Building and expanding your firm in a competitive market is always a challenge. While there are many ways of doing so, deciding to establish your practice as leading experts in a specific niche may just be a game-changer for your business: this one step can elevate your firm to the next level, help you recruit quality clients, increase profitability, efficiency, and enable you to find more fulfillment and enjoyment in your day-to-day work.
Why focus on a niche in the first place?
Many accounting and bookkeeping firms hold the belief that casting a wider net will yield more business prospects for them. And on the face of it, this logic has an appeal. If the equation is that more clients=more profits, why exclude prospective clients, right? Well, not exactly.
- Different industries - different accounting: As you may already be well aware, businesses in different industries and markets operate differently. A restaurant is an entirely different operation than that of a construction company. They each have unique accounting and bookkeeping needs, their own terminology, and require different approaches to handle their accounts.
The way to calculate the cost of goods sold (CGS) is different between construction, restaurant, and dental accounting. In construction accounting, there are two different methods of recognizing income: The percentage-of-completion method, the completed contract method, and there are rules for applying each of the methods.
As you see, each industry requires a different accounting approach. This principle is the key to understanding the benefits of establishing expertise in a specific niche or industry.
- Stand out in the crowd: Establishing and presenting yourself as an expert accountant in a specific industry gives you a marketing advantage over other firms. It sets you apart from the competition and makes it easier for prospective clients to find you. The key idea here is to be able to present your services as "tailor-made" for a client's needs. When all other things are equal, it's only natural for a client to opt for the accountant with the specific knowledge and experience in their industry. And the more complex and nuanced are the accounting skills the industry or niche demands, the more edge you have over "general" accounting firms.
- Become more efficient: Focusing on a niche also aids you in becoming more efficient in your practice and thereby increases profitability. Accounting firms move from a billable hour pricing model to a retainer billing model with their clients, and therefore every minute wasted is on your dime. Handling the same type of clients over time enables you to develop efficient across-the-board work practices. Once you've mastered a unique kind of knowledge, it's readily available for you to use over and over again. This principle is even more true when handling industries with more nuanced and unique accounting needs, such as the construction industry. In stark contrast, every minute you spend on pivoting inefficiently from handling one type of client to an entirely different one is time and money lost.
- Charge a premium for your services: Being able to offer your specialized skills and services will allow you to charge a premium from your clients. The key idea here is "tailor-made", remember? Just as a bespoke suit costs more than an off-the-rack one, niche clients will be willing and happy to pay more when they know their accountant has specialized knowledge and abilities on how to handle their specific business.
- Self-fulfillment: While the monetary perk is not too bad, we all know money isn't everything in life. At the end of the day, we want to be doing what we love. At the risk of sounding unoriginal, the old cliche - "Find a job you enjoy doing, and you will never have to work a day in your life" - is actually sound advice. When you choose a niche, you have power over the type of accounting you want to practice and the type of clients you want to interact with daily.
How to choose your niche?
- Build on what you already have: A great place to start is by looking at your current clients. Is there a specific type of client that is standing out in the mix of your client roster? Whom do you like working with the most, and why? What do they have in common? Are there specific industries you find more interesting? Which of them proved to be more lucrative over time? Which of them requires more specialized and unique knowledge? Answering these questions will give you a sense of direction for the prospective niches that you should consider.
- Research the market: Check your area for accounting and bookkeeping firms. Go into their websites, read about the services they offer. See which markets are saturated and overpopulated with accounting firms, and try to find out if there's an unmet demand for accounting services for a specific industry. Go on business owners' discussion forum websites (such forums exist for virtually any industry) and use the "search" button to look for accounting-related keywords to see which ones are struggling the most with their accounting issues. Taking these steps will give you a better grasp of market demand for specific niches.
When researching the market, you should also take into account the number of potential clients (i.e., businesses in the desired industry) that are available. While the starting point is geographic, a part of the equation is also if you can provide remote services to your clients. With technological advancements, more and more businesses are open to working with remote service providers.
Ask yourself in which of the industries the demand for specialized accounting knowledge, experience, and skills is greater. Research also if there are any specific certifications required for that field and consider the possibility of obtaining such certifications. That's where you'll be able to bring more added value to your clients.
- Think of the long-term: Consider not only what happens now or a year ahead but five, ten, and fifteen years ahead: which industries are likely to grow and which are likely to dwindle? Will they need more or less accounting services? Try to identify consistent industry trends and incorporate them into your decision-making process.
As the Covid-19 pandemic is demonstrating, some industries are more recession-proof than others. Some industries survive better and even thrive during recessions and crises, while others are hit hard. Dentists, as an example, will always find work as long as people have teeth.
- Diversify your risk: Deciding on a niche does not mean putting all your eggs in one basket. If we continue with the egg-in-basket imagery, it means not having your eggs lying around scattered all over the henhouse. It means thoughtfully putting some eggs in carefully selected baskets. In other words, you can keep "regular" clients along with your niche practice, and you can establish yourself in more than one niche, and by doing so, diversifying your client portfolio. You just need to be careful not to spread yourself too thin. Remember - a Jack of all trades is a master of none.
How to establish yourself in your niche?
Congratulations on selecting your niche! Now it's time to roll up your sleeves and establish yourself in the chosen niche. We can divide this into two different aspects of work: developing the required expertise and marketing yourself to prospective clients.
As to developing the expertise:
- Join the relevant accounting associations, such as the CFMA, an association for financial professionals in the construction business, or the Dental Accounting Association. Participate in seminars and courses, obtain the required or recommended certifications.
- See if any of your team members have previous experience with the selected niche. Consider expertise, experience, and certifications when hiring new team members.
- If you're already handling clients in the industry, talk to them and ask them what type of accounting and bookkeeping issues they're tackling. You'll be surprised to find out the things that go by unmentioned in your day-to-day relationship with them and can only come up in a designated conversation.
As to marketing, advertising, and client recruiting efforts, we can divide that into "real-world" efforts and online efforts:
- In the "real world", The best place to start is, again, with your current clients. Ask them for referrals. Many industries have a tight webbed network of word-to-mouth information. If you already have one happy client, a good referral will do a great job of recruiting more clients.
- Attend industry conferences and make sure business owners get acquainted with your firm. Try to find out who are the predominant figures and leaders in the industry and reach out to them. Try to go on interviews and industry-related podcasts.
- Online marketing is as important, if not more important. Make sure you put in the resources to build a robust online presence. Invest in a website for your accounting firm with a landing page that presents your firm as an expert in the field. If you target several niches, consider having designated landing pages for each niche. Look at websites of other accounting firms to learn how they are presenting their expertise.
- Ask clients to do video or written testimonials and put them on your website. Invest in online marketing efforts on social media, write blog posts with high-quality educational material and advice for business owners accessible on your website, set up a mailing list on your website, and send a weekly newsletter with quality advice.
- Set a future goal date to measure your progress over a period of time, and see how many clients you've successfully recruited and retained. You can use website metrics to keep track of how many visitors your marketing efforts are yielding.
- Offer your services for remote clients: doing so will broaden your market-reach beyond city and state borders. Keep in mind that you will need to make sure you have the technological infrastructure to provide such services. Working remotely with your clients while still performing manual bill pay is virtually impossible. Therefore, before you offer such services, make sure you indeed have the technological capabilities to provide them.
Hopefully, with this article, we've set your wheels in motion. The rest is up to you. If you’d like to know more about the ways Melio can help you make more time to grow your practice and our easy and intuitive platform to manage all your clients' accounts payables, just click here.