What is Your Niche? – Episode Transcript
Rem Oculee (00:05):
Welcome to the Exit Mindset Podcast. I’m Rem Oculee. 15 years ago, when I was trying to sell one of my companies, I couldn’t get what I thought was the right price for it. I realized I had things set up the wrong way, even though the company was profitable. So, I spent years researching and studying exit strategies to improve my company’s valuation. I discovered that the same process that improves valuation would improve business profitability and give me more free time. I’m here to show you what I have learned. You see, the best way to grow your business is to look at it from the perspective of someone who’s going to buy your company. Once you start thinking that way, magic happens, and you start seeing things you could not see before. But that’s not all, I also discovered the three principles that you must know to command a better price for your company. The three principles are first, the product, second, the infrastructure, and third, the conversation you have with the consumer. Once you master these three principles, you will be on your way to increasing your profits, your company valuation, and get more work-life balance. So, listen in and learn how you can do that. I will teach you through this podcast, lessons from the trenches, and we will have a dialogue with some of the greatest minds on the planet.
Rem Oculee (01:29):
Do you ever wonder why you’re not making enough profits? Well, sometimes the answer to that one is probably not targeting the right consumer. In the Exit Mindset, we talk a lot about increasing your business valuation by creating a business model that is successful. That generates more revenues for you, that gives you more time. And ultimately, if somebody wants to buy it from you, if you decide to sell, it would be a model that you would get more monetary value for than it is right now. And we also, of course, understand that it’s sort of a feedback model where if you create the higher valuation, then your life is much better, because again, you get more time, more profits. So, we’re going to go into the area of niche targeting to figure out how you can create a better business model. So, let’s talk about this a little bit more.
Rem Oculee (02:14):
You and I know the Exit Mindset is predicated on treating your business as if somebody’s going to buy it tomorrow. And your business has to be ready for them to look at it from a perspective of, this is a great business, is generating the right amount of revenues. It’s targeting the right consumer, it’s doing the right things. It’s got the right product, right infrastructure. It’s having the right conversation with the consumer. All these things have to be in place. And when you have that in place, you’re going to be able to command a higher valuation, which is what you worked for all those years. However, you and I also know that this design we’re talking about right now is meant for you to create a better business model for yourself. So, the Exit Mindset says that ultimately, if you want to sell the company, you can get it for a higher valuation.
Rem Oculee (02:58):
But right now, while you’re running the company, you can make it work in a better way that is good for everybody; yourself and people that work in the company. So, what we’re going to talk about today is an area that is most often looked by many business owners and companies, and that is area of creating a niche. Most people think that their product is good for everybody. But smart business people, and the people that create better companies, are the ones that focus on a niche. A niche that can target a specific consumer that they can help, and then they could do the most for. In your case, my question to you, are you targeting the right consumer? I can’t tell you how many times when I’m having discussions with my CEO friends, or business owners, or people that ask me questions, how many times I find that they are targeting the wrong consumer. And to them, it doesn’t seem that way because they have sort of a closed view.
Rem Oculee (03:49):
They’re too close to the situation to understand what’s going on sometimes. And sometimes the second set of eyes from the outside looks at it and goes, “Hold on, that does not look like the right consumer for your product or for your service.” And if you start really examining that and try and identify whether this actually is true or not, you’re going to find that there’s a lot of power in figuring this particular aspect of your company. Because once you figure out the right consumer, your life is going to be so much easier, your thinking is going to be focused. Your advertising dollars are going to be streamlined, your people are going to be aligned. I can tell you about 10 things right now that could be beneficial. But ultimately, the summation of all of it is that you’re going to have a better business model.
Rem Oculee (04:30):
If you look at most of the great companies that focused on one particular target consumer or the other. Now the target consumer could be broad, and your niche could be is that you’re providing products to everyone that needs that service in some way or the other. It could be from different demographics, psychographics. However, in many cases, you’re going to find businesses focused on different Kappa demographics for the same product, some products that I can consider them, consumer staples. So, in the case of electronics, it might be something along the lines of office products and suites, word processors, spreadsheets, things like that. So, these are consumer steps. However, there are many other companies out there that have a very specific niche. For example, there are certain types of accounting firms that only cater to businesses. There are certain accounting firms that only cater to individuals, that’s their niche. There are accounting firms that will not deal with anything, any company, less than $10, $15, $20 million in revenues.
