A lot of freelancers choose a niche. Some suggest that there’s no better way to approach the business. Develop a reputation in an area and you can command attractive rates, they say.
If you ask me, should freelancers choose a niche, and my answer is No. But, it’s smart to do something close to it.
Financial experts constantly warn against putting all your eggs in one basket. When you restrict yourself to a niche that’s exactly what you’re doing.
And when your work is concentrated in one area, your livelihood is dependent on one area.
Putting yourself in that position can limit you financially, and it can break you.
A Niche’s Limitations
When you look at the most successful companies and professionals, most diversify.
Apple doesn’t only sell phones. Amazon doesn’t only sell books. Both sell a range of products and a variety of services.
Likewise, the executives for one company are commonly on the board of others. And those board positions are often in different areas of business.
When you have skills that are as widely applicable as writing, graphic design, web design, or many of the other things people do on a freelance basis, I don’t think the strongest argument or the smartest move is to limit yourself to a niche.
When more lucrative opportunities arise, and you have the ability to cash in on them, I just can’t see the logic in limiting yourself to a lower-paying or stagnant market for the sake of sticking to the same thing.
Even if opportunities arise that pay equally as well as a niche, if you have the time and skill to make that extra money, I can’t see turning your back on that either.
I don’t believe in unnecessary earning caps, and that’s what happens when freelancers choose a niche.
A Niche Is Risky
In addition to limiting your income, a niche can create a personal finance crisis.
Remember the Great Recession of 2007-08? Remember how the housing market collapsed? Think of all the niche markets that were affected.
What do you think happened to freelance writers whose niche was real estate?
I’ll tell you.
A lot of them found themselves suddenly out of work and struggling.
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Other niches that they probably could have transitioned to any other time, such as construction, building materials, and interior design were also a no-go because all of them were affected by the downturn too.
Companies in those sectors stopped doling out ad money.
They stopped investing in content marketing.
They maxed out their credit and couldn’t get any more.
And a lot of freelance budgets evaporated.
And the thing about freelance clients is they will see financial problems coming, but many aren’t going to tell you. They’ll allow you to keep working like it’s business as usual until they just can’t hang on anymore.
Then, they’ll abruptly announce they won’t be using your services anymore, wiping out your revenue stream.
Related: The Reminder From Losing A Major Client
Or worse, some freelance clients will rack up debt knowing they can’t pay it. But until you figure that out, they’ll keep assigning you work and accepting your submissions.
When one client has financial problems but you have others, you have a good chance of staying afloat. But when you’re a niche freelancer and your entire sector is in a slump, you’re in trouble.
A lot of segments of the economy are a lot more volatile than many people realize. And if you don’t follow financial news, you may not know about the down cycles for your niche until it’s at a dire point.
If you are going to select a niche, I strongly recommend that you investigate that sector’s financials first. And keep a watch on them.
You may think you’re making a safe choice with something that seems evergreen like parenting, fashion, or journalism. But pay close attention to where those “safe” niches get the majority of their revenue.
What To Do Instead
Overall, I believe it’s too risky for freelancers to choose a niche. And, it’s an unnecessary risk.
I suggest a hybrid approach.
Develop a specialty, an area where you build your knowledge and devote 60%, 70%, or 80% of your focus. You can develop a reputation and command a premium for it.
But devote the remaining 20% to 40% of your work to one or more areas that aren’t directly linked to that niche.
You don’t have to publicize this other work on your resume, website or in your portfolio if you don’t want to. But if the market ever tightens for your niche, you’ll have this other experience, the income and hopefully some solid contacts that allow you to ramp-up production in your backup field until your niche market recovers.