A lot of gonna-be and wanna-be consultants/freelancers ask me if they should be pursuing a niche. They may be web application developers, for example, but they wonder if they should only be coding tools for the blogging platforms, or working within a certain industry vertical.

My instinct is always to say: HELL YES , niche away. Somebody once said that in niches there be riches, and I’ve found that to be very true in the last seven years. The more I specialize, the higher I can set my fees, the more sophisticated the customer, the more focused the pain points, the shorter the sales cycle.

My thinking is, why should I compete with a whole bunch of other generalists for the tiny scraps of food thrown out into the main square when I can stand up, enter the fine restaurant, go upstairs to one of the private rooms, and eat like a king with only a few other colleagues, none of whom I’m particularly afraid will try to stab me in the back?

Matt Gillogly once defined a niche as a place where you can do your thing without fear of competition. I think this pretty much covers it. Remember, the term niche comes to us from the study of nature. Biologists and naturalists have shown time and time again that living creatures (whether plant or animal) always find some way to survive in their niche. They adapt to the heat or cold, presence or absence of water, amount of predators or prey, amount of sunlight, whatever. A rose is a rose is a rose, but show me a rose that is bred to grow in a dry desert area, and I’ll show you a rose that’s different from an English country rose.

So how do you pick out a niche? Like I said in the intro to this piece, most of the people reading this blog will have one big advantage (or disadvantage, if you choose to look at it that way). They want to be technical consultants or freelancers. Most of them will become technical writers/copywriters, designers, or developers/coders of some kind. A few of them will become strategists or architects. Another little group will be drawn toward the world of people or project management, or process improvement. A very small group will be able to do two or three things well, and be in demand as designer/developer combos, or writer/developer.

However, sometimes this level of niching isn’t enough. Here in Austin, we were able to gather 40 people for a wekend of iPhone development with just two weeks notice. Most everyone in the room knew something about PHP, Rails, HTML, and Javascript. A few had Java and C in their toolkit. We only had two weeks notice to pull this group together. One could almost say, given just this little anecdotal bit of evidence, that Austin is probably CRAWLING with developers.

So how to niche? Well, a good way to niche is to pay attention to what your current customers (or prospective customers) are complaining about. What are their main pain points? What do they complain about over and over about? Do these complaints all group or cluster together? For example, in the 1990s, the big pain point in web site management was easy publishing systems….hence the rise of the CMS and blogging platforms.

What if you don’t have customers yet, or don’t have easy access to people who can express a business problem? Or you’re just simply burned out from taking on customer requests? Walk into whatever room in your home you use to store books and magazines. Take a quick inventory. Are there any cases in which you have three or more books, magazines, newsletters, or other publications on any given topic?

Now take a look at your email and rss subscriptions….same thing goes. Are you subscribing to three or more feeds on security? Performance? A particular language? What about your browser and social bookmarks?

Now think about your schooling, both formal and informal….not just the classes you took in university, but all the workshops, webinars, teleseminars and things you’ve taken over the years. And I’m not just talking about the stuff related to your job either. Add all those little stand-up comic classes you took, and the workshops on laying tile, and the yoga classes, and the jogging clinics. These all count. Do you see a pattern?

Conversely, do you wish to see a pattern? Maybe you want to go back and take more Jiu Jitsu classes, learn more about that industry. Hmmmm, is there any way to bring what you do (mad Ajax skillz) to the world of martial arts? Maybe not directly, but certainly with just a little work, you might find yourself being the number one go-to guy for front-end work on any martial arts ecommerce site.

Now think about all your favorite brands. I like Saucony running shoes (they make extra-wide shoes for my extra-wide feet), Pentax cameras (the K1000 was my first SLR, and now I own a sweet K100 digital SLR), Apple anythying (MacBook Pro, iPod shuffle, iPhone, iMac), and on and on. Do you have a close affinity with any brands? How about the tribes of people who follow those brands? Is there a way that by talking the inside lingo you could bring your talents to bear with that group?

What about your hobbies and interests? My wife and I keep a tidy and productive vegetable garden, and we enjoy camping out and dancing. And sometimes, campy dancing. The first thing we documented in our environmental blog was how we built our vegetable garden . Not exactly a money-maker, that blog, but it was fun to write about it.

The list is unending. One day you’ll be out with friends or jogging the nature trails and it will hit you….BAM! Of course, you should be focusing on X companies who have Y problem….and here you’ve had Z approach that will totally change everything! And then you’ll be on your way to fame, fortune, and glory. If nothing else, glory.

Unless you’ve been living in a cave, you know about the demise of Pets.com. Its downfall, and its sock puppet mascot, became a symbol for an entire era of business stupidity. Being someone who was actually working in the dot-com industry at the time, I thought it was pretty amusing, and never did I give a second thought to the people behind the Pets.com effort.

Have a read-through of this post by Julie Wainwright, former CEO of Pets.com. She’s now CEO of SmarterNow, and is confronting some of those old ghosts of Pets.com failure after an eight-year hiatus. Here’s a little piece:

First some background, I was the CEO of Pets.com. In case you haven’t heard of it, Pets.com and its mascot, the Sock Puppet, became the symbol for the dotcom bubble and its subsequent bust. Some have even charged me personally with bringing down the U.S. economy. Pets’ short period of success was fueled by positive press about the company and myself. Pets received even more press when it failed.

As the public CEO, I failed, and it was a very public failure. In fact, I was labeled one of the biggest failures ever.

Whatever you may think of Julie, her company, the dot-bomb era, whatever, please read this extremely courageous, transparent piece. It doesn’t matter if you plan on creating a world-spanning startup or a home-based consulting business. The mistakes she acknowledges are universal ones, and looking over the list, I acknowledge having made the same mistakes (boy, did I ever)

The only difference is scale, really. I’ve never had anyone laugh in my face because of my mistakes. Doesn’t mean that I don’t punish myself when I see my own face reflected back to me in the mirror.

Read the Story Here