A growing number of accounting practices are choosing to focus on a particular market niche. Honing in on one client profile paves the way for specialized value-adding services, simplifies the market, and separates the experts from their competitors. If you want to grow, focusing on a niche is one of the smartest strategies you can implement.
Deciding what niche to focus on is daunting. There are a never-ending array of options, and with so much on the line, the pressure to segment your market in the correct way – or perhaps more importantly, to avoid selecting the wrong option – is huge.
If you are going down the path of exploring a niche to target, you need to follow a process to help you come to a decision that is right for your practice’s future. This is how we recommend you go about it.
#1 Look at your clients
Download a list of your clients and place this into a spreadsheet (we’ll be sorting and re-sorting it). You can download an Excel template you can use for this. If you’re not using our template, add some additional columns to your client list so you can identify the industry, size, location, and growth trajectory of each client.
Add another column to identify your favorite vs. least favorite clients, working relationship (one for good points and one for bad points), and a notes column.
#2 Describe your clients
Complete these columns for your clients, and feel free to get help from your staff. You might even ask them to complete the details for the clients they work with. In the notes column, ask your staff to comment if they have complaints about working with the client, or what they enjoy about that relationship most.
Here are some of the most common ways you can segment your clients:
- Industry: Hospitality, dentists, lawyers, construction, eCommerce, warehouse management, healthcare, manufacturers, and others. Which industry do each of your clients belong to?
- Business size or complexity: Small businesses, medium-sized, or larger? A startup or well-established organization. How many staff?
- Business revenue: Hobbyists or part-timer making less than $100,000? $500,000-$2 million? $2-$5 million? $5-20 million or beyond?
- Location: Are they based in your local community, globally, or online?
- Age or tech savviness: Are you clients younger, older, or a mix? Are they an early adopter or perhaps a tech laggard?
- Type of service: Do you currently provide a full-service, or is there a particular service or group of services that you provide?
Finally, rate each client based on how much you enjoy working with them (you can do a numbering or point system – whatever works for you). You should also describe your working relationship (good points and bad points), and any other notes you think are important.
#3 Sort your favorites
With this information entered into your spreadsheet, sort by your favorite to least favorite. Pay attention to any similarities these preferred clients have. Perhaps they all come from one industry, are all of a similar age or size, or they are all based in one location.
Enter details into the notes column to identify characteristics you notice you enjoy or gravitate toward.
#4 Sort the industries
Sort by industry, and identify whether you enjoy working in that area, know about it already, or can easily learn more about it. Think about whether that industry is growing (there’s not much sense specializing in video rental shops, for example), and whether there are any related industries that might make sense to explore (you may have several electricians as clients, so plumbers or HVAC technicians may be potential clients to look at).
Once again, detail the observations for each industry in the notes column.
#5 Sort the size
Sorting by size will show whether your preferred clients are startups or more established companies – or, if they’re business with a small number of employees or larger.
These are all important demographics that will identify the types of services they may require. A growing company may need assistance with accounting processes, while a larger, more established company may have those processes mastered, but need HR assistance for their large number of employees.
Again, make notes to identify characteristics that you enjoy or gravitate toward.
#6 Rinse and repeat
Start again from step 3, but this time pay attention to your least favorite clients. Deconstruct these clients similarly to understand what demographics make them less attractive. This is important. Focussing on a niche that you hate working with is a recipe for disaster.
#7 Decision time
After going through these steps you’ll have a detailed idea or at least a shortlist of your firm’s ideal client. You’ll know the industry, size, location, revenue, age, and more of who you prefer working with, and who will give you growth opportunities going forward.
If this process hasn’t given you a clear answer, repeat it again with your shortlist. Keep going until you confidently settle on a niche that makes sense.
#8 Go all in
With you ideal niche identified, involve yourself in everything about them. Learn how they think, how they speak, what they want; do what it takes to become the expert in their field, and use this knowledge to shape the services you offer and how you market them.
The practice growth playbook provides you with a set of tools to transform your practice and double your profits in one year, including details on how to tailor your services to suit your niche. Drawing on strategies employed by some of the world’s most progressive firms, you’ll learn how you can grow rapidly and build a sustainable firm. Download for free.