#29 Defining Your Niche

Niche Markets are one of the fundamentals of starting your business. We discuss the questions to ask yourself to help you define your niche such as: What problem are you solving for other people? What is unique to you or your craft? How are your clients going to access your product or service?

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TRANSCRIPTION:

Speaker 1:
From his first job, flipping burgers at McDonald’s and delivering the Washington Post, Craig Willett counts only one and a half years of his adult life working for someone else. Welcome to the Biz Sherpa podcast with your host, Craig Willett, founder of several multi-million dollar businesses and trusted advisor to other business owners. He’s giving back to help business owners and aspiring entrepreneurs achieve fulfillment, enhance their lives, and create enduring wealth. The Biz Sherpa.

Craig Willett:
This is Craig Willett, at the Biz Sherpa. Welcome to this episode of the Biz Sherpa podcast. I’m excited that you joined me today because I want to talk to you about niche markets. I think it’s one of the fundamental principles of starting a business or refocusing your business. I said that in 2021, I hope everyone’s objective is to recommit rather than reset. And I think what we commit to our principles, underlying principles of our country. I mentioned like the declaration of independence and the bill of rights serve as fundamental documents that have principles in them on which all of our government rights and all of our rights as citizens of this nation are based.

Craig Willett:
We can have similar sets of principles that govern our businesses, and I think one of the keys is to determine a niche market. If you’re going to start a business, you’re not going to want to be everything to everyone, that’s really hard to do unless you have an unlimited supply of capital, and I doubt any of us have that. Most of us are trying to figure out how to have enough capital to make it for the next 30, 60 days in business, let alone how to capture the entire market share.

Craig Willett:
So, as I have mentioned before, one of the key principles is what problem are you solving for other people? Let me share maybe an example that I have experienced with when it comes to solving problems. In fact, I’ll share two of them. One when I started out as a CPA, my father-in-law told me go out and see your clients every week, take an afternoon off and go start to visit some of your clients. One of the talents or skills that I had was the ability to be able to talk to people and hear what situations they were faced with and then offer them some solutions around the financial aspects of their business or their business life. This led to me getting more and more clients because they referred more to me.

Craig Willett:
It took me from being an accountant that delivered financial statements and tax returns to their bank or to the IRS for them, to being a fundamental resource for the success and the improvement of their business. This is what’s important. Let me take this away from accounting because a lot of you are probably saying, “Oh, I hate accounting.” And you’re like me, that’s how I was in school, but I went ahead and got a degree in it anyway. What I really liked is when I had the opportunity to start a real estate development business, and it became more than dollars and cents in doing some projects that came my way when I was able to articulate the principles of real estate development and solve a problem for a lot of business owners.

Craig Willett:
Let me tell you the problem. The problem, a lot of people have is they’re business professionals, meaning they have a professional license. They’ve spent a majority of their time prior to them starting their practice or business in school, getting a degree in dentistry, getting a degree in medicine and getting a license, or they may get a degree in law and pass the bar exam. These people have invested a lot of time and money in their future, and they don’t have a high cost to starting their business per se. But what they do have is they have a problem, they want to find a location that typifies and resonates with their customers as to the success they want to have. And that is not too big, but not too small that allows them to grow and adequately serve their client’s needs. But they don’t have the time to go out and buy a piece of property, hire an architect or/and an engineer and a development consultant and go get it zoned and then bid it out three different times and hire a contractor to build it. That process could take up to two years.

Craig Willett:
The solution I had for them is I would go out and buy the land on speculation, put it in a location that would work for these business professionals and healthcare professionals, and then put all that package together. And they could come to me within months of wanting to open their business. And I will have built shell buildings on that property and they could buy it and just customize the tenant improvements inside, having the ceilings they wanted, having the floor plan they wanted, it was totally doable for them. So I took something that they wanted, ownership, and I took a location that they desired and I made it affordable to them. They didn’t have to spend the three years of time, which they probably didn’t have. They could focus on developing their practice and spending their time at doing what they do best taking care of their clients and patients to make money.

Craig Willett:
Now here’s where the real solution came in and really accentuated. I talk a lot about in my niche market introduction that I did in the three-part series on starting your business about testing your market. Well, it’s a big test to buy a piece of property and not know who your customers are, right? It was a big task, but I had seen it done in some other areas. So I had a high level of confidence that given the choice of paying rent for 30 years or owning a building and paying a mortgage for 30 years and having your building with your name on it was probably a choice. A lot of people who spent a high dollar amount of money invested in their college degrees, their advanced education and training would opt for. That was a good leap of faith.

