Why Niches Can Be Risky Ditches for Business Growth

Jim James (00:02.306)
Hello, welcome to this episode of the Unnoticed Entrepreneur with me, your host, Jim James. I'm going to take you all the way to sunny San Diego, because in San Diego, we've got a chap who is very wise, in fact, he's the founder and CEO of a company called Wise Digital. And Pat Dillon is going to join us and talk about the power of building a business and the danger of niches and why those niches may just be ditches. And actually could misdirect and even kill your business if you're not careful.

Looking forward to hearing his slightly counter cultural theory about the way we need to build a business. We're also going to talk about any mistakes that he sees businesses making when it comes to digital and ways that you yourself can build your business. So Pat, welcome to the show.

Pat Dillon (00:51.084)
Thank you, Jim. Nice to be here.

Jim James (00:53.11)
It's wonderful that we know that you've been an entrepreneur since the age of 12, and then you are now in San Diego. So I'd love to hear a little bit about your story, and then tell us what Wise does and how you help companies make the most out of digital presence.

Pat Dillon (01:09.088)
Yeah, thanks. So I guess, you know, just where I came from, I, I grew up in Wisconsin. So, you know, 3000 miles away from San Diego here, um, got sick of the cold. Just, you know, if I could never shovel snow again for the rest of my life, I'd be happy and that's, that's about it. And I saw, I want to see palm trees. So, um, I, uh, I studied business, you know, in college and I, uh, I was very successful during college selling.

Jim James (01:21.23)
Ha ha.

Pat Dillon (01:37.632)
Actually knives door to door for a company here in the States called Cutco. Um, they're tough rep in the state of Wisconsin, also college. And then I went on to help, uh, run events and, and promotion and sales training for them for 15 States for about five years after, and, you know, got the itch to go back into, you know, being an entrepreneur and a buddy of mine from, from that business and I, uh, moved to San Diego, he moved here before me. And I, you know,

finally convinced me to come out. We started our first business in 2006 was a crowdsourcing fashion company. And that eventually became a software business. And we had a couple of products and our second products was kind of a breakthrough success. It was the first private label version of Groupon. So our clientele was media companies,

newspaper or radio, TV, and we were helping them develop a competitive program to, you know, fighting off Groupon in their markets. And the platform ended up being, you know, very successful. We had 50,000 small businesses on it. And I really liked working with small businesses. My parents owned small businesses. And

And so we eventually found a path into working with them. We developed a digital marketing agency that we franchised nationwide and had almost a thousand clients, you know, selling, you know, social media and websites and SEO and stuff like that. And that, that just became a business model. I really fell in love with.

Jim James (03:17.782)
So really serial entrepreneur. And I, by the way, I agree with you with the cold. I lived, I loved Singapore where I lived for 12 years. England, getting used to the weather. I'm still not getting used to it again, but Pat. So I think San Diego is a, I can only dream what that must be like living there. But Pat, you're also a Forbes contributor. So you have taken what you've learned and you're sharing it kindly. Tell us a little bit about what San Diego Digital and

Pat Dillon (03:30.281)
Yeah.

Jim James (03:46.582)
marketing does under the wise umbrella. Also tell us, when I look at your website, I can see any number of industries. Now, receive wisdom is that we should all niche down, have one industry that we focus on, become an expert, subject matter, known, da-da-da. How are you going against that prevailing theory? Is it working for you?

Pat Dillon (04:13.undefined)
Yeah, so, you know, a lot of things led to my thinking on that. And my theories on that is that, you know, when we had DealCurrent was the software business, we worked with 48,000 small businesses and 83% were restaurants. And that's a really tough niche to be in. Restaurants, you know, are generally not great run businesses. They're not very profitable. They have

tiny margins, they're always coming into trouble. Actually, I have another couple of businesses, one of my commercial janitorial companies, my partner in that first business has another janitorial business and all of his clients were restaurants. And COVID hit and his business got destroyed because they all got into so much trouble and they weren't organized. So getting federal grants and PPP money and all that stuff took a long time.

