One of the biggest challenges for small business owners (and independent salespeople) is embracing the idea of focusing on a specific and narrow market niche.  There is a lot of resistance on people's part and I think it comes from two main factors:

1. A reliance on the the outmoded idea that more market share is good, and that bigger is better.  The model of business success in the second half of the twentieth century was one of big corporations vying for huge chunks of a particular market.  The goal of most small businesses was to follow the Microsoft model – start in a garage and then grow to become one of the most dominant companies in the world.  We got used to that way of thinking and it’s hard to get rid of habits.
2. When you are first building a business you are afraid of losing any customer (and any source of revenue).  The start-up phase of any new business is tough and it’s imperative to bring in the money.  The last thing a business wants to do is turn potential clients and paychecks away.  Most business owners/salespeople wake up in the morning and start “hunting’ for money, so why do something that seems counter-intuitive and make it harder to find paying clients.

While those are both very reasonable forces that keep us in the habit of casting the nets far and wide, here are a few thoughts that support narrowing your focus:

1. It's easier to market - your ideal clients can find you and you can find them.  If one of the main roles of a salesperson or small business owner is to develop business, then making that process as easy and effective as possible is key.  There are so many marketing messages out there, one of the main ways to make sure you get heard is to have a very specific message that goes to a very specific audience.  See my posts on The Long Tail and Permission Marketing for more information on this.
2. It’s really hard to compete against the big kids.  Almost every industry (unless it’s a completely new product or service) has it’s established heavyweights.  Trying to go toe-to-toe with them requires a lot of money, clout, and luck to win.  They already have the position and they have the money.  By narrowing your focus, however, you don’t have to compete directly against them.  If you make guitars, for example, it's going to be hard to take down Gibson and Fender.   But if you make a specialized instrument for a specialized market, like guitars specifically for 3–chord punk players, you can create your own niche.
3. You don't have to be big to be profitable; in fact, it's almost easier to be profitable when you aren’t.  Sometimes being small and nimble has it’s advantages.  One of them is better profit margins.  Instead of having to blanket a large market with a zillion marketing messages, you can focus your efforts on building a small, but loyal, “fan-base”.  It’s a lot cheaper to buy an ad in one targeted magazine, for example, than taking a nationwide ad in USA Today.  Not only can you get into the game with less initial outlay, but while you’re in it you don’t have to spend as much.  Even though your revenues won’t be as high, your expenses won’t be either.

Don’t be afraid of really focusing your marketing and customer communication.  Think about it, why does a hammer or a laser work so well – they’re both example of concentrated energy.

If you have any other thoughts on the pros or cons of focusing on a specific market niche, let me know.