The biggest problem you will face in building a successful small business

You've heard a lot of pratin' and prattlin' about this bein' the age of specialization. I'm a carpenter by trade. At one time I could of built a house, barn, church, or chicken coop. But I seen the need of a specialist in my line, so I studied her. I got her, she's mine. Gentlemen, you are face to face with the champion privybuilder of Sangamon County.

So says Lem Putt in the opening words of Charles Sale's 1929 classic The Specialist. Lem was a true specialist in his chosen line of work - building outhouses. He not only understood the intricacies of comfort, but also how the placement of an outhouse on the way to the woodpile would save time by allowing visitors to the outhouse to collect wood on their way back.

Lem had solved the biggest problem in building a successful business - specialisation. Finding your niche is probably the single most important thing you need to do to build a successful business - but it is also the most difficult thing you will need to do.

Here are three problems you will face when choosing your specialisation - and some help in overcoming them.

The biggest problem

There's a truism that most startups fail because they build stuff people don't want. But I have a slight variation on that:

The top reasons small businesses fail is because they build stuff people don't want - or fail to express it in a way that potential clients find compelling.

We usually start a business because we're expert at something and we recognise a problem that needs to be solved. We design a series of products or services that will solve that problem and take it to market — only to discover that we have to compete in a market that is so noisy we struggle to stand out from the competition.

To get around this problem - to stand out in a crowded market - you have to specialize. Specialization means that we're playing in a subset of a market that fewer people are playing in, and it becomes a lot easier to become known as the go-to-person for that specific problem.

But finding that specialisation is difficult for a number of reasons. Here are the three most common things you will have to deal with - and some guidelines on how to overcome them:

We're afraid to lose clients.

Specialisation means that we're going to focus on a smaller market - and that, by definition, means giving up or saying no to other problems we could also solve.

While it is certainly true that you're going to "lose" some potential clients, those clients are the ones that you probably shouldn't be working with in the first place. They are not quite in your niche and working with them is going to keep you back from specialising in what you're good in. Working with them means that you're trying to be all things to all men - and that just means that you're back in the crowded markets where everyone is playing.

So while the fear may be real the reality is that specialisation will bring you more of the right kind of clients.

We don't know if that niche segment is big enough to sustain a business.

Niching down - or specialising - means focusing on smaller market segments. What if that market segment is not big enough to sustain our business?

It is certainly possible to choose a market segment with a very small number of potential clients. But you would have to try really hard to do that - and if you do any kind of market research you will find that even very small niches are quite big enough to sustain a number of businesses.

In my research I've come across businesses that (for example) specialise in helping musicians audition for orchestra jobs; a site dedicated to tiny living in a COMET (Cost-effective, Off-grid Mobile Eco Trailer); and a fitness site for nerds.

We don't believe that we can put ourselves forward as experts in that niche.

Also known as imposter syndrome, this fear is something we all face. We don't have enough belief in our own expertise to walk confidently into a room and talk as the expert on the topic.

But here's the counter-argument: when you specialise in a very specific niche, you're going to find that you already are at least somewhat expert just because you've chosen that niche. Very few other people are playing there - you're the proverbial big fish in a small pond.

But more importantly, when you focus on that niche, you're going to build up expertise way faster than if you were trying to get good at a lot of stuff.

It's going to take longer than you think

The next thing I've seen when it comes to specialisation is that finding your niche is going to take longer than you think. Here's why:

You have to deal with fear and uncertainty

In the previous section I identified some of the fears and obstacles that you will need to overcome. The reality is that it  takes time to overcome them. You don't just take a fear, read about it and then magically overcome it. It takes time to get it out of your system; get the market validation that your fears are unfounded; and build up the confidence that you are indeed the expert you would like to portray.

Validating a segment and a need takes time

Identifying a market segment and a need in that segment is the easy part. But until you've validated the segment and the need in that segment, you're working on assumptions. Validation takes time.

It's a winding road

As you start working in your niche you will find out things you didn't know before. Clients will come with requests that you hadn't thought of, opportunities will steer you in different directions and people will want things that you know you could build - but take you away from your niche. All of these learnings will eventually help you find your niche — but the journey is a winding road rather than a highway.

None of these things are bad — but you have to realise that it is going to take time to find your niche. Once you know that, you can enjoy the journey for what it is - a journey of discovery.

It has to resonate with you - and with your clients

Your passion is reflected in your work. And a lack of passion is reflected just as much.

As you develop your specialisation you're going to find niches that seem attractive at the outset. But as you work more in that niche you may find that it just doesn't get you out of bed in the morning - you don't have the passion it takes to get really good at it.

Just about everyone that I've worked with who went through the process of specialisation has experienced this. We find promising niches but we just can't develop a passion for it.

And that's fine - you just don't have the passion and you shouldn't force it. If you find yourself in a situation like this you will need to think carefully about whether you really lack the passion - or whether it is fear, anxiety and other pressures that make it difficult to develop a passion.

And if you're truly not passionate about it, you need to find another niche. Because if it doesn't resonate with you - and with your clients - you're never going to be as good at it as you could be.

Chocolates for art lovers

One of the startups that I've been working with over the last three months sent me an excited email this morning. She creates a line of high-end, hand-made chocolates, and until recently had struggled to find her ideal market.

The owner of this startup just sold some of her chocolates at an art gallery in town - and discovered that this was her target market (and channel to that market).

I've been working with the owner of this for over three months now - and she just made this discovery. She's gone through all the fears, all the doubts and investigated a range of target markets - and now it seems that she's found it. Persistence is paying off.

Summary

The biggest problem you will need to deal with when building and growing your small business is finding your specialisation - your niche. Finding that niche can be scary and tough - but key to building a business you can put your heart into.

We've looked at three things you need to know about specialisation:

Everyone struggles with specialisation.

We will have to face the fears of losing potential clients; validate the market size and need; and get over imposter syndrome. But if you're able to overcome the fears and validate the market you have a strong foundation for a successful business.

It's going to take longer than you think.

Very few entrepreneurs are lucky enough to find their specialisation when they start out. It can take months to find the niche that you feel comfortable in and you know will be big enough to build a business on. But persistence and learning will pay off.

It has to resonate with you - and with your clients.

If you're not passionate about what you do it will reflect in your work. So you need to keep going until you find the niche that you're not just comfortable with - but one that you're passionate about. Only then will your clients be able to be passionate about what you can do for them.

Lem Putt is proud of his specialisation

As he says in The Specialist:

As I look at that beautiful picture of my work, I'm proud. I heaves a sigh of satisfaction, my eyes fill up and I sez to myself, 'Folks are right when they say that next to my eight holer that's the finest piece of construction work I ever done. I know I done right in Specializin'; I'm sittin' on top of the world; and I hope that boy of mine who is growin' up like a weed keeps up the good work when I'm gone.'

Each of us deserves to be proud of the work we do.

What you can do now

The Specialist by Charles Sale is a very small book and is in the public domain in some countries (including Canada). You can read The Specialist for free here.

If you're still wondering whether you niche is big enough to sustain a business, here are 23 great examples of niche businesses.‍

And if you're overwhelmed by your business, download the free Beginner's Guide to the Tornado Method here - the world's simplest system for dealing with overwhelm in your business, be brutal about what's not working and focus on what matters now.