A common piece of advice given by Internet business gurus is that you should “niche down until it hurts.” The idea is that you should pick a small subsection of an existing market so that you can serve that niche better than anyone else and become the go-to-resource for your niche. You might be interested in aquariums and having fish in your home as your target market. The “niche down until it hurts” ideology would suggest that you focus on a specific kind of fish and only on the breeding or care of that specific type of fish. Instead of choosing “aquariums” as your niche, your niche might be “gold fish breeding.”
In this case, the experts are wrong—especially if you want to build a large business. When you “niche down until it hurts,” you will often end up selecting a very small market which will significantly limit your ability to build a large business over the long term. Even if you were to build the best gold fish breeding website and products in the world, you are never going to make as much money as you would if you had built a well-executed website about aquariums and fishkeeping. By choosing a larger market, you will have more room to grow and will have a potentially higher ceiling on the maximum size of your business.
I know a number of people that make six-figures and seven-figures in their Internet businesses. These people aren’t necessarily any smarter than anyone else, but they do attack bigger markets. They use many of the same marketing and growth strategies that others do in their businesses, but get better results because there are many more potential customers in their market. If you find a marketing strategy that works well, you’ll make a lot more money applying that strategy to a market of 20 million people than you will to a market of 2 million people.
I chose “stock research” as my niche in part because of the size of the market. Around 55% of Americans have some money invested in the stock market (http://www.gallup.com/poll/182816/little-change-percentage-americans-invested-market.aspx) and 7% of Americans report that they “trade stocks or other funds pretty regularly” (http://www.pewresearch.org/2007/11/19/tracking-the-traders/). Assuming that my market consists only of active traders, I have around 20 million potential customers in the United States alone. While MarketBeat has grown to nearly 500,000 subscribers, I’ve still only scratched the surface of the market and have plenty of room for growth.
You shouldn’t try to build a business that’s for everybody, because you will end up building a business that doesn’t really help anyone. However, you shouldn’t limit yourself to a very small section of a market either. Instead, you should choose a relatively broad category that has significant room for growth. For example, “sports” might be too broad of a niche and “Green Bay Packers Cheerleaders” is probably too narrow of a niche. A happy medium might be writing about the NFC North division of the NFL, which consists of the Chicago Bears, Detroit Lions, Green Bay Packers, and Minnesota Vikings. That niche is narrow enough that you can cover it well, but not so narrow that you are dramatically limiting the size of your market.