Rem Oculee (05:23):
There are all sorts of types of models in there. When you understand your business model, you’re going to find that again, you are much more able to help those people develop your consumer, achieve the results they’re looking for. So, the first thing you want to do is start digging into your niche. So, I’m going to give another example you could wrap your head around. Let’s say you’re in the pet care business. There are companies that are very general. We do all pet products and that’s fine. And their specialty is providing a wide array of products for anybody that has a pet. And the usual, it’s a variety of pets. But what if your niche becomes one particular pet? Would you think you’d be able to maybe create a better market for yourself, a better demographic? So, let’s say you focus on dogs. So, your company will be the company that caters to specific dog needs.
Rem Oculee (06:08):
So, if you go to a wide range of product, kind of a store, you’d get a limited supply of the things that a dog would need. Perhaps your store would be so focused on dogs that would carry a significantly better, wider range of products and targeting that dog owner. If you’re a dog owner, where would you go? Would you go to the general store or would you go to the niche store? Again, it depends. But in many cases, you’ll find more appealing to some people to go directly to the store that specializes in dog products. And they might get used to it to the point of, they don’t want to go to the other store. And many, many companies have been built based on that model. The nice thing about that is that if you’re able to establish a niche, and if you stick with it, and you develop a following, and you develop loyal consumers that are going to come to your establishment, and buy from you or order from you, the valuation of your company could be significantly enhanced.
Rem Oculee (06:59):
But again, why is it enhanced? Because you’re probably very profitable or you’re generating right amount of revenues. Or there’s mass customer appeal that somebody feels that has more market, even further development that could be created if they buy a company. And you might start thinking about these things as well. Maybe now that I have this niche, I can expand different geographical areas. You might decide to take that niche and develop another niche. So, for example, we talked about the pet care business, or we talked about dogs. You might decide to open up a different establishment that caters to cats, again, a very common household pet. And you could have a significant market if you develop the right product for them. And now you’re expanding your business model and your evaluations could be significantly higher, again. I don’t suggest by the way you go spread around too much.
Rem Oculee (07:45):
I find that most people are successful when they focus on one thing, one niche. Now you and I know that business is very difficult and the best way to do it is just keep your focus on the right place, and the right business and on the right consumer. But let’s go to it from an advertising perspective. If you’re advertising general products for pets, you’re probably competing in the marketplace with tons and tons of people that do that. Some of them are very, very big chains. But again, if you go out and advertise to dog owners, you can imagine how that is different. Now you’re flagging the dog owner and he’s going to be listening to you because you know, you’re for him. And he knows that it probably, you have something that he has a major interest in, which is his dog or her dog.
Rem Oculee (08:30):
So, in this particular case, you’re going to find by creating a niche, you are well ahead in the game and you could actually create a model that could be significantly more profitable. Even from a market perspective, you might be able to acquire products or find vendors that provide you with certain kind of services that would actually have higher markup to them that the consumer wants. And guess who’s benefiting? Both of you, you and the consumer. Also, it’s not just a matter of increasing the types of products, if we’re talking about physical products here. It could be certain kind of services that could enhance what the dog owner needs. It could be certain services that could be complimentary to what the dog owner needs. It could be as simple as dog training classes, or it could be a dog retreat camp. I don’t know, I’m just making things up right now.
Rem Oculee (09:17):
What I’m saying is that the sky’s the limit. I’m not suggesting you do that exact thing. I’m just saying to you, that you could think of things in a different way. The Exit Mindset, predicated on you taking what we say in here and try and interpret the theme, and make it tell it to your model. What in your model that could be conducive to expansion of the product line with regards to a specific niche that you are interested in? Because remember, if you’re not interested in the niche, it’s going to be very hard for you. I’ve seen way too many people fail because they want two things, they think it just because it sells. And sometimes it works, sometimes you find someone that sells right away and works. But the most successful people I’ve seen are the people that are passionate about the product that they’re selling.
