In 2009, psychologists Timothy Judge and Charlice Hurst published an interesting study. The study took 2 decades to complete and involved some 12,000 then-teenage participants.
What they are looking for is the answer to an age-old question: what makes a person financially successful?
To answer the question, they looked at hundreds of possible variables, including family income, parent’s education, school grades, etc. What they found is pretty much what every other researcher found: those who are wealthy tend to earn more after graduating, and those that graduate at the top of their classes tend to be better off than their peers.
But they noticed a peculiar thing among their sample, a group of people who seem to defy the odds. You know, people like Steve Jobs and Bill Gates, who against all odds, made it big. What do these guys have in common?
Well, if you’ve ever been to a self-improvement seminar, you’d know that your beliefs have a huge impact on what you will achieve in your career. What Judge and Hurst found is that these people believe they possess the ability to shape their future.
But how does that connect to financial success, exactly?
Well, in a separate study, psychologist Georges Potworowski found that those who don’t believe they have the power to alter their destiny struggle to make “right vs right” decisions.
For example, should you quit your day job and travel the world for a year or take the promotion? Answer: there’s no wrong choice.
The Advantage of Decisiveness
Most of us would struggle to make that decision. So we compromise. We travel whenever we can but spend most of our time working.
The result is not, contrary to popular belief, a balanced lifestyle. Because the desire to travel is always in the back of our minds, it takes our focus away from other things in life – things like work and family – and therefore affects our performance.
Those who defy the odds, on the other hand, are decisive in making such choices. If they choose to take the promotion, the dream of travelling the world will never again pop into their minds.
In other words, they are able to completely quit pursuing other paths – an ability just as important as being able to choose the right thing to do.
In business, that means specializing in one niche and turning down legitimate, potentially money-making opportunities that come along. This is the opportunity costs.
By turning down those who are out of their segment, they can focus on growing their business where it really matters. They can focus on delivering out-of-the-world services to people IN their segment, thereby maximizing the chances of a referral and repeat visits.
They can focus on growing their brand, personalizing the whole experience for their target customers instead of trying to balance polarizing demands, which unfortunately, is what most people do.
So What Should I Specialize In?
So the question is not so much should you specialize or not, but what should you specialize in.
Before you go ahead and dedicate your life to a particular niche, you need to know it’s going to pay. Certain niches, like “teenage goth brides who are also golfers”, are too small to pursue.
How do you know if there’s a market for a particular niche? Go through this checklist:
- Are there blogs, forums, Facebook groups, etc. dedicated to that niche?
- Go to Google’sKeywordtool and see if anyone searches for your keywords.
- Do a Google search of your keyword: are there any advertisers?
Size is just one factor to consider. Here are a few more:
1.Profitability
Writing essays for university students, for example, is a huge market with low profitability – meaning you have to work a lot more than you need to, if say, you write for the corporate market.
Why? Because students are usually broke.
2. Urgency
Is the niche you’re going to focus on facing an urgent problem? For example, weddings are urgent problems for most brides, and therefore make a great niche. Making posters out of your landscape photography, on the other hand, is not solving an urgent problem, and therefore make for a less ideal niche.
3. Bottom Line
If the problem is not urgent, then does it at least help other people somehow make money? For example, advertising in yet-another-magazine is not an urgent problem for most companies. Professional freelance salespeople know that, so they pitch the fact that the advertising space will contribute to the business’ bottom line.
This is also true for niches like self-improvement or productivity.
4. Irrational Passion
The last criteria I like to use are whether or not the niche has an irrational passion for that activity. For example, dog owners have an irrational passion for their new pets. They are therefore willing to spend thousands of dollars on a photo shoot, splurge on new “dog shirts”, buy only the best organic dog food and build custom made kennels for their “buddies”.
Does this mean the niche you wish to pursue must meet all criteria? Of course it doesn’t. But the more of it your niche checks, the better.
For example, a gardening service does not address an urgent problem, it does not contribute to the bottom line and people don’t have an irrational passion for it (if they do, they wouldn’t hire you to garden for them), but it is highly profitable and it’s a great-sized market.
What’s an example of a niche that checks all these criteria? Weight loss. It’s a huge market, it’s highly profitable, it’s an urgent issue for most people, it contributes to productivity (which is why you often see business blogs talk about nutrition) and people certainly have an irrational passion for losing weight.
So anything that has to do with weight loss – supplements, personal training, coaching, diets, etc – tend to have lots of competition.
And competition is a good thing. If you found a niche without competition, and think it’s a goldmine, think again. It’s more like a ghost town.
There’s a reason why nobody’s there.
Andrianes Pinantoan is part of the team behind Open Colleges. When not working, he can be found on Google+ and www.awesometasticwriter.com.
