This article was originally written for my previous company that specifically helped accountants, but I thought that the information applies to every business that was thinking about niching down. Enjoy! - Mike
What’s in this article
- “Every accountant is (not) the same”
- When should you pick a niche?
- Rapidly increase the value you give your customers
- What to check for before picking a niche
- Research resources
- Can you make a niche too narrow?
- Can you still serve business outside your niche?
- Ideas and inspiration for niches to choose
They say "Every accountant is the same"
If this is true, then accounting and bookkeeping firms that pick a niche will have a distinct competitive advantage.
In the accounting world, it is important to be able to pick a niche for your accounting business. Your competition is no longer the firm across town, your competition is every single firm that has gone digital.
To stand out and remain competitive, marketing your accounting and bookkeeping firm is more important than ever, and trying to sell to everyone is complicated and expensive. Accounting Firms that niche down typically have lower marketing and operating costs, higher margins, and are easier to manage and scale.
With over 217 thousand CPAs in Canada alone, finding a niche can make or break your practice.
61% of small business owners are fully satisfied with services provided by their accountant. (source)
That means there is almost 40% that could be served better!
The good news is that there are many niches available and picking one doesn't have to be difficult; all you need is a little creativity and knowledge of what makes an effective CPA firm.
Should you gain experience first before picking an accounting niche?
Shortest answer: No.
Short answer: If you are a new business, the temptation is to wait and try a couple of different industries before picking a niche. The problem with this is that picking a niche gets harder the larger you are. When you have fewer liabilities, staff, and processes to manage, that is the best time to pick a niche and start simply.
It also makes it easier to find your first few customers, because your niche gives you a competitive edge over more established firms. You already know their pain points. And you have a plan to solve them.
And for more established accounting professionals that have hit a plateau in sales, niching down is usually the solution to reducing margins, and minimizing the constant fires that managing a large firm usually entails.
Finally, niching down your accounting business takes a lot of work, and there are many things to learn about. It doesn’t happen all at once, so the earlier you start the process of trying out a niche, the faster you will find out what works and what doesn’t.
Focusing on one type of client can help CPA and bookkeeping firms develop unique expertise quickly
When you have an accounting niche, the tax and accounting knowledge you get for one client will bring value to every single one of your other clients. Many firms develop knowledge of all sorts of businesses that do not really apply to the next client.
By knowing about all the little details of one industry, even new accountants can become experts in one specific area quickly.
And while older firms might have more generalized experience, no one will be able to serve that one niche better than you, and you will become in high demand.
Consider the type of work you enjoy doing.
What types of work do you enjoy doing?
Do you like accounting for individuals or corporations? Do you enjoy being a partner that makes strategic decisions in your client's companies, or is your team masters at efficiency and managing many clients?
Every industry has a unique set of challenges and problems to overcome. Funded startup's main concern is always cash flow, while restaurants are all about aggressively maximizing their margins.
By pairing your skills and preferences to a niche, you can cut out types of jobs that you don't enjoy doing, so you have more energy and focus on doing what you love.
Check if any specialists are serving this niche already
Are you the first one to specialize in this particular industry? A market with few competitors is a great niche to enter because it means that the market often is missing someone to really serve them well.
Accounting firms that have chosen a niche with large client bases can dominate a market quickly. To find out if anyone is serving your industry, you can do several things:
One option is to look up related websites on Google. Typically niched firms have a strong advertising game because the cost for acquiring customers is low. Do a few keyword searches for "Accounting for YOUR INDUSTRY" and check the ads section.
Remember: Just because there is competition does not mean there isn't room for you. Especially if you are in a growing industry. Just like a small town can have several accountants, your whole province or country can support many specialty niched firms.
Find out what industries have a lot of potential for growth and which ones are shrinking
Knowing which industries are on the rise and which are on the decline will factor into your decision for picking an accounting niche for your business.
One way to know what types of clients are performing well in your market is to look at the 5-year trends within your local industry. You can do this using resources like:
You can also pay for customized data extractions
B: Research services from the Government of Canada is incredibly useful
Using this or similar information, you can tell what industries are experiencing growth and decline. This information will help make a more informed decision when researching a niche for your accounting firm.
