🔍 How to Niche Down Properly in SA...

3 effective strategies to niche down without limiting your startup's market potential: Identify viable market subsets, concentrate on providing exceptional value, strategically expand your niche, and leverage technology to scale efficiently and sustainably.

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During our podcast with Ben and Lorne, focussing on a niche came up as something that is crucially important for startups. Yet niching down means making your total addressable market (TAM) smaller – sometimes too small.

That’s what makes building startups in SA so much harder than in a massive market like the US – and why so many SA startups we consult have tried to be too much to too many people.

So how do you niche down without killing your TAM?

1. Find a niche

Can your solution service a subset of the total market well first? DigsConnect, for example, niched down on just student accommodation at first.

Identify your market, then choose a subset that has:

1. The least competition
2. Biggest pains,
3. and/or Where you have the most experience/connections in.

Then ask yourself, can I go even more niche on this? I.e DigsConnect could have started offering accommodation only for first years and nail that, etc.

2. Double down on the value for this niche

When you have 40 (or 120) hours a week to figure out how to add value, trying to add value to 4 different types of customers means you are only giving each 10 (or 30) hours. So you might attract a larger base, but you’re gonna battle to make it a great experience for them – founder focus doesn’t scale well in the early days!

However when you double down on a specific niche (1 type of customer), you can really fine-tune the value and customer experience. Create a “wow that was awesome” experience and they’re likely to tell others – and the others they tell might just be the group you target next.

Momentum is key, don’t break it by trying to be everything for everyone.

3. Maximise returns on each niche

Iterate your offering to catch fringe use cases, and scale with tech. Once it runs smoothly and your cost to service is less than the fee they’re paying you, that’s when you can try to increase the size of your TAM by going vertical or horizontal.

Large markets are nice, but even when generating lots of revenue from these markets, the business will fail if the unit economics don’t work. Focus smaller, get the cost to service down and scale from there.

Got a hot niching and revenue tip? Hit reply and let us know…

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