Craig Willett:
But we’re really where it came home to me was the first phone call I got on the first sign I put up on my project when I chose to do the marketing, rather than sub it out to a third party. The call came in, it was a doctor. And he said, “I’m out here looking for a new office. My lease expires in about four months and I need to find something else that will suit my needs better. I see your sign, it says own for less than rent. I didn’t even know that owning a building was an option, I thought I had the lease.”

Craig Willett:
So when you look at a niche market, you have to not only consider what problem do you solve and what experience do you bring to the table to help them solve it, but what’s unique about you. Now think about it, of all the office space in that town where that sign was, mine at that time was the only one for sale. That made it unique, a unique value proposition to that potential customer and that potential market. I want you to think about what is unique about you as an individual? What experiences do you have that will help people solve a problem that they have in their life? If you can articulate your experience and what is unique about you in that experience, you will be able to craft a very, very narrow market that you can then not necessarily take advantage of, but then captivate. And you will be able to articulate your product better than anyone else who tries to copy you.

Craig Willett:
During that time, I had a lot of people trying to copy the market that we were doing. They were copying the building plans, but they didn’t get necessarily all the components that we had because what I had is experience as a real estate developer. I had experienced as a business owner. I had experience in knowing what would make a good longterm real estate investment, not just solve a short-term need. Most people when they go to lease only care if this will last for about five years. And therefore, if someone, as a developer has cut the corners on that building, they’ll find that out during the five years and not renew.

Craig Willett:
But if it’s a great location with easy access from many points of access, good visibility and high ceilings and very flexible floor plans, they’ll probably stay. And if there are other professionals around them that are referring business to them, I guarantee you they’ll stay. So I understood that, and that’s what made my experience worthwhile for me to be able to take that risk and be able to carve that niche. I want you to consider if even if you’re a current business owner, what’s unique about you and then focus on that uniqueness.

Craig Willett:
The other key point after you figured out what unique? What your experience is? And what problem you solve? Is to look at how are your clients going to access your product or service. You may choose to do it online. I’m not the person to help you with that, but I know a lot of people who are very good at that. Of course my podcast is available online, but I have a lot of help in that.

Craig Willett:
How are people going to access that product or service? It will determine how you package it, it will determine how you deliver it, it will determine how you market it, how and where you market it. For me, my access point was location. My father taught me at a young age. When I took his real estate course in the business, in the community college, the three most important things about real estate are location, location, location. I knew that just like the first phone call, I got that people usually at the time, now this is tells you how old I am, but drive around and look for signs in an area where they were hoping to be able to open their business or their practice. So access to me meant that my signs had to be, and my locations had to be in areas that were desirable for them.

Craig Willett:
The key signs that stood out, I hired a company that helps some technology companies really brand themselves. And I was able to put unique signs up that looked like a building was being constructed and they had taglines on them. And some of them said, imagine you’re building here because I didn’t have one yet. And then also had my main tagline, which was owned for less than rent. Your access is important. You need to understand who your customers are. After a while, the internet became more searchable and more of a tool. And then we were able to put our locations there where people could search and find us. And then also we were able to stand out when people search by your own building or own for less than rent, we came out on top every time.

Craig Willett:
But I would say location is something that’s still important, think about it. Business professionals like to live near where they work and like to live in that community, and they do a lot of things in that community. So for me, the access was still a sign. My dad taught me a long time ago that sign never sleeps, it doesn’t call in sick, it doesn’t take a week’s vacation, it doesn’t sleep at night, it’s up all the time. My signs had reflective tape on them so that the message was still read at night with the lights driving by. Your potential customers could possibly be driving by your location every day. You need to find a way to get in front of them, whether it’s on the internet, but you need to think about where do they go and how can you get their attention?

Craig Willett:
So access then to your product or service, I had to build them and I had to then create that access for their clients and their customers, which only enhanced but happened. Because those clients and customers of one doctor became referrals to another doctor or from one dentist to another orthodontist or from one real estate company to the title company or from the title company to the insurance agent who are all in the same professional village. This concept created access in community. Think about that because that’s the next step. How do you expand the reach of your product or service? This is everyone’s goal and objective, right?

