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INSIGHT MAGAZINE
(An
e-Publication of the ILLINOIS CPA
SOCIETY)
March-April 2007
Niche
Novice: Build Your Practice One
Specialty at a Time
By Tamara E. Holmes
When Jack
Richter launched his Chicago-based firm
J.S. Richter, Ltd. in 1979, he opted not
to be a generalist. Instead, he chose to
focus on serving US subsidiaries of
German, Swiss, Austrian and other
European-owned business enterprises.
Some years
before, while working for a local firm,
Richter “was contacted by the German
Chamber of Commerce and a German Bank.
They were seeking some assistance in
servicing their US subsidiaries doing
business in the United States. That gave
me an incentive to look for some
possibilities in specializing. When I
went on my own, I started to service
these clients exclusively.”
Gradually,
clients spread the word about Richter’s
services. “Throughout the years, we
developed a certain reputation and
contacts with these types of clients,
and we picked up some accounts from
Germany, Switzerland and Austria, and
some other European countries,” he
explains.
What Richter
and many other accounting professionals
have realized is that developing a niche
is an excellent way to build a financial
business.
“It’s easier to
build credibility in a niche than it is
in a broad practice,” says David S.
Rachford, author of the CPA Marketing
Center Blog (cpamarketingcenter.com/blog).
“When you become credible in a niche by
working with an established business in
a particular practice area, you learn
their language, so it’s easier to
communicate with prospects from that
niche,” he explains.
There’s no
shortage of areas in which to
specialize. Not only can you find
particular industries to hone in on, but
you can also focus on particular
demographic groups, such as women
entrepreneurs and Baby Boomers, and on
functional niches, such as tax services
or forensic accounting, which are
provided across various industries and
client segments.
Find a
niche
- There are a number of ways
to determine which niche is best for
you. First, look within your client
base, advises Rachford. “Find out what
clients you enjoy working with and the
businesses you enjoy serving.”
Always play to
your strengths. Richter was born in
Austria and speaks German, which means
he speaks his clients’ language. By
choosing a specialty that makes use of
his native tongue, Richter was able to
capitalize on one of his unique
qualities—a quality that differentiates
him from his peers.
Pay attention to industry trends, says
Jeff Moore, who writes a blog called
The
Solo Accountant Reporter.
Moore decided to focus on forensic
accounting when he noticed demand
increase for that particular specialty.
“The American Institute of CPAs conducts
surveys from time to time about practice
niches—what areas of growth does the CPA
community see and where are they
planning to expand capacities in their
firms?” Moore explains. “Litigation
services, which includes forensic
accounting, was one of the leading new
niche practice areas that I’ve seen on
just about every list in the last 10
years.” Today, forensic accounting
consumes between 25 and 30 percent of
Moore’s business.
Develop your
expertise - Focusing on a niche requires
time and energy, particularly given the
likelihood of a learning curve. “It’s a
long haul. It took me about three or
four years to develop a practice that
would sustain my financial needs,” says
Richter. While you’ll
learn a lot about your chosen industry
or area of expertise through your
clients, there are other ways to expand
your knowledge base.
Continuing
Professional Education (CPE) credits can
quickly add to your expertise in a
particular area. Check out offerings
from accounting associations and
associations geared specifically to your
area of specialization. The Internet is
also a good source of information. Other
places to look include books and
magazines written for and positioned
toward your chosen segment of the
market. If your niche is a particular
industry, trade journals can provide a
wealth of information. Finally, conduct
face-to-face research by attending
seminars, conferences and meetings of
people in your target industry or
demographic.
Avoid
the pitfalls - As with many things
in life, focusing on a niche can be
bittersweet. “When the industry hurts,
you hurt,” says Rachford. For example,
CPAs who serviced real estate
professionals likely enjoyed the wealth
overflow of the recent real estate boom,
but as the market has cooled, so too has
business for financial professionals
focused on that niche. Since every
industry experiences its ups and downs,
one way to make it through an industry’s
lean times is to diversify. “I would
encourage practitioners to develop a
couple of key areas,” says Rachford.
“You don’t want to get caught with all
your eggs in one basket and have the
bottom fall out of the basket.”
Moore agrees. “What I’ve chosen to do is
to be kind of a generalist but have two
or three specialty areas,” he says. In
addition to forensic accounting, Moore
specializes in interim and part-time
CFO/controllership services, as well as
services for financially troubled
businesses. “But I don’t do it to the
extent that it precludes me from taking
work in other practice areas,” he adds.
Another way to
avoid being swept up in a niche
industry’s woes is to choose businesses
and individuals that are established, so
that the client will be better able to
survive the tough times and continue to
pay for your services.
Despite the
risks, developing a niche can be
financially rewarding. In many cases, a
company’s specialization will attract
clients it would not ordinarily have
been able to land. In addition, without
a specialty, an accountant has nothing
to make him or her stand out from the
competition. “There is room for people
to specialize,” says Richter.
“Otherwise, they’re just a dime a dozen
out to compete for the same clients.” |
