What comes first: Your business model or your niche?

If you are trying to grow your small business, there are two decisions that will have a huge impact on your future success:

• Your business model

• Your niche (aka your Ideal Client)

These dictate who you’re helping and how you get paid to help them — which, when you’re working a 40+ hour week, essentially means they dictate your entire life and future.

Whilst they are two distinct decisions you need to make in your business, they’re heavily intertwined.

It can get confusing.

Many people come to me when they’re stuck on these decisions or feel something is off.

I too, have been questioning them lately. Not because I don’t know what my business model and niche are, but because I’m reviewing whether they’re truly optimised for the long-term growth I seek.

Whether you’re starting out or reviewing what yours should be, I hope this post helps you assess whether your setup matches the success you want.

Also I have been heavily influenced by a masterclass on this very topic that I wanted to share with you, too. It’s by Olly Richards, mentor to 7 figure education business owners and was a game-changer for me.

Your business model and niche determine your future

As stated, these small choices can dictate the future of your business and, ultimately, your life.

To bring this to life, let’s imagine two business owners: Jo and Luis.

Jo and Luis are both trained coaches. They met at coaching school six years ago. They're both UK-based, hence the figures in GBP. They share a similar starting point — but that’s almost where the similarities end.

You see…

And

On the surface, we think most of the difference here is happening with the niche, but let’s look at how this work actually happens.

Under the hood of their client delivery

And

You might think Jo has it easier, considering how few sessions she delivers, but let’s look at how they get their clients.

Under the hood of their client acquisition process

And

You now might think you’d prefer one of these approaches over the other.

But let’s talk money.

Under the hood of their finances

And

So Luis earns more.

Is that a better business? Let’s break down how they each spend their time.

Under the hood of their time

And

Their effective hourly rates:

• Jo: £100k ÷ ~1,500 hours = ~£67/hour

• Luis: £150k ÷ ~2,000 hours = ~£75/hour

So while Jo has more space, Luis earns slightly more per hour — though he delivers more, more often.

In my opinion?

These are both GREAT businesses.

Their realities of getting there might not have been plain sailing, but if Jo and Luis can keep things ticking along as they are, they are in a pretty strong position.

Phew, a mini coaching business model MBA for you there ;)

Can you pick and mix these components?

You might read these examples and think to yourself: “I want Jo’s deep work and high-value clients, lack of social media, and Luis’s freedom and cleaner margins.”

Why wouldn’t you?!

First, let me remind you these tales are fictional, and there is every possibility a business like Jo’s exists out there on lower margins.

But, the tale has been told to reveal a certain truth to you: certain niches dictate the need for certain business models, and vice versa.

Jo would, I imagine if I met her, love to have a £300k revenue business without spending so much money.

But not only is this money being spent strategically — on activities that allow her to do just two coaching sessions per week and still run a multi-six-figure business (!) — it’s also being spent on activities she enjoys. Things that make the effort of running a business more worthwhile.

Jo loves to travel. To network. To learn. To work with super-senior people.She hates social media. She doesn’t like being behind a laptop. Her screen time is probably 1/10th of Luis’s.

So the price Jo pays to run this business is spending more money on these activities. It’s a trade-off she’s happy with.

Now — how does her niche fit into this?Well, it only makes sense for Jo to spend all this time and money on client acquisition precisely because landing a client is such a big win (£50k). If she had to do all of that to land a £5k client, she’d have terrible margins and be a bad commercial coach!

And remember, who pays £50k for coaching? Executives and founders with money to spend, and a big enough pain point — like wanting to grow their organisation.

So in this case, the niche and business model are deeply intertwined.

Same with Luis, to an extent. He’s chosen a higher-volume client base, working with ~40 clients per year, and he gets them through more digital marketing-led efforts. More screen time, fewer big events and networking calls. Much more following social media trends.

And, because he’s charging £3,750 per client, it’s less important that he’s at the very top of his game as a coach and much more important that the experience is excellent, the community is strong, and the offer feels worth it. A lot of that comes down to the brand he’s built. He’s not just running a coaching programme — he’s building a movement.

And that movement takes time and energy to grow — especially on social media.Which is exactly where Luis thrives.

He loves the flexibility. The men he coaches. The reels and videos he makes. The impact he’s having.

So yes — you can design your business model and niche to suit your preferences.

But they also have to align with the preferences, pain points, and buying behaviours of the people you serve.

What business model should you build around?

Training? Events? Licensing? Coaching? Teaching? Groups? Membership? Consulting?

Here’s what I know from my work and experience:

These decisions all come down to one key question:

There are trade-offs to every path, as Jo and Luis show.

This is where Olly Richards’ masterclass Business Model Mastery really shines.

I rarely finish a training in one sitting, but did for this. It was exactly what I needed. I currently run a 1-1 practice and a group membership, am past six figures but not yet at multi-six.

This masterclass showed me exactly where I was overcomplicating the scaling part of my own journey and that’s why I wanted to add it to todays’ post. It’s excellent.

If you’re under ~£100k, those trade-offs aren’t as stark. You’re still (as Olly puts it) “nailing the foundational machine” — figuring out your model, testing offers, getting cash in the door. But if you want to hit multi-six or seven figures? You need to make these decisions now. And then you need to stick to them.

Because complexity doesn’t scale.

Trying to juggle multiple niches or models “in case one works” is exactly what holds people back. Avoiding hard decisions? Definitely won’t get you to scale.

(Transparency: if you purchase Olly’s masterclass, I make a small commission. I’m exploring ways to monetise this newsletter beyond subscriptions and sponsorships, and this is a test. It also happens to be a topic I was planning to write about anyway!)

I do more than help you choose a niche or business model.

I help you make trade-offs, explore your options, assess your strengths, and design a business that fits your whole life. One that you enjoy AND that makes you money sustainably.

If you’ve followed me for a while, you’ll know my whole ethos is about building a business as unique as you are — aka founder-model fit.

This doesn’t have to be when you’re new either, as a large part of my client base know, when you’ve been in business a while, there are still tweaks changes and pivots to make. You’re simply building from more data.

So if you’ve been going in circles on these decisions, you’re not broken or indecisive.

You’re right to hesitate these are big decisions.

But if you’re ready to work through them with someone who’s been there, and helps others work through them daily...

Let’s get to the heart of it together. Schedule a call to explore how we might partner together and bring your industry leading business to life in a way that aligns to who you are, what you want, and what will actually work in today’s market.

This is a no obligation chat to explore your option. Let’s get to the heart of it together.

More resources on finding the right business for you from The Ask archives…

• What is your Unique Contribution?

• How to design a one-person business around yourself

• How much of your true self should you really bring into your business?

Thanks for reading as alway, and until next time!

Ellen Donnelly, Founder & Chief Coach, The Ask.