How can I narrow down what target market or niche to focus on?

I can think of a few ways to solve this problem but there's only one I really like. And that is because the truth of the solution is not out there in the marketplace, but here inside the mind of the contractor.

What does this freelancer believe is "a lot of money"?

That's your first and key question. It drives all the others. You have to be totally honest about this because people often lie to themselves about this number...the reality is the truth is a figure a whole lot lower than they initially say.

Why are we doing this? Because if you mismatch your beliefs with your target market, you will never sell. Either the projects will be too small for your taste, in which case you'll find ways to screw up the sale because the ideas are boring...or (more commonly) the projects will be valued too highly for your personal sense of value, and you'll screw up the sale because it's too big for you.

The sweet spot is a level that is just a small bit higher than what you think of as "a lot of money." Let's say you get real with yourself, you've never earned more than $50K a year (most people have not), and so you're used to a salary of around $4K. Earning $10K or $15K at once is frightening to you. Exciting, but scary. You don't really believe you can do it...that someone will actually pay you that in one go.

So looking for companies that have a $10-15K or higher project level comfort zone is a bad idea for you at present in this example. Projects at $5-7K are a much better choice, because they will draw you on while seeming believable in terms of someone really sending you that much at once. And if you're used to twice monthly salary payments, $3-5K may be even better.

Once you understand what is true for you right now--and the goalposts can be changed; this is all habit and you have to be consciously aware of it and work on it continuously--then you can go out and look for a match in the marketplace.

The fact is there are customers at every level. I had a South African friend I worked for about 10 years ago who had a design agency there before he moved to Vancouver, Canada. One of his designers bid on a job to redesign a credit card cover, and that art project was awarded to them at $80K.

$80K to redesign that small space.

Why? Because that customer felt it was worth it. But if the designer hadn't believed THEY were worth it, they would never have bid on that project, not at that amount...heck, they may not have even SEEN the listing for the project because their RAS would have screened it out.

So find your sweet spot, then go and find out who has projects that are worth 10-20X that figure. It's easy to get someone to say "Yes" to a project where they know the value is $100K when your price is $5K to solve the problem. Maybe even $10K as the investment to fix things. And $100K problems are lying around everywhere in business.

As for what niche, I like to pick niches I enjoy talking about all day. Beyond typical project value that's another good factor. If I'm going to be stuck in there, I might as well enjoy it. Also makes the marketing easier, since I stand out due to knowing the industry jargon. Yeah, a designer could work on anything...but that's the wrong perspective to be using when it comes to finding clients. The client's perspective is this:
"Is this for me? Will this work for me?" And appearing general does not help answer those questions confidently.

These answers analyzing revenue potential and goals are spot on.

To add to this, think of what motivates you and where you can provide a great service and also grow it.

Think back on your experience:
- Which jobs did you enjoy the most?
- Which areas of your business are most ripe for learning and innovation?
- In which jobs did you provide the most amount of impact/innovation?

And then your markets:
- Which audiences have the most spend-ability?
- Which audiences provide the most word of mouth?

Work on these sorts of questions to determine where you can make the most money, continuously grow and also enjoy your work over time.

Rule of thumb is to set your target profit/month.

Then niche down (tighter focus), till you have a niche small enough to dominate + large enough to produce your target profit/month.

Search Clarify for many other answers I've placed about using Meetup.com for this process.

If you get stumped, might be good to hire someone to assist you designing your niche.

Now, there are two ways to niche: you can niche vertically by industry or horizontally by skillset. And if you do one, you can do the other when you're ready.

For example, if you start with a vertical: if you've worked with several different industries, you know which you enjoyed most and which you enjoyed least. Whatever you enjoyed most makes up your niche. Now if these verticals are polar opposites (restaurants and government), but you don't want to choose among them, go horizontal by picking one set of services you enjoy and creating a profitable package suited to each vertical. Now you've created your own unique niche with a single specialty service for a handful of verticals you want to focus on exclusively.

I've found that there's good money in every industry. You just might need to dig deeper for it in some. The best way to narrow your target market is to focus on what you enjoy the most. If don't enjoy the market, you're not going to do your best work. I've turned down clients that offer services or products I have no real interest in because I know I'm not going to be able to fake my excitement about a product or a project. If you do what you enjoy, even the failures are a blessing.

Choose a niche where:
1. You enjoy the work.
2. You already have some satisfied clients.
3. There is an ecosystem of related professions (ex: realtors, bankers, title companies, lawyers, home inspectors).

Number three is important because solid businesses are built on a pipeline of referrals, and clients won't give referrals to competitors.

So, for example, if you are a designer focused on real estate agents, don't ask for referrals to other agents. Ask for referrals to real estate lawyers, home inspectors, bankers. The agent would gladly give them to you. Then, build relationships with them, saying that you design websites for real estate agents. They refer you to agents and you can refer them to agents. Then, when you get new real estate agent clients, ask them for lawyers, inspectors, etc. So it becomes a virtuous cycle.

Also, if you hesitate to pick a niche, remember that a niche is for outgoing marketing only. If people from other niches come to you, then feel free to work with them. So you really aren't limited to the niche, its just that you market that ay.

I wrote a three-part guide that discussed several niche selection techniques that you can use to find profitable products to sell. While you may not be looking for specific products but rather a niche, the principles in this series still apply.

The link to Part 1 of the series is: https://pezlogic.com/2018/05/20/tips-and-tricks-to-successful-niche-selection-part-1/

In Part 1 we review what makes a good niche and then explain the details of how to find a profitable niche. In Part 2 we introduce some powerful tips on how to refine your list, so you can pick out the best products and begin to narrow you’re your list. In Part 3 we go over how you can verify that your product ideas will actually sell. You can use the same tools and techniques in part 3 to validate that the niche you select is big enough to focus on.

It's important to start the niche selection process by letting your goals guide your decisions. The planning process becomes much easier when you know what you are trying to achieve.

Once your goals are clear it helps to brainstorm so you generate a lot of great product ideas. This is the time where you let your ideas flow, so you don’t limit your creativity. After brainstorming you begin to refine your list by using the tips outlined in Part 2. Refining your list will allow you to narrow things down so you can begin to verify that your niche ideas have a viable market.

As you travel down this journey, it’s easy to get lost in the weeds. Don’t be afraid to pause along the way to evaluate your progress. Remember, there’s no magic bullet in niche selection so taking a systematic and data driven approach will help you significantly increase your chances of success. At the same time, don’t forget to allow your interests and passions guide you. At the end of the day, you’ll want to be in an industry that interests you and you believe in.