Rem Oculee (09:59):
So, in the case of the dog products, you gotta be passionate about dogs to get the greatest dog products. Because imagine if you’re a cat person, which is nothing wrong with that at all. But you’re not a fan of dogs, and you just think dogs are nice animals. Can you imagine the kind of products and services you would provide to a consumer? You wouldn’t be focused on it as much as you would focus on a cat. So, you’re a cat person, then go ahead and niche in cats. And you’re going to find that your attention to what the cat needs is going to be much more developed because you know what the consumer needs, because you’re one of them as well. So, I would say to you to sum that particular part up is that the smaller, the niche, the better it is. So, try to find the one that will maximize both your revenues and reduce the demographic range that you’re dealing with. Which brings me to the topic…
Rem Oculee (10:52):
How deep can you go into the niche market? The deeper you go, the better it is. So, if you talk about dogs, you have more advantage. But maybe you could specialize in Labradors. What if you do that? If you figure out how many Labrador owners are in your area or available to you, that you can reach, you might find it to be a lucrative market. Would a Labrador owner rather go to a general store to get supplies for their Labrador or you? Most likely would be you. So, there you go. Now, you might even go deeper. And I’m just saying this, not saying to you, this is the case, but just an example. You might decide to have a niche where it’s baby Labradors. People that have newborn Labradors, to give them something that would make the Labrador grow better. Maybe something about their structure, something about their diet.
Rem Oculee (11:40):
And if you’re creating that kind of store, that’s another niche you’re getting. Again, I’m not suggesting that it’s something that is practical. I’m just giving an example of how far I can go. In your model, trying to drill down as much as you could to find out who is your target consumer, that is going to be most palatable in terms of revenues, in terms of services you provide them. But by the way, let me warn you. There is such a thing as over niching. You don’t want to go too far. Okay? You don’t want to go crazy with that concept. The concept is neither to be a way at the top where you’re just very general like anybody else. But it’s neither to drill down to the point, where you won’t have any customers or barely any to support you endeavor, no matter how passionate you are about it. So, example, let me take my own example.
Rem Oculee (12:21):
I’m going to turn it on me. The baby Labrador example, what you’re going after, because you like baby Labradors and you, they can grow better. But the market doesn’t support it, and they’re going to be able to support a viable enterprise. Then I suggest you don’t do that. Make that as part of your offering for the say, general Labrador store. If the Labrador concept doesn’t gel, because you find the demographics aren’t enough or something’s going on, that would not work out very well. Then stick to a dog establishment that has part of it that caters to Labradors, probably. That might work. Again, you may not want to do that either. So, you really got to figure it out. You got to assess. I’m here to guide you into the process. So, you could start thinking, I want to turn the wheels on that one for you.
Rem Oculee (13:03):
Once the wheels are turning, you’re going to be able to find the right niche for yourself. So, the question for you is how deep can you go into a niche market? That’s one. Remember the saying, “There are riches in the niches.” And the Exit Mindset will mean more profits for you. So, the quicker you adopt that mindset, the quicker you get to your targets. Another question might pop up is that, do I have the right product? So, just because you want a niche, try to also evaluate if your product is the right one, and that becomes one of something on your checklist you want to look at. Well, I’m going to try and keep giving you pointers as to what it is that could be helpful to you. That could spark some, some idea or two here. One other way you could do that in terms of your niche, trying to understand your market better, segment your market into different customer segments. By the way, I do talk about a lot of these things in my other podcasts. So, some of those concepts might filter in into various podcasts. But at the end of the day, if you go back to some of the previous podcasts, you’re going to find some of those concepts in a more expanded format. Remember, action is everything. Use it or lose it. To achieve your exit, you have to have an Exit Mindset. I’ll see you on the next podcast.
Amber Giannone (14:21):
You’ve just listened to the Exit Mindset Podcast with Rem Oculee. If you haven’t yet subscribed or followed, please do so in your podcast listening app. Or better yet, visit exitmindset.com to join the conversation, access the show notes and discover our bonus content. Lastly, we want to help as many business owners as possible. If you know anyone who could benefit from the information given in this podcast, please feel free to share it with them. Until next time…