"Obviously there's a diminishing return if you hit specialization of 'There's one business in my region I can market to' -- how do you know when you've specialized enough"

• Know your target market, like Ecommerce


• Know niches within your target market, like Women's Fashion and Beauty or Every Day Carry


• Identify if there are 20-50 companies in your niche in your target market


• Identify if of those 20-50 there are 15-20 companies that are paying for consultants, have paid for consultants, or are looking for
  
  help solving a problem

Iterate. Too many companies come out? Become a

little more specialized, based on your research. Too few? Become a

little less specialized ("SEO optimization for women's fashion and

beauty stores selling $1,000,000/yr and based in New York" →

potentially too specialized)