Determine what accounting services your niche needs the most.
This is important: You want to make hiring an accountant as easy as possible. By figuring out what your niche searches, or asks for the most, you can position your marketing around that one thing.
This will give you a competitive edge over firms that only offer general accounting services that try and sell everything an accountant does, when really they just want ONE THING solved first. They will get the rest later.
This doesn’t mean you don’t talk about your other services, it just means you lead with that one thing.
Be confident about the niche you choose! You can always change it later if need be
As the saying goes: Fate favours the bold.
As with any business decision, you can never truly know how something will go until you try it.
If you recognize that the niche you chose is not working out in a few months, do not be afraid to change your decision. What you learn from the process is the most valuable thing, and with each foray into a niche, you will get more skilled at honing in on what works for you and your company.
Accounting Niches come in all shapes and sizes
Accounting niches help every type of financial service business. Whether you are a bookkeeper, CPA firm, giving full-service tax and accounting services or if you specialize in advisory services, you can always pick a niche.
Can you make your accounting niche too narrow?
Everything in moderation!
Accounting and Tax companies need to consider having a Minimum Viable Audience (MVA) This term coined by Seth Godin is all about figuring out what is the smallest audience that you can serve, and actually still make money in.
The idea is that while you could be a CPA firm that specializes in only Alternative prog-rock bands, and while this accounting niche would definitely feel the love, there might not be a large enough audience with money to sustain you.
A better niche after your research would be to give specific accounting services to artists.
Can you still take business outside of your niche?
Of course you can! It's your business.
Market Pie's niche is accountants and financial planners. (Shameless plug: Check out our Facebook group for accountants and financial planners!) But we also help those in the financial services industry like insurance brokers that are a great fit for us, that follow the same set of processes.
The key here is that when your default answer is "no", your "yes" becomes that much more powerful, and you have to have a good reason to say yes now.
A local hospital needed help getting their social media profiles out. This was a great network connection and also felt like a way I could help my local community. So while they were not my niche, I felt we had a good fit and relationship that made it worth doing the work.
Just be aware that every time you step outside your niche, you are reducing the efficiency of your marketing and operational engine. If you say you are a niche accountant, but your current clients are all over the map, the real-world benefits of having a specific industry you serve will not be realized.
Easy Accounting Niches to get started.
These are some accounting niches that will always need more help and have plenty of clients to go around. Remember, every business has a different need.
Industry Niches
Having a general industry niche is the simplest way to start. While this is not a very specific niche to choose, it does keep you flexible
Construction Clients
Have lots of seasonal workers. Cashflow and tax planning are critical for these clients, as well as having a full-service bookkeeping staff.
Nonprofit accounting
Specializing in accounting for nonprofits means knowing every letter of the law, and all the regulatory burdens they are placed under. Nonprofits don't just need paperwork filled out, they need a solid strategy to ensure they are compliant, and minimizing auditing.
Small businesses / Local Businesses
While we talk a lot about how accounting can be done anywhere, this actually makes the idea of being the "local accounting firm" become valuable again. But to make this your niche you can't just do lip service to local to win. You have to go all-in on your local community because they can still get their services anywhere.
Service Niches
Sometimes you might consider your niche as the type of work you do. Think of H&R Block. They are known for doing just one thing: Tax preparation. That makes their business incredibly scalable as every entry-level employee only has to learn how to fill out some forms.
Tax preparation
Efficiency and pricing will win the day here
CFO Services / CPA Firms
Maybe the day-to-day work is not your forte? Solving higher-level problems in larger businesses means you can charge a premium for your services, do more creative work, and work with fewer clients.
Business / Personal Taxes
Deciding that you specialize in business, or personal taxes is one way to easily cut your target market in half, streamline your services, without a big commitment.
Other Niches
There are other ways of niching your accounting services.
A few examples we found online include Estate & Trusts, international tax, mergers acquisitions... there are many others and it all comes down to Minimum viable audience, and what you enjoy doing.