Craig Willett:
I’ve said this before growth for growth’s sake is not necessarily the best thing, but when you can expand on what unique about you and tap into additional markets then you can grow your business based on the principles and fundamentals, not because you’re trying to reach some proforma financial objective that you have, but because you’re able to find other users who have similar needs and be able to capitalize on them using you or your product or service to fill that need.

Craig Willett:
Now, this all comes back to what’s really important, and that is to always test it. It was an expensive test for me, thank goodness it worked. I bought my first project thinking that this might work, having seen something work in another area, but I wasn’t sure. And it was a big financial risk at the time. But whatever you do, you want to test that market and key is to find your first customers. Fortunately, in my very first project, almost all of them were real estate professionals or real estate centered people or businesses that bought from me. That told me I was onto something, if the real estate professionals and the real estate home builders, real estate developers and people in the know in real estate were buying my buildings and it sold out to them then I was really onto something that this would work. But that first test is really important.

Craig Willett:
Finding your customer. How do you find your first customer? You may ask yourself that, it might be a friend, but they may buy just because they’re your friend. They might use your services because they’re relative. But what’s key is to find someone with the defined need that you have, and then watch their reaction to your product or service. When you’re able to do that, then you know you’re hitting the mark. I remember being a CPA and part of my practice was to be able to help customers who had bank loans. And I remember in particular, one lender who really wasn’t happy because he could never get financial statements from the client’s CPA firm in time to be able to renew the line of credit that his customers have. And he was with the largest bank in the state at the time. And he had a quite a portfolio of clients.

Craig Willett:
I know I came across one of his clients and I turned the financial statements in early, gave him plenty of time and support for the line of credit renewal with tax returns extensions. I knew what he needed because I had audited banks, not only had I audit banks, I had also started a bank. And so I knew what he needed. Guess what? Over the years, I can attribute about 70% of my new referrals from that bank, why? Not because I was in bed with that bank, but because I met the needs. And guess what? Every customer whose tax returns or financial statements came in late for the renewal on their line of credit got a referral to me. Now it was up to me to earn their business. But I can tell you that if you can figure out how to solve that problem, you’ll be able to find those customers. But it is truly finding the first customers that’s important. You’ll want to reach out to who your likely customer is.

Craig Willett:
I know we talk a lot about demographics and I can tell you, well, I don’t profess to be an expert in marketing. I’ve been very successful at marketing in my career. And I can’t necessarily demographically describe who the customer is, but I can tell you who it’s not. It’s not everybody, not everybody is going to want your product or service, that’s the first thing we all go to. But my products can be so good, everybody is going to want it. How many times do we think that or have we heard that? That’s a mistake. I would say take time to really figure out who best can use it and then narrowly define that.

Craig Willett:
For me, in my real estate development business, I didn’t want to build big buildings, so I wasn’t looking for large practices to buy into my projects, I was looking for solo practitioners, or at least two doc, maybe at the most two doctors in a practice. They wouldn’t exceed 2,500 or 5,000 square feet. You can go out and there’s statistics out there for nearly every market that you want to potentially reach. And try to look at some of those studies. And then I was able to find locations based on one secret that I’ll now reveal now that I’m no longer do it. I took the census information and figured out where there was a greater than 15% of the people in that area who had professional license where they lived. And then I would find locations near there so that they would want to buy a building and practice close to their home, it worked.

Craig Willett:
But finding the customers, it takes research, it takes willingness to get out there and talk to other people and it takes willingness even to go out and survey potential customers. I know that sounds like a college exercise, right? But I would really do it. I would talk to people. You don’t want to take a shot in the dark, this is your career, this is your reputation, this is your money riding on this. And certainly your friends and family, as we talk about financing your startup in another episode.

Craig Willett:
But once you do that and test your market and find your initial customers then it’s finding additional customers who are like the customers that you got. Now, I would say that that is a proposition that takes care of itself. If you have a satisfied customer, they’re going to tell a lot of people about you. And you’ll earn the next customer because you took care of the first one so well. But think of the opposite, if you don’t take care of them, if your product or service is inferior, then everyone is going to hear about that, not just a few people, everyone, and that’s going to be a barrier to your success. So you want to be sure you’ve developed your product or service to the point where it exceeds the expectations of your customers.

