how to choose a market niche for your accounting firm in 2021
When your accounting firm caters to a broad market, you will have to spend a lot of time and resources trying to attract profitable businesses, learn all their processes, and fulfill their respective expectations. Here’s everything you need to know on how to choose a niche market for your accounting firm.
More often than not, people tend to only say yes to things that they personally find relevant. When something speaks directly to us, we often feel personally attached to it, or even invested in it. Taking the time to choose a niche market for your accounting firm makes it easier to identify, acquire, and then secure your dream clients. Moreover, framing yourself as an expert firm in a specific accounting niche is a much faster and less tedious way to generate more income.
That period, when an accounting firm is having a hard time choosing a niche, is purgatory for most accounting, bookkeeping, and tax firms. So, let’s discuss, in detail, what you need to know to get out of that purgatory as soon as possible.
If you or your accounting firm needs more help and resources to get your dream clients, check out our YouTube Channel.
Which Types of Niche Markets Should Your Accounting Firm Avoid?
When choosing a niche for your accounting firm, you should first know which niches to avoid. Narrowing down your choices from the get-go will make it easier for you to find the right one for you and your accounting practice.
1. Business Size “Niche”
Let’s get this out of the way first, a business’s size has nothing to do with its niche. Many accounting, bookkeeping, and tax professionals believe that working exclusively with small businesses can be considered a “niche,” but sadly, this is far from the truth. Small businesses can encompass multitudes of niches, like food, tech, fitness, health & wellness, and infinitely more.
So, we’ll say it again, one more time for the people in the back:
Business size is NOT a niche!
Companies can be classified as small, midsize, or big (or even mega). Small and midsize businesses are typically more appealing to accounting firms looking for high-value clients because mega-companies tend to have their own in-house accounting departments.
However, if your ultimate goal is to work with mega-companies, mastering a single niche and being an expert on it will significantly improve your firm’s chances to both win and keep them as clients.
Many accounting firms often refuse to work with startup businesses because they believe they won’t last long. But, rather than rejecting any and all startups outright, it is better to create packages that can accommodate the more promising ones. Doing this can be a good investment because we all have to start somewhere, and they might just be the next Google or Apple. As the old saying goes, from small seeds do mighty oak trees sprout. Be careful about dismissing start ups, you never know who could evolve into your largest client!
2. Shrinking Niche Markets
Advancements in technology are continuously changing the way people do things. Step back and try to visualize if your clients’ business models, products, or services will still be thriving in the future.
Avoid shrinking niche markets!
It’s financially risky to target businesses that offer products or services that most people nowadays don’t need anymore, like typewriters and copy stores. As a general rule of thumb, choose a business in a growing niche market that has an overall upward trend based on reliable data from reputable statistical sources. You can check out another free resource we have here to help you with doing exactly that.
3. Oversaturated Niche Markets
Shrinking niche markets aren’t the only thing you need to watch out for… Perhaps you did your research and found a growing niche that many other competing firms are jumping on. Although this doesn’t necessarily mean that it’s not a good opportunity, this could be something called an oversaturated niche market.
It isn’t wrong to argue that when a market has a lot of competition, there’s probably a lot of potential revenues in there. However, you need to be willing to spend a significant amount of time and money to market your accounting firm and out market the incumbents. Oversaturated niche markets can still be high-income opportunities. Just keep in mind, though, that mega-companies with high budgets for marketing tend to penetrate oversaturated niche markets and drive up costs for the rest of us.
One example of a growing yet oversaturated niche market today is cannabis. The cannabis niche was heralded as a small business revolution, which wasn’t untrue at the time, but its popularity today has made it very crowded with big businesses sapping away strength from smaller cannabis businesses. With so many competitors, you should expect it to really extremely difficult to break in, look different, and win in there.
Which Niche Market Is Best for Your Accounting Firm?
Only you can answer this question. It’s like asking someone else what YOUR favorite color is… Consider the first thing that comes to your mind when someone asks what niche interests you. Naturally, you want to consider a niche in which you have extensive, first-hand experience.
When you live and breathe something day in and out, everything from client acquisition, fulfillment, and getting great results is easier!
While no one else but you can determine your best niche market, there are key factors that you can evaluate to make this tough decision easier. These key factors are the demographics of your potential dream clients and their business.
Which Key Factors Should You Evaluate When Choosing a Niche and Identifying Dream Clients?
Demographics, or demographic data, are the characteristics or traits that allow institutions like the government or businesses to group people within a population. In business and marketing, these factors are generally used to increase the impact and relevance of your marketing strategies.
For your accounting firm, evaluating the demographics of each potential client and their business can make choosing a niche market and finding long-term dream clients much quicker.
People from different generations have different mindsets, values, and preferred means of communication. The age of a business owner is a demographic that you should evaluate closely when trying to find a niche for your accounting firm.
