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@jairekrobbins
21 December 2021

Why It is Important to Niche Down Like Mark Cuban

Jairek Robbins

We live at a time when the entrepreneurial spirit is very alive, and that means lots of businesses are started every single day. Unfortunately, it isn’t easy to come up with a truly original idea, which means that your “brilliant business idea” is already being implemented by lots of other people. Throw in Covid-19 and you can see how challenging it can get to stand out as nearly every business has gone online. Is starting or scaling your small business a lost cause in the face of such stiff competition? Not in the least! The answer to succeeding lies in what brilliant entrepreneurs, such as Mark Cuban, do; they niche down.

So, what is niching down?

Niching down means that you identify a small section of the market or industry you are interested in and focus on that narrow market you have selected.

For example, if you are a lawyer, don’t try to be a generalist by reaching out to different kinds of clients, such as those looking for help with fighting criminal charges and those interested in setting up multinational businesses. If you want to be a lawyer for everybody, you will end up being an attorney for no one, which is why nearly 50% of all small businesses fail.

Niching down in the example above would entail making a deliberate decision to target either clients seeking help against criminal charges (murder and arson, for example) or clients who need international business law expertise.

Doesn’t niching down leave out a huge potential market?

Consider the example of sportswear. If you are a manufacturer in this industry, you will have a lot of work understanding soccer and the kind of attire best suited to this sport while also trying to meet the apparel needs of players of other games and sports.

It is therefore far better, at least in the beginning, to target just one sport/game and excel at serving their unique needs so that you can command a dominant share of that market. You can then scale your business to serve as many target buyers in that niche as you can through leveraging the power of the internet.

What real-life business examples show that niching down isn’t suicidal?

Consider a retail chain like Walmart. Do you think they invest any effort in trying to attract the high-end income earners to buy apparel from them? They don’t. Instead, they focus on working class people with limited budgets and they stock clothing that offers great value at price points these people can afford. You can agree that Walmart is doing a good job in this regard and they sure have a huge target market to serve in the niche they have selected!

Let’s look at professional photographers as another example. If you had an upcoming wedding that you needed to hire a photographer for, wouldn’t you rather hire a photographer who specializes in wedding photography as opposed to a photographer who is at a horse racing event on one day, then at a bird-watching excursion the next day, while also taking photos at the wildlife sanctuary on weekends?

I guess the specialized photographer would attract your attention since you are sure that they have mastered the ins and outs of taking wedding photos. Guess what? That specialized photographer will charge higher rates and you will gladly pay them so they can do their magic capturing the unforgettable highlights of your wedding. That is how niching down is great for business!

How else is niching down great for small businesses?

When you narrow your focus to a specific niche, it is easier for you to get referrals from within that niche. Who do soccer players like hanging out with? Other soccer players, and they talk to each other about who best addresses their needs. Consequently, word of mouth will market your business and your client base will keep growing within the members of the niche you choose.

Brand loyalty also results when you focus on a specific niche. This is because you get an intimate grasp of who your customers are, what their needs are, and the best ways to serve those customers. As a result, your messaging will resonate with the clients and you will be the go-to company when they need solutions or products. Remember, repeat business is what cements the health of a company since the clients you retain are easier to convince to buy any products you come up with as opposed to having to look for new clients each time you have a new offering.

Additionally, niching down is a great strategy for small businesses since the limited marketing resources available to them can be put to excellent use. You know who your ideal client is, and you target your marketing campaigns to reach out to them. For example, being number one for keywords targeting your local city is a lot easier than being number one across the country for an entire industry.

You can also become an industry leader when you niche down. For example, the moment you zero down on a niche that is underserved in a given industry and serve that niche well, you are immediately the leader in that space. With that leadership comes the perks of being the authority on all matters connected to your niche. For example, you may not know this, but Al Jazeera shot to global prominence due to its uncanny ability to have reporters embedded at the war front during the Afghan War. The station secured interviews and footage that no other television station could, and as they say, the rest is history.

As you can see, being a generalist and trying to appeal to everyone when just starting out is a shortcut to joining the statistics of businesses which struggle or fail. The smarter thing to do is to identify a narrow niche and let that base form the foundation upon which you can scale. Mark Cuban has done it, and so can you!

 

To Your Success,

Jairek Robbins

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