Craig Willett:
We’ll talk about pricing in another episode. But once you find that customer and truly value them and give them value for their money, you will then find not only them coming back to you as repeat customers, but they will also refer other people to you. I think I told you the story one time on an episode about how Carol came home one day from taking the children to the pediatrician. And she said, “Craig, it was terrible, I had to go behind the grocery store and then I couldn’t figure out where to park. And then when I finally found the building and went inside, the building was old and was worn out. The pediatricians were great.” It was a great referral that she had received from someone else to go meet with these pediatricians. But the level of their service didn’t match the building.

Craig Willett:
I said, “Well, next time you go in, tell them what I do. Tell them about that. I’m building a new location, about two miles from there, and that they ought to consider that.” You know what? They listened to her. I went and met with them. I helped them get out of their lease early so that they could move in to the new location. Not only did my helping them move out of an inferior location and get out of their lease early, be of great benefit to them, but their ownership proposition ended up being a great thing for their practice. That when I did another one in another location about 10 miles away, they were the first in line to buy.

Craig Willett:
Earning the business of a customer a second time is not just loyalty, it’s the highest compliment you can get. The second highest compliment you can get as a referral. Now, someone says to get the referral, you can’t be afraid to ask, I would agree with that. I wasn’t afraid to tell my wife to ask for even in the first instance for them to even consider our location. Maybe you might say, well, you are desperate. And I probably was, it was my second or third project, and we certainly wanted more customers and wanted more business there. But you have to be willing to get out, you have to be willing to talk to other people. And then once you do have a customer, gauge their satisfaction, not only gauge their satisfaction, but if they’re satisfied, ask them who else they know who might be able to use that product.

Craig Willett:
We’ve all heard it, and I hate getting asked that question. But if you really know someone and that name comes to mind, take that name and go visit with them, you’ll find that a very rewarding experience. So to summarize a niche market is where I recommend you start. You’re not going to be all things to all people, that’s a mistake. Figure out the problem that you can solve for someone, but figure that out based on your experience, look at what’s unique to you and your experiences, and then figure out what’s going to be unique to your product or your product value proposition to your customers.

Craig Willett:
In my case, it was owned for less than rent. It stood out like a sore thumb because no one else offered a building for sale. Everything of my competition was for lease. It was quite a remarkable experience at the time. And then consider what your access points are and how your clients are going to access your information become aware of your product or your service, and then get it in front of them.

Craig Willett:
Sometimes it doesn’t cost a lot of money. My first sign didn’t cost a lot of money, but it built a multimillion dollar business based off of a sign on a location. And then figure out as you articulate that how you can expand the product or service to help other users meet their needs. Sometimes what you do is very easily adaptable to other markets or other users. And once you figure that out, you’re able to expand your influence and expand your penetration in the market. Don’t forget before you do all this, make sure you test it, make sure there’s a great way to look at someone else’s success, not copy it, but still figure out what unique? Look at and try to figure out why and what will be successful for your product or service. I put the sign up. I got the call. I didn’t know, I could buy a building. That proved to me that my market of own for less than rent was viable because he wasn’t the only one to call.

Craig Willett:
Of course, finding the customers is important. You’ll get some friends and family, but I would suggest that they’re not reliable, they’ll not want to hurt your feelings. And I promise you, you want to find someone unrelated to test your product or service on. And then once you’ve done that, don’t forget to ask for the referral and then try to earn their repeat business, that’s the highest compliment. Again, the second highest compliment is a referral. I hope that as you evaluate your principles of operating your business that you can focus on your niche market, that if you’re going home tired at night because you’re trying to be all things to all people step back and focus on what you do best, what’s unique about you and what experience you have to truly take care of them? Your customers. It will bring that emotional currency to you of satisfaction of a job well done.

Craig Willett:
All of a sudden, it won’t be about money, it won’t be about growth, it will be about making a difference in people’s lives. That’s the motivating factor in any market. I wish you continued success and I hope that you’re able to continue forward focusing on a niche that brings great satisfaction to your customers and return. I promise you’ll sleep better and the finances will take care of themselves. This is Craig Willett, the Biz Sherpa. Join me again for one on pricing so that you can learn how to price your market to price to the value you offer. Again, Craig Willett, at the Biz Sherpa. Thanks. Again, this is Craig Willett, at the Biz Sherpa. Thanks for joining.

Speaker 1:
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