When Should You Branch Out of Your Niche?

branch out from niche

This is a little bit of an advanced topic for entrepreneurs. So if you’re just starting out I’d really advise you to save this blog post for a year or so down the line. For the most part, success in business comes down to drilling down into as specific a niche as possible and maximizing your opportunities in a small, but die hard fan base that will champion your business.

But what about when you’re feeling like you’ve exhausted your primary niche and are starting to think the grass is greener somewhere else?

Can you branch out from your niche?

The quick, but vague answer is: Yes, absolutely. The real answer, though, is: Yes. But you need to have a serious plan and consider the risks that come along with it.

Let’s cover the bad news first:

Expanding your business into a similar or altogether different niche may upset your current customer base, as many of them will see it as abandoning/selling out/etc the people who made you successful. You’ll also have to consider that your current fan base probably won’t be the ones who buy your new line. So you’ll have to consider who your second customer base is and how parallel they would be to your current way of conducting business.

A perfect example of this is Toyota.

Toyota has been around for decades building mid range, but well made cars (your opinions may vary) and wanted to start producing a higher level line of cars. I hesitate to say “luxury” because then we’re getting into semantics. So let’s say they wanted to charge more than they do for a Camry but weren’t interested in being the next Lamborghini.

Toyota knew that their name represented an idea in the marketplace and attracted a certain type of buyer. They most likely did enough market research to realize that no matter how fancy their new line of cars were, potential customers who would be willing the shell out the dough for it wouldn’t trust the name Toyota when they could buy something with more clout like a Mercedes Bens. So how did they do it?

They created Lexus. 

Toyota created an entirely new company that those who weren’t really paying attention would never know these higher end cars were made in the same factory as a Camry or Prius. They wanted to branch out and expand their market share in the automotive industry but knew they’d never be successful if it was simply under the Toyota name.

My point to all of this is that if you’re feeling your niche is tapped out (or you’ve burned out) but you want to expand into other markets, know that you’re essentially going to have to start from scratch. 

A different customer requires a different marketing strategy, packaging design, customer service policy, pricing structure, etc etc etc. 

Some other things you’ll need to consider:
  • Do I have the employee structure that can handle a separate client base? Think about the logistics that come with appealing to a new crowd: social media, shipping, and packaging (if physical products), customer service, finances, marketing, events.
  • Can my current business float this new niche? Consider the startup costs that come along with branching into any new area. Where is that cash flow going to come from? Do you have the capital from your current business to float this new one for a year or more while it gains traction?
  • How transparent are you going to be with your new and old customer base? I don’t believe you should actively deceive your customers. But do you plan on publicizing one end of your business to the other? Or do you feel it’s better that everyone just stays in their own lane? This is especially important to consider when moving into a more luxury market or downgrading into a more mass market. 
  • Why do I want this branch out to happen? This requires a little bit of soul searching to come up with the real answers as to why you want a change. Do you have new ideas that your current customers can’t support (i.e. a higher-end product or service?)? Are you burned out from your current marketplace, or is it something else? I’d recommend talking it out first with a business coach or therapist to get some outside perspective before you start a gigantic undertaking like this.

Whatever the reason, you should branch out of your niche into other marketplaces when you can answer the above questions honestly and have a realistic timeline in place (SMART goals are clutch in situations like this) so don’t jump into it quickly without a plan!

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