6 Rules For Picking A Niche Where You Can Become The Top Consultant
The key is to select the niche which is the right size, has barriers to entry, limited competition, and where you have a clear advantage.
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I’d estimate that the vast majority of consultants who are struggling to attract clients and earn a reasonable living have selected the wrong niche. Or, perhaps worse, failed to properly select any niche.
Remember when you become a consultant, you’re starting a business. You need customers whose problems you can solve better than any other consultant while earning a good living.
If you don’t spend a good amount of time researching and validating your niche, you’re going to really struggle to thrive. There are several common mistakes to avoid when selecting a niche.
Six Common Mistakes When Selecting A Niche
Nothing is more important than selecting the right niche when you begin a consulting career.
Yet, when people select a niche, they often make mistakes such as:
Selecting niches which are too new or growing fast (like AI).
Selecting niches which are too broad (like marketing)
Selecting niches with too much competition (like management consulting)
Selecting niches with low barriers to entry (like life coaching)
Selecting niches which are difficult to reach (like C-level execs)
Selecting niches in which they have no clear advantage over existing consultants.
If you select the wrong niche, it’s extremely likely you will spend the majority of your time struggling to make much progress.
Put simply, if you’re not obviously more successful than you were a year ago, you probably haven’t selected the right niche.
Rule 1: Select An Established Niche (with budgets already set aside for what you offer)
Whenever a new thing emerges, there’s a new flock of consultants trying to be at the forefront of it. This makes intuitive sense. If you position yourself at the cutting edge of a niche which is about to explode, you should reap the rewards.
The problem is it rarely works in practice. Most organisations are still trying to get to grips with the old thing before adapting to the new thing. They typically haven’t allocated budgets for the new thing or put structures in place to acquire support in new areas.
The other problem is it creates a gold-rush effect. You’re going to be one of many, many, people jostling for attention in that space. It’s hard to stand out and the barrier to entry when things are new is incredibly low.
These consultants are hoping for supply-driven benefits. i.e. if enough consultants are promoting consultants, organisations will embrace it. It’s certainly possible - but it’s far riskier than taking a demand-driven approach - especially demand-driven by scarcity.
Look for the scarcity in the system
A far better approach is to look for established niches with scarcity.
Over 300,000 people moved to California during the gold rush. I wonder what work was left behind? What labour roles weren’t satisfied? What expertise was lacking in those communities?
If all the experts in hydraulic mining, dredging, and whatever else is required to extract gold have flocked to one location, that creates scarcity in other locations.
I argued in my very first post how I benefited tremendously from many people jumping board the social media bandwagon and leaving me in a niche pretty much by myself.
Look for the scarcity in the system.
I know someone who makes close to $1m per year helping public-sector organizations support and maintain legacy operating systems. He is one of the only people in the world who can help, he knows all the players in his niche, and pretty much nobody else has the skills he possesses. He names his price and the clients pay it.
It’s important then to look for an established niche where organisations are used to investing their resources and have multiple problems they can solve.
You don’t need to worry about if it’s sexy, you need to worry about scarcity. If you’re the only game in town you get to name your price (and won’t have to fight off the competition).
(Aside: Helping clients become compliant with common standards and law is a particularly great niche to be in).
Rule 2: Find The Goldilocks Niche (Not Too Big, But Not Too Small)
You want a niche which isn’t too big, but not too small either.
People might disagree, but I’d argue as an independent consultant you want to select a niche which is big enough for you to sustain a living, but not so big it attracts the big fish.
You’re a boutique consulting firm, you don’t want to be competing against tier 1, 2, or 3 consulting firms for contracts.
The perfect niche is one which is big enough to sustain you and a small number of competitors, but too small to sustain larger firms.
You Need To Know The Key Players
Perhaps the most critical thing in defining a niche is you’re able to get to know the key players and build relationships. You don’t want to boil the ocean here. You want to have a clearly defined niche where you can build a reputation.
You want a niche where people often change jobs within that sector and can work with you from one organisation to the next (or at least talk about you from one organisation to the next).
You want a niche with industry events and communities where people can talk about you (and where you can speak at those events). This also helps keep you focused on specific conferences and groups to target.
Two things are important here. First, narrow the target audience and then narrow the type of service you provide.
This is why ‘marketing’ is a terrible niche. It’s too broad. You need to go narrower. Use your past experience here if you can. If you’ve worked at cybersecurity firms, then use that as a niche.
A better niche than marketing might be:
Inbound marketing for cybersecurity firms.
‘Inbound marketing’ has narrowed the type of marketing that you do and ‘cybersecurity firms’ have narrowed who you do it for.
If you focus exclusively on that area, everyone in that field will begin to pay attention. It will be a smaller niche, but it’s one where you can quickly get to know all the key players. You can focus almost exclusively on networking with the 50 to 100 people doing inbound marketing at these firms.
Rule 3: Select Niches With 6 to 7 Figure Problems
You need a niche which has problems which cost six to seven figures to resolve.
Any smaller than that, and it’s not important enough to pay a consultant a reasonable amount to solve the problem. Any larger than that and it usually makes sense to bring in a larger firm.
