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- F Your Passion, Do This Instead
1,070 Words | 4 Min 28 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing why you should avoid building a business around your “passion” if it’s your first time trying to achieve success onlne.
In particular, we’ll discuss the basic math that shows just how hard it can be to generate sales from hobby niches relative to mega ones.
Let’s dive in.
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Whether you’re starting a faceless page, coaching business or launching a physical product, one of the biggest questions that plagues entrepreneurs is what niche to go into.
On the one hand, many people tell you to chase your passions or hobbies because you'll have more inherent interest in those topics.
And while we agree in principle, unfortunately, most hobby niches are extremely difficult to make money in.
On the flip side, there are certain niches that are so big they lend themselves to hundred-million and even billion-dollar businesses.
So in today’s issue, we’ll discuss the downside realities of trying to succeed in a small passion niche.
#1 - Reach
If you’re unfamiliar with it, in the online marketing world, reach refers to how many people your content and ads are capable of reaching (being shown to) in any given market.*
*And is most typically measured in the hundreds of thousands or millions.
Here's why this matters so much.
If you follow this newsletter, odds are you're highly plugged into both the online business and social media space. What you need to understand, however, is that not everybody spends as much time online as we do.
While it’s true most everyone uses Google, social media usage rates can fluctuate dramatically based on demographics.
From influences related to age, gender, and location - to how much time someone spends scrolling the feed on a given day - just because someone has an account on a social media platform does not mean you'll be able to get your content/ads in front of them.
As an example, there are tens of millions of people who dabble in surfing on an annual basis (from diehards to people who go a couple times per year max).
Despite this, Kelly Slater—who is arguably the most famous surfer in the world—only has 3.3 million Instagram followers.
Meaning, even if you somehow convinced Kelly Slater to do an influencer promotion—and even if that promotion reached 100% of his followers—you would still fail to reach tens of millions of surfers worldwide.
To make matters worse, it is literally impossible to reach 100% of an account’s followers. Instead, the average content post will reach maybe 3-5% while a promotional post could reach less than 1%.
Last, when it comes to Reach, there are huge numbers of people who do not use social media at all (or use it so little they're basically inactive).
Meaning, unless you go offline, reaching that sub-segment of your market will be near impossible via social media marketing (Google, however, could be an option).
#2 - Buyer Readiness
The second reason you should avoid small hobby niches has to do with what’s called buyer readiness.
This is a phenomenon discussed by Chet Holmes in his book The Ultimate Sales Machine.
In it, Chet describes how at any given time, only 3 to 5% of the participants in a market are ready to make a purchase.
Which, using basic math, means 95-97% of people in a given market have zero interest in making an immediate purchase at any given time.*
*Including the option of buying something from you or one of your competitors.
Meaning, if you’re in a hobby niche that only 500,000 people pay attention to, buyer readiness tells us that only 15,000 to 25,000 people will be willing to make a purchase in the next 7 to 14 days.
Combine this fact with what we discussed above regarding reach, and your ability to get your content and/or ads in front of those 15k to 25k people becomes incredibly difficult.
In addition, no one company dominates 100% of market share.
Instead, a market could be split between 10, 100, 1,000 or even 10,000 companies (like it is in the fitness space).
So even if you only have 10 competitors in a small hobby niche, achieving success if you're not the dominant market leader can be incredibly tough.
Now, this doesn’t mean it’s "impossible."
I myself buy stuff from micro-influencers in hobby niches and know for a fact it can be done.
The caveat is that these people put in tremendous amounts of work to make what is by most measures a small amount of money (mid-five figures to low-six-figures max, with little room for upward growth).
On the flip side, if these people had poured the same amount of effort into a mega-niche like health, wealth, or relationships, they would have been able to build multi-seven-figure businesses.
In conclusion, the problem with passion niches boils down to math.
When you look at the amount of traffic needed to generate a sale, and you consider how many people your content/ads can realistically reach on social media, the numbers are not in your favor.
Because of that, you’re better off building your first business in a mega-niche so you can learn how online business works in general.
Then, once you have a real-world grasp of just how hard it can be to succeed online, you can decide if it’s worth the effort to build a business around your “passion.”
💡 Takeaway: The reason mega niches exist is because they're relevant to 100s of millions / billions of people. On the flip side, the limits of Reach and Buyer Readiness make it more difficult to succeed in smaller niche markets.
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