I'll share a bit of our personal experience.
I launched my PR firm in 2008...right when the recession hit.
But that difficult time actually assisted in us being able to hone our messaging and steal business away from more entrenched (read: expensive) PR agencies.
My decision was to position Firecracker PR as a boutique agency that serviced technology companies, mainly because of my experience working client-side at tech firms.
What I found, interestingly enough, was that even if you position yourself one way, it attracts prospects from different industries.
Although we focused on messaging our PR for tech firms, we still got prospects from diverse industries such as travel and tourism, fashion, consumer goods, etc.
Branding and positioning a service-based business like an agency is extraordinarily hard.
This is because service is intangible versus a product company.
I highly recommend "Selling the Invisible" by Harry Beckwith. The book directly provides tips on how service based companies can stand out from their competitors.
Regarding service offerings, much of it will be trial and error. Early on we found that we hated web design and removed that from our list of services. Same with things like collateral design. We decided to focus on PR, content marketing and search engine marketing as the 3 core offerings. That doesn't mean we won't take on other types of marketing projects, but it means we primarily message those three.
As for Rob Gropper's comment, even doctors have doctors. Meaning, being in an industry doesn't remove the need for outside consulting to sometimes help clarify.
Feel free to hit me up if you want to chat more about it.