Accounting has generally been viewed as a one-size-fits-all service where any customer is the right customer. The problem with this approach is that instead of doing one thing really well, many firms end up doing several different things mediocre. This is especially true when there is a change in certain processes or industries, and everyone is left scrambling to keep up. For many, this is just how things are and it’s accepted as part and parcel of the accounting profession.
But no matter how common this perception may be, the reality is that accounting is not a one-size-fits-all service. Quite simply, different businesses have different needs. There’s a reason designers create clothing in different sizes because no business would survive selling one-size-fits-all pants (no matter how stretchy). The same goes for accounting firms.
So what’s the opposite of one-size-fits-all? A niche approach. By definition, niche accounting is about focusing on clients within a specific industry or profession. This means that instead of catering to all businesses, you narrow down the field to focus on very specific types of businesses. While your first thought may be that a niche is just a fancy term for “limiting yourself,” this couldn’t be further from the truth. As counterintuitive as it may seem, there are quite a few benefits to be gained from serving a more specialized clientele:
Benefits of a Niche
1. Expert Status
If you try to be an expert in too many areas, your team will be stretched thin and constantly bouncing from one project to the next. However, when all of your efforts are focused on one industry, your partners and staff can become true experts.
2. Build Credibility
As you develop a reputation for serving a specific industry, you build business credibility. In turn, a solid history of serving a niche industry allows you to better use your marketing dollars to target your most profitable group of potential clients.
3. Help Prospects Find You
The more niche your services, the more likely you are to rise to the top of the search results because you’re not competing with all the other general accounting firms. As a result, your reach is expanded and clients will start coming from far and wide to use your services.
4. Stand Out From The Competition
The more exclusive your firm, the fewer competitors you’ll have. For instance, there may be dozens of general accounting firms in your area, but if your niche is real estate, you’ll have far less competition.
5. Simplify Your Business
Establishing a niche allows your team to cut down on exceptions and one-off processes. Instead of stretching your staff (and yourself) too thin, you can streamline operations and put in place established systems that are well known by your team. At the end of the day, this means less stress on everyone.
6. Industry-Specific Services
The more you serve niche clients, the more you learn about their specific industry. In turn, you can use that specialized knowledge to offer industry-specific services that other firms won’t touch.
7. The Bottom Line
With knowledge and experience in an area that no other firm has, you can charge a premium that will help to increase your profit margins. When it comes down to it, your services are worth more when you can anticipate your client’s needs, respond quickly, and let the client know how they stack up against the competition.
Downsides of a Niche
If there are so many upsides to having a niche, why are there still so many accounting firms that generalize? Well, the answer is that niche accounting does present certain challenges that not all accounting firms are equipped to handle. For many accountants, skepticism about establishing a niche stems from the following obstacles:
1. Saying No To Clients
One of the main downsides of choosing a niche means sometimes saying no to paying clients. Yes, you read that right. You don’t have endless resources and sometimes you need to turn down clients that don’t fit into your niche to ensure the long-term success of your business. While it may be painful to turn a client (and their money) away, you need to have faith that specializing will pay off down the line.
2. Shedding Existing Clients
If turning away new clients makes your eyes water, shedding your existing ones might bring you to full-on tears. However, if you’re going to fully commit to a niche, you need to make sure that your partners and staff are all focusing their efforts on one specific type of client, meaning those that don’t fit the bill may need to be cut. For instance, if your firm has a dozen clients in the construction space, and just a handful in agriculture, real estate, and non-profits, it might be time to refocus your efforts. If you choose construction as your niche, you may then consider supporting other firms by handing off your other clients to accountants that specialize in those specific industries (and hopefully they do the same).
3. You Need to Really Know Your Client
In order to be an expert at anything, you have to know the subject inside and out, and the same goes for your clients. If you decide to specialize, it’s up to you to spend time with your clients visiting their businesses and understanding what their day-to-day activities consist of. This may require extra research and planning (in other words, unbillable time) in order to figure out what specialized services you can offer them and anticipate their future needs. In short, you need to get really cozy with your clients, which is something that not every firm is able to do.
4. Keep Up With The Trends
Not only do you need to know everything about your clients, but you also need to be paying attention to their industry as a whole—something that requires ongoing vigilance. This means using data from governmental organizations and trade associations to stay ahead of industry trends and bolster your knowledge base. For instance, if your niche industry is hospitality, you’ll need to constantly keep up with the latest trends, insights, and changes in order to remain an expert in the field.
5. Shift Your Marketing Strategy
No more general campaigns here. If you’re going to go after a specific type of client, you’ll need to spend time defining and then finding your target market. You’ll also need to tailor your assets to speak to your ideal customer, which could mean creating special pamphlets, blog posts, or even a whole website geared towards prospects within your specialization. In short, you’ll need to be more strategic with your marketing efforts, and not all firms have the time and resources to be able to do this.
While these downsides may sound intimidating, don’t abandon the idea of a niche just yet! In fact, the rewards that come from specializing often outweigh the risks; the secret is doing your homework in advance to ensure you choose the right niche for your firm. Consequently, it’s important to think long and hard before making the leap from general to niche accounting and keep a couple of key factors in mind.
Finding Your Niche
If you’ve decided to make the leap and try your hand at narrowing down your client base, you’re probably excited to get started. However, before you simply choose the most profitable industry you can think of, take the time to consider a few important factors.
Who are your regular clients?
● Figure out if you have a number of clients in the same general field and consider making that field your specialty. Whether it’s based on your location or personal referrals, it’s likely that at least a portion of your clients fall into one industry. For example, Florida-based CPA Peter Freuler noticed that individuals and investors interested in buying vacation condos as investments were frequently calling his practice with questions. As more of these investors became clients, Peter realized that he was developing a niche client base that he could easily capitalize on.
What are you good at?
● Think about what you enjoy most and consider building your services around that specialty. One of the biggest benefits of choosing a niche is that you get to choose the clients you work with, instead of getting “stuck” with clients you dread. Maybe you love providing payroll services to restaurateurs, or helping traditional business move their services to the cloud. Whatever it is, always keep the things you enjoy most top of mind.
What’s your background?
● Sure, you’re an accountant now, but you likely have a background in another area that may influence the direction of your firm. For example, take the case of Ohio-based CPA Michael Bohinc. Bohnic developed strong relationships with contractors while keeping the books for his father’s plumbing business. In turn, this led to a number of personal referrals that allowed Bohnic to carve out an industry niche focused on plumbing and HVAC contractors.
What’s happening around you?
● While your clients don’t have to be walking distance away, it doesn’t hurt to look at the industries around you that seem to be thriving. For instance, you may live in a city with a growing tech sector, meaning there could be a need for firms servicing startups. Or maybe marijuana was just legalized and dispensaries need firms that can help them stay compliant. A good reference is the case of Chicago’s New Vision CPA Group, which saw the rise of the gig economy and subsequently “developed a cloud-based system that takes a systematic approach to creating business solutions for freelancers and small business owners.”
What does the market look like?
● At the end of the day, the niche you choose needs to be profitable, so think about an industry that is large enough for you to build a strong client portfolio. Similarly, take a look at the competition and figure out whether you’ll be competing with a number of other firms for the same business. The fewer competitors you have, the bigger your slice of the pie.
At the end of the day, it’s important to remember that there are only two ways to create a niche: you either find it, or you discover it. However, once you’ve done the hard part and narrowed things down, it’s just a matter of having the knowledge, experience, and relatability to make it happen.
By Katherine Pendrill on Dec 4, 2018