You know, so when I had the software business, having all that focus in one sort of niche was, it was really stressful, lost a lot of sleep over that. And when I moved into the digital marketing agency sort of world, and I've been in that for like 12 years now, you know, I've had probably really in-depth conversations with 10,000 business owners in the last 12 years. And so many of them focus on one

vertical, one niche, one. And it just seems like over time, everybody who does that gets into trouble. And you know, you have digital marketing agencies that focus on just chiropractic or just dental or just legal or just plumbing or just like we're doing a lot in the ketamine space right now. There's marketing agencies out there that just do ketamine clinics. I mean, there's federal

Pat Dillon (06:10.316)
that business's future, that industry's future. And so, the idea of just focusing on that one thing is so risky to me. And what I've done with Wise is really focus on a number of verticals. The idea is we wanna have 10 pillar verticals, all which produce a million bucks a year in revenue. And then I know we're gonna have an extra 10 million bucks a year from everything else that comes in, because we work in 30 or 40 industries right now. But...

Jim James (06:39.275)
How interesting.

Pat Dillon (06:39.424)
You know, there's so much that are shared between all those different industries. Like you do something illegal. It's really innovative and it works really well. And that transfers to accounting or to insurance or to mortgage. And so, you know, I just want to have less risk in my life today.

Jim James (06:58.67)
Pat, I think you've also highlighted for investors is a very prudent strategy about having a balanced portfolio. And yet in business, we're told to niche down and it creates this tremendous risk. And I've seen as well with some clients that I work with on a consulting basis, they've employed agencies that specialize in a certain industry and each one of the clients is the same for the agency. And actually what they do is they seem to cut and paste the same solution for each

Pat Dillon (07:25.676)
100%. Yep.

Jim James (07:28.37)
architecture businesses, right? And you end up looking at basically the same design work for all of their clients.

Pat Dillon (07:33.908)
Yeah, and those marketing agencies are so blind to what works in other industries, because they don't know, they don't do any other industries. What they become really good at is selling those businesses on working with them. They don't really become great at the work.

Jim James (07:50.442)
Yeah, Pat, I think that's a fabulous, fabulous insight. And I think in a way counterintuitive and yet really grounded in basic economic theory as well. So brilliant to see you've got so many pillars. You've got 10, I think you mentioned there. And the other thing that we were talking about before we started recording was how most small companies are encouraged to grow by word of mouth, right?

What have you done to build Wise as a digital agency? Have you relied on word of mouth? I mean, you've been in San Diego for a long time, yet it looks as though you've got diverse clients and also across the whole country. It's not just San Diego, your client base.

Pat Dillon (08:35.832)
Yeah, I'll pull up something I think that's going to be helpful in this. Um, I, I haven't really relied on word of mouth. Um, I think for a number of reasons, I think. Listen, I, I've talked to, again, 10,000 business owners over the last 10, 12 years, and the first question I ask a business owner when I start talking to them is where do they get new business? How do they grow their business? And 99.9% probably of small business owners say referrals. And...

You know, referrals are the byproduct of doing a good business. It's not a marketing strategy. It's not a strategy for growth. And there's a lot of pitfalls in relying on referrals, right? You're not in control of the direction of your business for one. You'll never get into new verticals or new, new size clients, right? Like we work with a lot of law firms and, you know, most law firms we work with are 10 to 20, 30 people. Well, one of our largest clients is a

80 person law firm and we never would have met them through referrals. They're in a completely different market across the country. Um, another, one of our clients is, um, one of the largest accounting firms in the country of Australia. I've never been to Australia. Don't be on my team has, you know, they found us online and, and that's, I think one of the big issues and worrying about referrals is, you know, you're just going to get the same stuff you have now. And maybe businesses

want to grow bigger and better and more profitable, and you're not going to do that with referrals. And I'll find something in a second that will show you where our business comes from. But I think if you look at the last two years where I've really been honing in on collecting all the data, 67% of our business has come from our website. So developing marketing for our own business, just like we do for others, has been

pivotal to the growth of the business. We've been growing at about 60% a year for five years.

