Competition among tax & accounting firms is intense, with firms now competing on a national level due to the shift to paperless operations. Even large firms face significant challenges.
Targeting a specific, smaller market a “blue ocean” of ideal clients can provide a significant advantage.
This can be achieved by selecting a niche, whether it’s an industry (such as healthcare, funeral homes, or charities) or a specific service (such as tax planning, auditing, or CFO services). Picking the right niche allows firms to focus on a smaller, more manageable pool of clients eager to do business with them.
The Power of Picking a Niche
Choosing a niche for your tax & accounting firm carries many distinct advantages, including
Better Client Service.
When you become a master of your niche, you can offer clients a better caliber of service, identifying leverage and pressure points they may not have even known existed.
Operational Efficiency.
A general client base is like snowfall no two snowflakes are alike. Taking on a new client can feel like starting from scratch: labor-intensive and customized.
Niche clients tend to be similar, which means you can standardize processes for onboarding and project management.
The results? Greater efficiency, reduced costs, and faster turnaround time.
Lower Marketing Costs.
It’s expensive to target the entire world as a potential client. The more specific you get about your audience, the lower your marketing costs — in terms of both cost-per-lead and client acquisition cost
Stronger Brand Reputation and Referrals.
As you become known as the firm that only helps charities or only does crypto capital gains taxes, your firm will start to become “famous” within your niche, the go-to choice for your specialization. People within industries tend to know each other. When a contact asks for a referral to an accounting firm, they will say, “I know a firm that helps
companies just like ours!”
Potential Downsides of Niche Expertise
Of course, no business strategy is perfect. Choosing a niche has its potential downsides, including:
Picking The Wrong Niche.
Some niches might already be competitive. Others might have too few prospective clients, or the average client fee might be too low. Extensive research is needed to determine whether a niche is worth pursuing.
Investment in Expertise.
In order to render the better quality of service that niche clients expect, you may have to invest in education and upskilling within the niche. If you select a niche where youalready have an established or growing specialization, this may not be a problem.
Finding Specialized Talent.
Talent within your niche may be rare. Be prepared for premium compensation. You may be able to manage this by upskilling generalist talent and/or seeing business process outsourcing (BPO) solutions within your niche
Evaluating Your Options
So what’s in a niche? Niches tend to fall into one of two buckets:
- Industry Niches: Examples include healthcare, real estate, non-profits, technology, manufacturing, retail, etc.
- Service Niches: Examples include tax problem resolution, wealth management, forensic accounting, cloud accounting, etc.
- Hybrid Niches: Combining industry and service niches, like payroll services for maritime and shipping.
Factors to Consider
What should you consider when beginning to brainstorm your niche? Some of the key factors to consider include:
Your Existing Client Base and Expertise.
If you have several years’ worth of problem-solving within a niche under your belt, you may already have significant specialized knowledge within that niche. You may also have valuable testimonials from clients within the niche.
Interests, Passions, and Strengths Within Your Team.
What industry or service vector are you passionate about? If nothing jumps to mind, interview your team. You may have a longstanding team member who has a passion or specialization you didn’t even know about — a niche just waiting to be tapped into.
Competitiveness of the Niche Market
Another key benefit of niching down is to have less competition … but that’s not true of all niches.
Some niches have already become flooded with specialists (or wannabe specialists).
Why choose a niche where you will face just as fierce competition as a generalist?
How to Research and Analyze a Potential Niche
Once you have a list of potential niches that interest or inspire you, it’s time to do some due diligence. Here’s how to research and analyze a potential niche:
Look At Industry Data, Associations, Publications.
Look at the average revenue, profit, and tax burden within that industry. Is it big enough to justify premium accounting services?
Check the websites of industry organizations. Read their publications. Scan the blog for mentions of
vexing accounting issues that the members face. If possible, attend association meetings in your area.
Interview Prospects in Potential Niche Areas.
Whether your existing clients, people you meet at tradeshows, or people you connect with online via social media or cold outreach, try to interview prospects within the niche. How happy are they with their accounting services? What major problems have they faced? Have inadequate accounting services played a role in any of those problems? Do they feel underserved or misunderstood in any way?
Consider a Test Campaign.