I covered this in-depth and shared some examples of such problems in this article:
You should be able to speak to people in your niche and quickly generate a list of challenges they want to be able to solve. Then you should be able to estimate how costly the problem is for them (or how much they’re investing in that activity at the moment).
Rule 4: Select Niches With Higher Barriers To Entry
Select a niche where people without your skillset or expertise would struggle to credibly claim to be able to help clients.
Niches like life coaching, social media consulting, or content marketing consulting should probably be avoided. Almost anyone can claim to be an expert in these and it’s difficult to distinguish the true experts from people claiming to be true experts.
Niches which require deep knowledge or a clear set of technical skills are a different matter. Legal, financial, mergers and acquisitions consulting clearly have higher barriers to entry. There is a certain set of qualifications, experience, or knowledge you would expect people to possess.
Presuming you don’t have this, consider niches where new consultants can’t pretend to be an expert.
Examples might include:
Consulting on particular platforms (Salesforce, SAP, Oracle, AWS, IBM etc…).
Consulting in a particular segment (education, retail, food and beverage).
Consulting to achieve particular goals (collaboration, efficiency, sustainability)
Consulting using particular skills (conflict resolution, facilitation, entrepreneurship).
If anyone tomorrow can set up shop, call themselves a consultant, and be credibly perceived as your competitor - you’ve probably picked the wrong niche.
Rule 5: Select Niches Where You Can Reach The Buyer
We rarely work with C-level execs.
They aren’t the people who hire us. They’re usually not the people who approve the budget. That’s a relief too because those folks are very difficult to reach. Not only do they put several gatekeepers in the way, but they also have fierce competition for attention. Pretty much everyone is doing everything they can to reach them.
If your success relies on selling to the C-Suite, you either need to be an extraordinarily good networker/salesperson (which I’m not), or you’re going to struggle.
Most of our work targets the rung or two below the C-Suite. Typically we target folks at the ‘Head of department’, director, or VP level. These are folks who typically:
Pay attention to industry news and trends.
Show up to industry events.
Subscribe to relevant blogs and newsletters.
Actually do the hiring to improve their field.
Might participate in events you host or content you create.
Have direct budget-line responsibility.
Once you recognise the above, it should soon become obvious to target folks who you can reach.
I occasionally shake my head at consultants creating ‘The CEO guide to [topic]’. First, CEOs don’t search for ‘CEO guides’. Second, the guide is never going to reach the CEOs you’re targeting. There simply isn’t an obvious A to B journey from you to them. Third, even if it did, the CEO wouldn’t have time to read it.
But if your events, content, and talks are good enough - it’s certainly possible to reach a couple of rungs below that level. You will be dealing with five budgets rather than six, but you will have far more success.
Rule 6: Select A Niche Where You Have A Natural Advantage Over Existing Consultants
If rule 4 (selecting a niche with a high barrier to entry) defined a set of skills to even be credibly considered as a consultant in the field, this rule is about ensuring you are selecting (or defining) a niche where you have an obvious advantage.
For almost any niche you select, there are going to be competitors. These competitors have a head start on you. The question is how will you define your niche in a way that affords you a clear advantage?
If you can’t quickly think of an answer, it might reflect a big problem. You might need to spend more time developing or acquiring skills before becoming a consultant.
Some good examples include:
Expertise in a particular type of project.
Expertise with a particular target audience.
Powerful relationships with people who will be eager to become clients (or will be eager to send clients to you).
It’s a good idea here to review the consultants already in your desired niche, see how they position themselves and the messaging they use, and then consider how you would position yourself to be radically different.
(Aside, if there are no consultants in your niche, that might not be a good thing. It could reflect the difficulty in thriving in that niche).
Be Prepared To Pivot
Similar to starting any organisation, where you begin might not be where you end up. Few plans survive first contact with reality fully intact. So you need to be prepared to pivot and adapt quickly to what is and isn’t working.
If you’ve been in one niche for a while and you haven’t managed to gain any momentum, you’re in the wrong niche and it’s time to adapt.
Good luck.
Highly practical advice: thank you for sharing. It frames and names a lot about the consulting proposition and process. Some are things I've learnt or done intuitively: however, it's really helpful to see them laid out this way.
The "left behind in the gold rush" stuff is very real for anything with AI in the subject line. Organisations still need to keep running and delivering all the stuff they were still doing a year ago. Many places to help out.
Great advice. I'm entering year 7 of what I call "sort-of" independent consulting journey (with the previous 12 years as an employee at various companies) and I experienced –and still experiencing— the influence of all these rules.
One thing I experienced is a sort of tail of disillusionment (for both clients and consultants alike) after a gold rush: I entered consulting during a peak of interest in agile "methodologies" a few years back, when basically anybody could make big money with a low barrier to entry.
It faded pretty quickly and even though I was aware of the exceptionality of the situation since the beginning, I'm still trying to figure out both niching strategies and de-niching strategies (e.g. focusing con team process and collaboration without using any "agile" monikers).