Jim James (10:39.87)
So Pat, that's so impressive in terms of growth and also geographical. I guess the guys in Australia also want to work with you because you're also in a sunshine place. They're blessed with nice weather as well. But you mentioned Pat about the website. Do you want to just share with us what is the strategy around the website? I know that one of your business partners is a tech whiz and you actually come from a background of building out

tech platforms, right? So for those of us that are not big tech, for example, like me, can you give us some sort of fairly simple instructions of what we should look for or what we could do in our own businesses?

Pat Dillon (11:22.184)
Yeah, yeah, absolutely. I mean, I think that the one thing that we really wanted to do here that was different than my first agency. And I've been involved in three agencies because I bought out my investors in the first agency and did a merger with that. And then I moved it into the second or the third one, the chief technology officer of the merger company, and I really saw eye to eye. So he and I started Wise Digital together.

And, you know, what we really wanted to do for small and mid-sized businesses was provide them a competitive advantage with technology paired up with award-winning services. And that was different than most agencies. That's, you know, I'd say less than 1% of agencies in the world have their own technology. We own our own website platform. It's called Nest. It's fully baked in with all of the tools that a small business needs, like ADA compliance and

which in the US since 2012, websites have fallen under the American with Disabilities Act. So it needs to be accessible to people with disabilities like the blind who use screen readers. Reporting and lead tracking and dynamic call tracking and all these things sort of baked into the solution, whereas other agencies go out and find out of the box products and then try and hobble them together and it's always a mess and it doesn't work.

You know, Fortune 500 and Fortune 5,000 businesses have access to tools that are different than small and mid-sized businesses. And so, you know, we wanted to put together a solution that, you know, brought them those advantages so then we could just worry about doing really great service.

Jim James (13:06.91)
You're absolutely right. Otherwise, many companies end up with an integration and with Zapier as being the holy grail, right? It's kind of what we used to call middleware or like how that BEA used to create middleware or glue for these things. So you're building out an offering for these mid-sized companies, this technology plus strategy. Is it all websites or are you also doing

Pat Dillon (13:14.156)
Yep. Right.

Jim James (13:36.37)
you know, traditional speaking, you've got your Forbes, for example, writing position. How is that working for you in terms of brand awareness for you as an entrepreneur?

Pat Dillon (13:50.348)
Yeah, I mean, so speaking about Wise for a second, we've got 12 services and about a half a dozen software products. Uh, Wise itself, I think one of the genius, you know, ideas we had was to make Wise a client of Wise. And in fact, Wise is the largest client of Wise. So, um, we probably deploy every strategy, every tool and every service

for the marketing agency to help market the business itself. By and far, I mean, websites are a big portion of our business. Websites are the only thing on the internet that you actually own, right? You don't own your YouTube page or your Facebook page or your Yelp page. Those businesses can make changes to those pages anytime they want. They can take down it for any reason. You can fight tooth and nail to get it back. It could take a year.

You know, we've seen that happen time and time again with so many different types of business models. And it's like, you would think it's for the cannabis businesses, but it's sometimes for the plumbers and chiropractors. And so it's really important to invest in your website as a foundation of your business online. But once you get beyond that, there's a lot more at play and based on, you know, your industry and your budget and your timeframe and your goals, that's where we developed those custom strategies to develop the right ROI for your business.

But for sure, hands down for my businesses, both the marketing agency, as well as some other businesses I own, I own a couple of commercial janitorial businesses. And SEO has been the most profitable thing we've ever done in those businesses. In fact, my first software company, DealCurrent was the name, it was a daily deal software platform. We ranked number one on Google organically through our own SEO efforts for eight years for daily deal software

globally and that brought us 5,000 prospective clients and we signed 900 of them over a period of seven years. And that was like NBC universal.