If you have some resources to commit, consider running a low-budget, limited-time test campaign using social media or search engine ads, targeting your niche. Offer a free giveaway piece of literature or offer a free consultation or appointment. The messaging will have to be dialed in over time, but if lots of people click on or engage with the campaign, you know there’s interest in your niche offer.
Building Niche Expertise
- Immersion: Join industry groups, get certifications, follow thought leaders, and attend conferences.
- Specialized Services Development: Create services tailored to niche needs, develop processes, and consider packaging and upselling complementary products.
Build a Marketing Engine
Now that you have your niche-specific service offering, it’s time to introduce it to the marketplace using a marketing engine. A marketing engine is a sustainable system designed to consistently attract new leads and prospects from your niche into your sales and business development pipeline. Components of this engine might include:
Niche-Focused Content Marketing Strategy
Start producing content relevant to your niche — blogs, eBooks, white papers, email newsletters, etc. Over time this can help your SEO strategy, as well as build up an authoritative presence and an inventory of content assets you can use to attract leads or burnish your credentials. Remember, most prospects look at 5-10 pieces of your content
before they even speak to a salesperson!
Leverage Existing Client Relationships.
If you have clients in the niche, see if they can refer you to other clients in the niche.
Referrals are some of the most productive sources of new business because people trust the experiences of trusted colleagues to do their thinking for them
Get Featured in Niche-Focused Publications.
Reach out to publications and ask to publish a guest post, guest article, or guest blog.
Contrary to what you might believe, industry publications are thirsty for content, and the work you did in the “immersion” section (certifications, organization memberships) will make you an attractive prospect. You can always hire a ghostwriter to write the content if you’re not a writer!
Managing The Transition
Change is never easy. As you make the switch from a generalist firm to a niche firm, you will inevitably run into bumps and growing pains. Some major roadblocks might include:
Phasing Out Clients Outside of the Niche
Phasing out clients outside your niche can be tough, but it’s necessary to focus on higher-value clients and build your brand. These clients may be lower-paying and higher-maintenance. Prepare for difficult “client break-ups” and consider referring them to a trusted firm. Remember, it’s just business.
Potential Challenges for the Transition Period
Transitioning from a generalist to a specialist firm will have complications, such as:
- Managing capacity issues: Initially, you may have idle resources, followed by potential capacity shortages as new work ramps up. Automation and outsourcing can help with scaling.
- Combatting perceived opportunity costs: Turning away non-niche business can impact team morale. Remind the team of your niche focus and desired outcomes.
- Celebrating small wins: Boost morale by acknowledging and celebrating small achievements, viewing them as steps toward larger goals.
Tips on Pricing Your Services
The right solutions can help make the transition from generalist to niche specialist much more smooth, as well as make sure you’re successful for years to come. Here are some ways firms use SmartPath, a pricing intelligence and revenue optimization platform, to accurately present their value, pricing, and packages to clients.
Optimize Pricing and Profitability:
- Advanced calculators and dynamic fee schedules ensure accurate pricing and fair compensation.
- Automated pricing adjusts fees based on client scenarios, safeguarding profitability.
- Profitability management tools provide performance insights for improvement and growth.
Enhance Client Communication and Satisfaction:
- Interactive client roadmaps and pricing links improve service presentation and client acceptance.
- Clear scope definition reduces misunderstandings and creates opportunities for additional work, leading to higher client satisfaction and stronger relationships.
Streamline Operations and Increase Efficiency:
- Automated onboarding dashboards and integration of e-signatures and payment collection streamline operations, improving cash flow and reducing administrative workload.
- Smart package creators enable quick and accurate quote generation.
Expand Service Offerings and Firm Value:
- Access to strategic advisory worksheets and certifications enables expansion into advisory services, increasing firm value and client satisfaction.
- Diversifies revenue streams and positions the firm as a comprehensive business partner.
Elevate Professional Image and Brand:
- Custom branding options in client-facing software enhance professionalism and attract high-value clients.
Leveraging SmartPath helps accounting firms solve everyday challenges, operate more efficiently, serve clients effectively, and position themselves for sustainable growth.
Next Steps
- Download our “How to Find Your Ideal Client Niche” Ebook
- Schedule a call with the SmartPath Team >> Get Help Implementing a Niche on your firm