
This is the story of how we escaped the niche to keep our big dreams alive.
The inevitable niche 🐚
The only way to start a business is to tackle and solve an extremely specific problem for a very small market. Facebook itself was born as a simple membership network for Harvard students, and today..well, I don’t need to tell you how big they are. There are billions of examples one could mention.
Usually a business starts from a personal pain point, a problem you face in your everyday life wondering why nobody has built a solution for it yet, until you decide to build it yourself. But you don’t necessarily need to go through the pain yourself. A good business man observes a market and builds solutions to solve its problems.
LeadsBridge was born from a similar process.
I remember reading Jon Loomer’s and other influencers blog and observing an enthusiastic buzz around the introduction of Facebook Lead Ads. I noticed how many people were pumped about it, but worried about how to sync their leads with the autoresponders. At that point, I had been in the market long enough to understand that it was going to be a huge pain point for them, so I talked with my partner to build that solution ourselves. After going in full “weekend hustle” mode for three whole months, we launched our first basic MVP to be the first on the market.
There was no long-term strategic thinking, just a solution to a simple problem in the daily business activity of many people: the lack of a tool to synchronize Facebook Lead Ads to their email marketing softwares and CRMs. That was our sole focus, and the only thing we wanted to solve in the first place. We had no clue that one day in the future we would be providing a broad spectrum of solutions for the whole lead generation market.
Having that sharp focus and a micro target audience served our growth very well. Having a relatively small target group to interact with, you get to know your audience very well. It’s easy to listen to their needs and improve your offer to better suits them, which usually translate into good business results. The customers know that you understand their problem. They know that you know how they feel about it, because they told you directly. This kind of business relationship is extremely powerful and you can quickly become an authority within that space.
But..there is a but.
Everything in nature either grows or dies at some point. Once your business is up and running, you’ll have to ask yourself what do you want to do about it.
The call for growth 📈
As soon as you start mastering the process of whatever business you are leading, it’s time to consider whether you want to scale it or not, and — if the answer is positive — how you want to do so.
The first thing to do, is to evaluate your asset.
Can you apply the solution you currently use to solve the specific problem of your niche, to a wider spectrum of problems as well?
It’s possible that you won’t even need to ask yourself that question. Your customers will:
“Hey, can you also do “x”? And could you also implement “y and z”?”
That’s your call for growth.
If you own an asset that can be leveraged in many different ways, you must raise your standards and expand your business.
At LeadsBridge, we answered “Yes” to the call. Since in its first year of life we had grown our revenue by +52% each quarter, we decided to scale it to +1000% by quarter. We had both the ambition and the technology to do that, but there was an obstacle in our way:
Our target audience was way too small.
We could never scale our project within our niche.
That’s the moment when we became aware of all the limits and the dangers of operating in a niche market. As a matter of fact, a niche market can easily transform from a clear path to a suffocating one. A better technology pops out in the market? A change of policies shuts down your operations? The Google algorithm decides you’re not cool anymore? There are no airbags to cushion the blow. You are simply out of business.
The niche is comfortable, but it’s a threat to your ambitions. If you really want to scale your business, you have to suck it up, raise your game and prepare for the major league.
You’ll need to start to think about how to attract investors to pour money into your project.
Yes, showing the numbers you’ve already achieved it’s great. Yes, proving your authority within the niche is going to impress them. But if that market is the size of the population of Finland, they won’t even listen to your pitch.
How can you appeal to them with such a small audience?
How much profit is left to share after all your competitors took their slice?
If you are operating in a niche market, you will never be taken seriously.
The pain of growth 🥊
The road to scale your project is steep and has no parking areas. It’s just hard.
The stakes and rewards are exponentially higher, but so are the challenges. In a way, you have to start from scratch.
Whereas in a vertical market it’s fairly easy to understand your customers, the tools they use and how to help them out — as soon as your value proposition gets more generic the advantage of authority is lost.
You’re not in Finland anymore. Welcome to China: this is the major league and nobody knows who you are.
When you expand your target audience, there are millions of new potential customers to seduce and millions of new relationships to build.
There is only one problem: you are now competing against the big players, companies positioned on the market since decades and with solid investors behind them.
Why would customers choose you instead of them? Good luck making them notice you. Good luck with making them trust you. Good luck with making them choose you.
It’s much harder to make people across several verticals perceive that you understand very well their daily problems and struggles. But with the right attitude and enough work you can do that and get a slice of the big cake too.
Your best bet 💰
Nobody can forecast whether his side project is going to be big or not. You will start small, and that’s ok. Even more so, if your are bootstrapping the whole thing.
Looking backwards, the experience tought us that it is a good practice to thoroughly asses the value of your asset as soon as possible. Then, even if it has a potential wide spectrum of applications, your best bet is still to address a vertical market to gain traction.
This will help you achieve far greater results in sales than if you would market it as a generic solution, and these initial results are necessary to transform your side project into a solid business. But as soon as that happens, expand your market.
If you have the ambition to scale your project, don’t get comfortable in your niche. The path to big dreams lies way outside of it.
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