Finally, rate each client based on how much you enjoy working with them (you can do a numbering or point system—whatever works for you). You should also describe your working relationship (good points and bad points), and any other notes you think are important.

3. Sort your favorites

With this information entered into your spreadsheet, sort it by your favorite to least favorite.

Pay attention to any similarities these preferred clients have. Perhaps they all come from one industry, are all of a similar age or size, or they are all based in one location.

Enter details into the notes column to identify characteristics you enjoy or gravitate towards.

4. Sort the industries

Sort by industry, and identify whether you enjoy working in that area, know about it already, or can easily learn more about it.

Think about whether that industry is growing (there’s not much sense specializing in video rental shops, for example), and whether there are any related industries that might make sense to explore (you may have several electricians as clients, so plumbers or HVAC technicians may be potential clients to look at).

Once again, detail the observations for each industry in the notes column.

5. Sort by size

Sorting by size will show whether your preferred clients are startups or more established companies. Or if they’re businesses with a small number of employees, or larger.

These are all important demographics that will identify the types of services they may require. A growing company may need assistance with accounting processes, while a larger, more established company may have those processes mastered, but need HR assistance for their large number of employees.

Again, make notes to identify characteristics that you enjoy or gravitate towards.

6. Rinse and repeat

Start again from step 3, but this time, pay attention to your least favorite clients.

Deconstruct these clients similarly to understand what demographics make them less attractive. This is important. Focusing on a niche that you hate working with is a recipe for disaster.

7. Decision time

After going through these steps you’ll have a detailed idea—or at least a shortlist—of your firm’s ideal client. You’ll know the industry, size, location, revenue, age (and more) of who you prefer working with, and who will give you growth opportunities going forward.

If this process hasn't given you a clear answer, repeat it again with your shortlist. Keep going until you confidently settle on a niche that makes sense.

8. Go all in

With your ideal niche identified, involve yourself in everything about them.

Learn how they think, how they speak, what they want—do what it takes to become the expert in their field. And use this knowledge to shape the services you offer and how you market them.