To niche down or not to niche down…that is the question.

To niche down or not to niche down…that is the question.

While Hamlet didn’t exactly utter these words, he might have if he was alive today and running a CFO advisory service. If you’re operating as an outsourced CFO, you too might be wondering if you should niche down.

If you have “anyone who needs a business advisor" as your client base, it will be challenging to position yourself in prospects' minds. Instead, you could focus on a small, well-defined market segment instead of serving a wide range of businesses. For example, choosing as your specialty only working with small tech startups to minimize end-of-year tax payments to maximize profit.

Niching down might seem risky to you. After all, you're losing clients because you're only focusing on a tiny sliver of the total pie. However, while there undoubtedly are risks, there are also benefits. Here are four of them:

By niching down, you'll conserve precious marketing dollars. That's because instead of advertising to everyone, you'll focus your messaging on a small customer base. For example, let’s say you want to help businesses with investment decisions and figuring out the best way to handle assets and debt.

This is niching down your specialty. However, if you further niche down by making your target market companies that manufacture solar panels, you'll only need to advertise to this select group. Reduced marketing expenditure results in higher ROI.

2. Positions You as the Expert

As a fractional CFO focusing on a specific niche, you'll gain in-depth knowledge about one particular type of business and its problems and pain points. This means you’re able to deliver the kind of precisely targeted advice that a business consultant offering generalized services cannot.

Prospects will have more confidence in your ability to solve challenges unique to their industry, which makes your services more attractive than a competing firm that doesn’t specialize.

3. Helps You Stand Out In a Sea of Competitors

The name “blue ocean strategy” comes from the book Blue Ocean Strategy: "How to Create Uncontested Market Space and Make Competition Irrelevant" by professors W. Chan Kim and Renee Mauborgne.

According to the book, it's better to swim in a "blue ocean" free from predators than a red one full of bloodthirsty sharks. In the human realm, this means that when you’re in a saturated market, you’re fighting for the same clients as everyone else is. This results in intense competition, which makes it difficult to do business.

On the other hand, if you can find a part of the market that no other firm is serving, you can have these clients all to yourself. To implement a blue ocean strategy for your CFO advisory service, identify pain points only your firm addresses and focus your marketing messaging on that.

Because you have in-depth expertise in one specific industry, you can charge more for your services. This makes being a specialist potentially more lucrative than being a generalist.

4. People Will Hear What You Have to Say

If you try to be everything to everyone, your messaging becomes generic to the point of being meaningless. This means you don't have much chance of cutting through the marketing din.

On the other hand, by being laser-focused on one specific market segment, people will hear what you have to say because you're actually communicating something worthwhile.

The Importance of Market Research

Do a little research to ensure that your chosen market segment isn't oversaturated. That way, you can learn how competitors make their services attractive to prospects. Market research includes finding out who's doing spectacularly well in your chosen niche.

Ask yourself how you can focus your efforts in a way that makes you boldly stand head and shoulders above what they’re doing. Once you find what makes you different, use that in your marketing.

The next step is to look at your audience’s pain points and how a CFO advisory service can address them. This helps identify clients’ needs and ensures that you’ll be able to assist them with the challenges they’re confronted with. In particular, look at needs that competitors aren't addressing. That way, you'll not only experience the exquisite satisfaction of helping a fellow business owner with a problem--you'll also most likely boost your reputation as a consummate problem solver.

Risks of Niching Down

By niching down, you will most likely make less money in the beginning. That's because you'll be turning away prospects outside your target market.

While revenue could slow down a little at first, your year-over-year growth is likely to be more substantial. And, before you know it, you’ve left all the business consultants serving everyone and anyone in the dust. This means you’ll be in a much better financial position than if you had catered to all types of clients.

Be a Highly-Sought Out Business Consultant With Training from The Expert CFO

Now that you’ve narrowed your client base to a specific segment, it’s time to roll up your sleeves and get to work. All your marketing materials (including your website) should speak to your brand-new clients and their pain points and challenges.

Become the go-to person that's a trusted part of their management team. Deepen your knowledge of your niche by solving your clients' problems. You'll tower above everyone else in that sector by speaking to a need nobody else is addressing.

At The Expert CFO, we have the training, tools, and everything else you need to embark on an exciting new career as an outsourced CFO.

Contact us today to start your CFO firm or add CFO advisory services to your existing firm.

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