Niche Selection: It's A Reversible Decision - So Use Your Best Guess And Just Get Going
It's better to pursue and fully explore the wrong path than not to make any progress. You can waste years dabbling between different niches.
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Niche Decision Paralysis
A recurring theme in my coaching calls is a fear of pursuing a specific niche because it means closing the door on other niches.
The usual example is when a consultant has attracted work from several types of organisations. The consultant doesn’t want to pursue one category because doing so might mean they no longer attract work from other categories. It feels like they will be excluding more income than they gain.
So, the consultant stays in the middle. They keep their messaging broad, trying to appeal to everybody. They talk about the discipline rather than focusing on a particular organisation.
And they don’t make any progress.
Aside: As consultants, we would instantly recognise this in clients as decision paralysis caused by excessive options and fear of making the wrong decision. But it’s interesting to observe how it’s different when it’s us.
The Problem With Appealing To Everyone
The obvious problem with staying broad is that more focused people will eat you for lunch.
If you’re a retail company looking for help with improving your e-commerce site, would you prefer to hire:
1) A consultant who does e-commerce.
2) A consultant who only does e-commerce for retail companies.
In the vast majority of cases, it’s option two. You would expect them to understand the nuances of your business better. They are also more likely to design systems that specifically work for you.
I understand that it’s difficult to turn down potential sources of work, but trying to appeal to everyone harms your own progress.
Most consultants who are surviving rather than thriving haven’t decided to select a niche.
Luckily, there’s a more straightforward way of thinking about it.
It’s A Reversible Decision
Jeff Bezos used to talk about one-way vs. two-way doors.
Some decisions are consequential and irreversible or nearly irreversible – one-way doors – and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that – they are changeable, reversible – they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high-judgment individuals or small groups.
Selecting a niche is a type 2 decision. It’s a reversible decision. If it doesn’t work out, you can quickly reverse back to where you were (or, even better, select a different niche). Only now are there fewer doors to walk through, and you are closer to finding the right answer.
You’re Facing A Monty Hall Scenario
Here’s a better way of thinking about it.
Imagine you’re on a game show with different doors representing different niches. You want to pick the most lucrative niche. Some niches aren’t viable, and others are too competitive.
You have some clues about each niche, but you don’t honestly know the size or possibility of each niche until you walk through the door.
Your goal is to find the right door to walk through.
Fortunately, you have an infinite number of guesses.
If you don’t like the door you walk through, you can walk back out at any time and pick another door.
However, you must commit to the niche to see if it works. You must target your marketing, services, and more for several months. Each guess costs you time and money (as in your monthly living expenses).
So, for example, if your monthly living expenses are $2000 and each guess takes 3 months, each guess costs $6k (yes, there are a bunch of assumptions in there - but you get the idea).
You can now get a sense of how many guesses you can make. The bigger your safety net, the more guesses you can make.
Of course, none of the doors are empty. You might find a healthy market behind some doors, but not big enough or vibrant enough to support you long-term.
Ideally, you want to make the right decision the first time. But that’s not always possible. What’s important is you get it right over time.
To advance from surviving to thriving, you must fully explore the different options and decide which way to go.
Criteria When Selecting Which Niche To Pursue
A common mistake is to list the niches by size and pursue the most significant first.
However, the biggest niches are often the most competitive and, thus, the most challenging in attracting work. In addition, the niche size isn’t as important as you imagine. Most consultants only need 5 to 7 clients per year to thrive — almost any niche will offer at least that many.
What matters more than size when evaluating a potential niche is:
Past work. The easiest thing to do is review your past work and determine if there is one niche from which most of your work (or most of your inbound leads) comes. Apply the 80/20 rule, but be careful if one client has provided most of your revenue.
Existing connections. By far, having existing connections and relationships is the best advantage. It’s challenging to pitch up your stall in a community which has never heard of you and has no reason to trust you. The strength and quality of connections are key.
Credibility. This is related to the above - the more experience you have in a sector, the easier it will be to get work because you can point to past success stories (and you have the expertise to share).
Work satisfaction. Who do you like and want to work with? I met someone recently who loved working with non-profits. She could earn far more in another niche, but she’s decided on the right niche. The niche you select has to be sustainable.
Level of competition. It’s good to be mindful of the quantity and calibre of consultants in that sector. No competition is a bad sign - it suggests the industry can’t support consultants. Too many consultants can also be a bad sign. Search for consultants in each niche and understand how many there are. You want a healthy, competitive market.
You can see an example of this for a marketing consultant below:
Once you lay it out in a table like this, you can quickly see that you’ve got a clear list of the top three you can pursue.
This doesn’t mean you need to select the top option first, but it highlights which doors you can skip for now to pursue those with the most significant opportunities.
But remember the most critical decision - don’t stand still.
Summary
Stop fearing niche selection: Avoid staying broad to attract everyone — it leads to stagnation. Focused consultants win because they speak directly to the needs of a specific audience.
Recognise niche selection is reversible: Choosing a niche is a low-risk, reversible decision (a "two-way door"). If it doesn’t work out, you can change direction.
Think like the Monty Hall game: Treat each niche as a door — you won’t know what’s behind it until you commit and try. Each attempt costs time and money, so plan accordingly.
Commit fully to test a niche: You can’t test a niche half-heartedly. You must tailor your marketing and services to it for several months to honestly evaluate fit and viability.
Evaluate niches using meaningful criteria: Focus on past work, existing connections, credibility, personal enjoyment, and competition, not size. You only need a few good clients.
Use a simple comparison tool: List potential niches in a table to see your best bets and eliminate lower-potential paths. This helps prioritise where to commit your efforts.
Good luck!
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