It is often said that you just can't be everything to everyone. 
This is especially true in business. The worst thing business 
owners can do is to delude themselves into thinking that 
everyone is in their buying audience. 

Trying to satisfy everyone's requirements for your products or 
services is a really big ask. And it is a thankless task too. 
You run the risk of being only moderately successful at keeping 
all your customers happy. This means that customer satisfaction, 
on average, probably won't be high enough to bring you lots of 
referrals and repeat business. And your business will be only 
moderately successful.

As a small business owner, you will do far better if you focus 
the delivery of your offering on satisfying the needs of a very 
specific subset of the market. Because your niche market has 
well defined needs, it is easier to satisfy them. And your 
selected customers are like to be a lot more pleased with your 
services.

You make a much bigger splash by jumping up and down in a 
puddle, than when you bob up and down in the sea. Similarly, 
focusing on a niche target market means that you have a much 
greater impact on the customers you serve. Customer satisfaction 
soars. And your reputation as a specialist grows as customers 
pass the word around. 

The need for a well defined market niche increases dramatically 
as markets become more competitive. Having a market niche 
enables you to differentiate yourself from competitors. And 
it provides you with a steady stream of business, even in the 
most crowded, fiercely competitive market.

Let's consider an example. Imagine that you are an ex-accountant,
and that you have decided to cash in on the booming internet 
business market. So, you buy some equipment and software, and 
you set yourself up to provide website hosting services.

The market for this service is enormous. Millions of new 
websites are created every year. And the rate of growth is 
skyrocketing. But you are dismayed to find that attracting any 
of this business is almost impossible for a small newcomer like 
you. There are so many people out there doing the same thing at 
cutthroat prices, that you just can't get your business off the 
ground.

Imagine how different your experience might have been if you 
only offered this service to accountants, together with a suite 
of tools accountants require for servicing their clients over 
the internet. As an ex-accountant, you would understand the needs 
of your target market very well. So you could put together a 
compelling service offering. You would also have the credibility 
it takes to inspire confidence in prospective clients.

Your specialisation would give all accountants out there who 
want to get on the net, a really good reason to do business with 
you. The size of this target market would be a small fraction of 
all the people creating websites. But your ability to penetrate 
this niche market would be infinitely greater. As a specialist, 
you are also able to charge more for your products and services. 
Which means that you don't have to compete on price.

Dominating a niche market means that you are well placed to 
build a compelling competitive advantage. One that brings you 
sustainable business success in a highly competitive market. 

Applying this principle will make any business more successful. 
You can base a market niche on various criteria : your location, 
profile of your customers, industry knowledge, people you know 
etc. 

Think of how you can add value for your customers in a way that 
no one else is doing it. And use this as your starting point. 
Your objective should be to create and take ownership of a 
market niche. And to do it in a way that makes your position 
virtually un-assailable.