Niching, the business strategy that allows your firm to leverage its expertise in one or more industry vertical, has become a trendy topic in the accounting profession over the past several years. This is with good reason. It’s an approach that can increase profitability for your firm by allowing you to charge more for specialized services, as well as offering significant growth potential if you can scale your services to serve a specific set of like clients efficiently.
While a niche strategy can work very well for many firms, some accounting practices get stuck at the starting gate when it comes to implementing one. This is often because they have difficulty (or resistance to) narrowing down to one or two specific niches they want to serve; and/or because they find packaging and selling their services within their chosen niche challenging.
If your firm is struggling to get started with a niche strategy—or to gain traction in the niche you have chosen—these five steps can help you get back on track and expedite your success:
1. Abandon the all or nothing mindset. Deciding to pursue a niche strategy for your accounting practice doesn’t have to be an all-or-nothing proposition, nor should it be when you’re just getting started. Think of it as a gradual transition toward the type of practice you want in the future. You’ll still serve your existing clients and other ideal clients when those opportunities are available, but you’ll also intentionally leverage your expertise in a specific industry vertical and start to build a new type of service offering around it.
2. Do your homework to identify a profitable niche. Accounting practices that want to develop a niche market will often look solely at their current book of business for clusters of clients within a certain industry and then start trying to attract more of those clients. While this may be a good place to start your research, it’s important to also do your due diligence before you commit time and effort to pursuing a niche simply because you’re already in it.
You need to do your homework to ensure that any selected niche is profitable (not just easy) to serve and that it is large enough to provide the ongoing growth your firm desires You also need to truly understand—and be able to alleviate—the pain points of the members of your chosen niche with your service offering. The bottom line for identifying a profitable niche? Study the niche beyond your own experience for an objective view on how viable it really is. If you already have clients within the niche you are considering, ask them for input and feedback on your service offering, too.
3. Set goals. Pursuing a particular niche for your firm should be approached no differently than any other strategic initiative. Given the homework you have done on the market potential of your chosen niche, you should be able to attach some measurable goals to what kind of growth you can expect in your client base over what period of time, and the degree of the corresponding revenue boost. While this may seem like common sense, many firms jump into a niche they think will be an easy win and end up disappointed by the results. Taking the time to do your own projections will help you set realistic expectations.
4. Start small, then scale. Another problematic approach for firms looking to niche their practices is going after a broad industry vertical right off the bat. This can be overwhelming, especially if you are just trying to get your specialized service offering and associated technology workflows in place. It can also make attracting clients challenging from a marketing perspective.
For example, you may want to be the “go-to” firm for the dental profession eventually, but that is a very wide and expensive net to cast for lead generation and advertising. Instead, segment your chosen niche by geography or better yet, by sub-specialties within that niche. You may choose to serve pediatric oral surgeons or only dentists within your state. Once you can comfortably serve them, then you can expand to implement a strategy that broadens your niche.
5. Structure your staff as well as your tech stack. The technology and workflow you implement to provide niche-specific services are, of course, a key part of your strategy. However, firms who truly succeed in dominating their niche also have the right staff in place with specific “point people” who know how to sell, service, and streamline the delivery of the products offered. Specialized accounting and advisory expertise in your chosen vertical is just one part of what your team members should offer clients—a compelling reason beyond that to do business with your firm, as well as a smooth onboarding process are equally important.
Take a comprehensive approach for long-term niche strategy success.
Adopting a niche strategy has become a common path for many accounting firms looking to grow and achieve new levels of profitability. Using the steps above can help you ensure that your approach is comprehensive and will support the success of your firm in pursuing its chosen industry vertical. It may take some time to gain enough traction to meet your stated goals, but the rewards of earning a strong competitive advantage within your chosen niche market can truly be transformative for your firm.