Jim James (15:57.55)
And so doing SEO, is there a tool, Pat, that you could recommend for people like me that are not tech experts to do SEO or does one really need to outsource that?

Pat Dillon (16:12.096)
Yeah, I mean, I think it's important to outsource it personally because it's not one tool and it's not one person. Like I think the misnomer is a lot of people think, well, I'll just go hire a website designer to build me a website. Depending on the complexity of your website, we'll have anywhere from 8 to 12 people working on a project from 8 to 16 weeks. And we, in fact, we had one client this past year where we took...

almost 13 months to build them a website, because it was so big and so complex. And, you know, SEO is also, I think, pretty, pretty similar to that. You need about two or three really technical experts to do it right. And it's changed so much over time. There are some great tools, um, you know, for keyword tracking, we use SE ranking. A lot of people use, uh, SEM rush. Um,

You know, just to identify what's going on in your website, screaming frogs a great tool, but unless you're somewhat trained or knowledgeable, you don't know what you're looking at.

Jim James (17:15.454)
Yeah, no, I think that's right, Pat. It's such a big issue. Let's just move on though, because it's a huge issue. And I think as you've rightly said, we need to find some experts to help us out, how I do as well.

Pat Dillon (17:28.437)
We have a lot of great videos on our YouTube channel that kind of help the novice business owner and entrepreneur learn about that stuff. So that's a great place to go.

Jim James (17:37.634)
Thank you for that. And we'll put a reference to that at the end and in the show notes as well. But Pat, you know, I always like to ask entrepreneurs, not in an insulting way, but just sort of a guidance to others. Is there a mistake that you feel that maybe you've made that you'd be willing to share as an entrepreneur on the getting notice side? You've been so successful, but maybe there's been one thing that you've done that you don't recommend that the rest of us try.

Pat Dillon (18:06.208)
Yeah, I think, you know, a big mistake is giving discounts. Um, you know, as, as business owners were so often in the beginning, um, inclined to give someone a discount so we can get that case study or we can get that new client or, you know, get that review or whatever, um, it's always bit me in the butt.

I think for the most part, it's not a good idea to discount your products and services unless it's built into your business model. The other one is just saying yes too often, especially in a service-based business, which most of my businesses now are service-based businesses. Saying no more often than yes is actually the way to win. No to the right...

If it's the wrong type of client, the wrong budget, the wrong attitude, the wrong level of cooperation, it's just really important to determine who comes in to the business.

Jim James (19:11.438)
That's really, really interesting and that sets the profile, doesn't it, for the company and also the kind of people that you hire. Because otherwise you're trying to find people with different skill sets or different levels of seniority to handle the different kind of client profiles that you've got. I always found that having a kind of a profile of an ideal client really helped inside the company in terms of delivery of services and systems as well.

Pat Dillon (19:39.56)
One of the greatest tips I can have that, you know, on that exact thing is, uh, I think a year into our business with wise digital and keep in mind, we started out with 50 clients because 50 clients came over from the first agency to start, to start wise digital with four key people, but about a year in, um, we were still having problems with some clients. And I said, I took the entire team to this great space for a

for a one day sort of event where we all got together and I put up a bullseye on a big whiteboard. And in the center of the bullseye, we started putting the clients that were the perfect fit for us. They had the right attitude, they had good budgets, they wanted to grow, they were in the right industries. And then we started sort of spreading out the clients until we had all the clients on the dartboard. And that was

one of the best exercises I think we've ever done as an agency. And we still think back to that where, gosh, we really got to handle on who we wanted to work with that exercise.

Jim James (20:46.942)
Yeah, that's a wonderful exercise. And what we what we're on the axis, Pat, if people were to look at doing that now with their existing or future

Pat Dillon (20:55.792)
It was really just, it was a dark board. So it was concentric circles in. So in the middle on the bullseye were the exact clients we wanted to work with on the outer edges of the dark board where the clients were like, if, if they didn't hit the dark board too, we're like, we're firing them. And we actually probably fired three or four clients out of that exercise.

