“There are riches in the niches” as the saying goes. Is that always true?
Niching is often touted as the secret to standing out in a crowded market. And while there are undeniable advantages to focusing on a specific industry or service offering, it's not always the golden ticket it's made out to be. In fact, if done wrong, niching can actually limit your growth, waste your marketing dollars, and even put your business at risk.
The trap of cyclical niches
Some industries are seasonal or heavily influenced by macroeconomic trends. If you go all-in on a niche that slows down during a recession or has unpredictable revenue swings—think real estate agents or e-commerce brands—your business becomes vulnerable. A downturn in their industry is a downturn in yours.
I recently spoke with a firm that focused solely on Amazon retailers. They crushed it during the pandemic: Sales were up and demand was sky high. But post-pandemic, their clients’ revenues shrank significantly—and so did theirs. They were riding the highs and lows of one specific platform’s economy, which made their growth unsustainable.
These types of cyclical niches can create a dangerous dependency. When times are good, everything feels like it's working. But the minute your niche takes a hit, you might find yourself scrambling for new business, pivoting too late, or having to lay off staff. It's a rollercoaster that's hard to get off.
Be smart about the niche
If you’re going narrow, make sure your niche is stable—or have a backup niche that balances things out. Focus on services that stay relevant no matter what, such as budgeting, cash flow forecasting, or financial advisory. You can also diversify your client base across different stages of the business lifecycle. For instance, work with startups, growth-stage businesses, and mature companies, so you’re not over-indexed in one segment.
Build resilience, not reliance.
Going too narrow and too shallow
Here’s where many firms get stuck: “We only do bookkeeping for dentists.”
That might sound focused, but it’s actually a dead end. You’ve limited your total addressable market and your value proposition. You’re not solving a big enough problem, and when your clients grow, they'll outgrow you.
Let’s say you build up a good roster of dental clients. At first, it feels like a win. You know the industry, the jargon, and the workflows. But eventually, those clients will start asking for more. They’ll want tax help, succession planning, or a retirement strategy. If you can’t provide it, you risk losing them to a more full-service competitor.
Suggestion: If you’re going narrow on whom you serve, go deeper on what you offer. Be the full-stack advisor. Do their books, handle their tax planning, help with succession planing, wealth management, and maybe even insurance and legal partnerships. Bring in trusted partners if needed, but make it seamless for the client. Your positioning should be: "We understand your business inside and out, and we can handle everything so you don’t have to piecemeal your financial support."
This approach builds trust and loyalty—and lets you significantly increase your average revenue per client.
Being too broad and overcommitted
On the flip side, if you serve everyone and try to offer everything, your team will burn out and your marketing will confuse your prospects. You end up being a jack of all trades and master of none.
I’ve seen firms that work with restaurants, law firms, SaaS companies, and e-commerce brands, offering everything from bookkeeping to CFO services to tax prep. The result? A team that’s constantly context switching with no economies of scale, and a website that says nothing clearly to anyone.
Suggestion: If you’re going broad across industries, keep your service offering tight. For example: “We’re outsourced CFOs,” “We specialize in bookkeeping—only,” or “We’re tax specialists in this specific tax strategy.” Pick one or two services you can absolutely nail, build repeatable systems around them, and then let your operational excellence become your differentiator.
When you're clear on your niche—or your anti-niche—it also becomes easier to train your team, measure success, and sustainably scale your firm.
Niching as an excuse for avoiding strategy
Sometimes, firms use niching as a shortcut to strategy. “We help chiropractors” sounds like a plan, but if you haven’t mapped out how to serve them deeply, where to find them, and what they really need, you’ve just slapped a label on your business without actually building a strategy around it.
Before choosing a niche, do your homework. Talk to prospective clients. Understand their pain points beyond the surface-level stuff. Ask: What keeps them up at night? Who do they trust for advice? What’s missing from their current financial support system?
Then, build a value proposition that solves real problems—not just a tagline that sounds good on a website.
Your positioning should be clear and defensible
You’ve got two healthy lanes:
- Narrow and deep: Pick an industry and become the go-to advisor for everything they need. Own the niche by solving multiple pain points.
- Broad and shallow: Serve a variety of industries, but specialize in a core service. Own the expertise by being the best at what you do.
Just don’t be narrow and shallow, especially in a cyclical industry. That’s a tough place to grow from. You’ll end up in a no-man’s land where your market is small, offerings are limited, and clients eventually leave you for someone who can do more.
Niching can absolutely work—but it has to be strategic. Done right, it gives you focus, leverage, and staying power. Done wrong, it boxes you in.