Jim James (21:09.735)
Right, so when I...

Jim James (21:14.31)
And that's a nice feeling, isn't it, to say to a client, thanks, I don't need your money. We used to do that and do size of budget and intent to commit to a period of time. And also that they had a particular innovative technology that we knew we could succeed for, for them in the media market. So we had a few in our scoring card as well when I ran East West PR in Singapore. So that's a great tip, Pat.

Pat Dillon (21:18.05)
Yeah.

Jim James (21:44.706)
One piece of advice for my fellow unnoticed entrepreneurs about what to do to get noticed. Could you give us, after all of these amazing businesses over such a long period of time, could you give us one, if you like, recurring sort of success tip that you'd recommend?

Pat Dillon (22:07.692)
Yeah, I mean, I believe so strongly in our core discipline in driving north of SEO. And that's where I think if I look at my software business, my janitorial businesses, my marketing agencies consistently investing in making sure Google understands what we do as a business, what products and services we offer and where we offer them is absolutely the

the greatest ROI you're gonna see in marketing. Typically for our clients, it's a 30 to 50 X ROI.

Jim James (22:43.55)
That is incredible. Pat Dillon as the CEO of Wise. I can see why you call it Wise, by the way, because it's a Wise words. Pat, obviously you're a considerate man as well. Is there a book or a podcast that you'd like to share with my fellow unnoticed entrepreneurs as we are either driving, walking, traveling?

Pat Dillon (23:05.132)
Yeah, there's a book that I think maybe my whole team is reading right now called smart brevity. And, um, that's, that's been a great one. I think for us is, you know, in a professional services business, time is money. And I think oftentimes we've had people on our team that just go long winded on stuff. And you could have said that five minute thing in 30 seconds. And

you know, in professional services, everyone on the call is, it's, we're spending that person's time. So, um, that, that book's been really helpful to get more clear and concise about what we're trying to say.

Jim James (23:45.606)
Smart Brevity, we'll have to look for that one. When we ran the PR firm, of course, we used to say, time is money. Of course, that's one of the reasons why I try and keep this podcast to sub 25 minutes so that the entrepreneurs who are listening are also paying for their own time, as indeed, you're currently sharing on your own dime as well. Pat Dillon, if you want to find out more about you and why, how can they do that?

Pat Dillon (24:12.94)
Yeah, I think the best place to do is go to my website, wisedigitalpartners.com. And if you have a business and you'd like to talk about marketing, you could book me there or my email, patrick@wisedigitalpartners.com.

Jim James (24:28.394)
Pat Dillon, thank you so much for joining me from San Diego and sharing an inspiring story about being an entrepreneur, but also some otherwise things, which I'll wrap up after we've given you a chance to say goodbye.

Pat Dillon (24:38.604)
Great, thank you so much.

Jim James (24:40.95)
Well, we've been listening to Pat, who's kindly shared a huge amount of wisdom. But one of the main takeaways for me is about to some degree ignoring or recognizing the fundamental weakness in the niching strategy. We've kind of all got carried away with the riches and the niches and so many people find it so easy to say, but actually there's a lot of strength in diversity and that I think is a key element, but also what he's done really

cleverly is to use SEO to have diversity, but still to get lead flow. And of course we think about niching because then we're known so that we can get referrals. But if we use the internet properly and SEO, we're letting the technology bring the clients to us rather than word of mouth. And that creates a sustainable and kind of beyond organic growth creates plainly in case of Wise Digital, exponential growth.

And ultimately that's what we want as entrepreneurs. So thank you so much to Pat for sharing those insights. And of course, I will include his details in the show notes. And thank you to you for joining me, Jim James, on this episode of the Unnoticed Entrepreneur. Hope you've enjoyed it. If you have to, please follow the show and review the show on your player because that really helps because it's part of SEO. If the players know that you like the show, they'll show other people. Thank you so much for listening until we meet again. Just encourage you to keep on communicating.