Business owners who are young adults are more likely to be hungrier for success, tech-savvy, and trendy. On the other hand, middle-aged and older clients have more experience and are more likely to have more connections and money because they have played the game longer. These older clients, while more tech averse, may also be willing to spend more to update their technology and be more grateful for the help.
Also, many niches are more likely to be dominated by business owners in certain age groups. Narrowing down your choices of potential clients by age group will make it easier for you to maintain long-term business relationships and choose a niche to settle with.
2. Geographic Location
People’s mindsets, values, and means of communication are heavily influenced by the neighborhoods they’re in. So you will want to know how big your client’s business service area is. Additionally, geographic location can also limit niche market’s ability to succeed.
Things to consider on a geographic scale are questions like: “Are you willing to work with a business that operates in all 50 states or on a national level?” This isn’t an easy task, but a business of this scale would most likely be very profitable. If you’re aiming for this, be prepared to constantly compete for relevance to sustain your firm’s success for that case.
Usually, you want to focus on a smaller area, like a single state, such as Florida, for example. You could aim to be the best accounting firm for a certain niche in Florida. By branding yourself as more local, it’ll be easier to increase your relevance while still securing dream clients that can generate long-term revenues for your firm.
3. Relationship or Civil Status
It’s no secret that marriage can significantly change how people deal with different matters. You want to consider if a potential client is single, in a relationship, engaged, married, or whatnot.
Single business owners are more likely to have more time, energy, and flexibility to invest in their businesses. On the other hand, married business owners are more likely to have a greater sense of responsibility, commitment, and work-life balance. Each relationship status has its fair share of advantages and disadvantages.
Certain niches can also be dominated by groups of people from a certain relationship or civil status. Nightclubs are more likely owned by single business owners, while family restaurants are more likely run by married business owners. In the end, it boils down to asking yourself which type of business owner, according to relationship or civil status, you find easier to connect with.
4. Religious or Political Affiliation
Religious and political affiliations are demographic characteristics that you may or may not want to evaluate. For one, a business owner’s work ethic does not necessarily depend on their affiliations. However, if you’re particularly leaning toward a religious or political niche market, you should consider these.
People have legitimate reasons for embracing affiliations. If you’re willing to harness the power of polarity, you want to work with people who have the same or similar affiliations as you. You might earn the ire of others for favoring a particular side, but you could also get strong and dedicated support from your own affiliation.
5. Educational Attainment
Educational attainment demonstrates how well you succeeded in the academic world, but this doesn’t necessarily ensure your success in real-world jobs. People can gain valuable experience and knowledge to secure lifelong success even without a degree. However, educational attainment is a demographic that you can think about when finding an ideal client.
Do you want to work with business owners who are college graduates? Those who have their master’s or even doctorate degrees? Those who have gone to trade school? The answers to these questions may depend on your own educational attainment because you may find it easier to work with people who have attained the same as you.
Psychographics is a fancy umbrella term referring to characteristics of a person based on psychological attributes. It includes personalities, values, opinions, attitudes, interests, lifestyles, and much more. People who share the same religious or political affiliation can have extremely different psychographics.
You want to know if your potential client’s psychographic characteristics align with yours. Do they value trust and integrity? Do they know the importance of leadership and following a coach? Are they mission-driven and competitive? Take the time to know if you’re about to work with someone who hates losing and would keep going to figure out ways to improve themselves and move forward.
What social issues are they passionate about? Where do they want to spend most of their time and money outside of their business? Do they have personal preferences and traits that are your pet peeves? When you work with like-minded entrepreneurs, it is easier to refuel your determination and hunger for long-term success.
7. Type of Business Model
A business model is the framework or strategy conceptually detailing how a company operates to generate value from its offered product or services. It primarily specifies a business’s identity, target market, value proposition, and rationale for prices and costs.
There are many different business models out there today. However, they can be broadly classified into one of two categories, either Business-to-Business (B2B) or Business-to-Client (B2C). B2B is a general type of business model where the exchange of goods and services happens between businesses, while B2C is when it’s between a business and a consumer.
B2B is more preferred by many because B2C requires extensive inventory and a not-so-high profit margin. Since profitability is more secure with B2B businesses, you want to choose a niche market that adopts this kind of framework.
8. Number of Employees in a Business
The number of employees in a company can reflect how well a business is doing. Noticeable differences between previous and current numbers could be a good indicator of either business growth or decline.
A significant increase in the number of employees typically suggests that a company is growing, though this isn’t always true. An example of this would be a startup in the process of filling crucial positions.
On the other hand, a considerable decrease in the number of employees can signal that a business is declining. But, this too should be taken with a grain of salt. For example, a business that decides to automate its processes to improve efficiency, save costs, and generate more profit, even if they are letting some employees go, is likely growing.
9. Business Annual Income
This demographic is arguably the most straightforward to interpret and analyze. However, this information can be difficult to obtain, especially if you’re not working with the company that you want to evaluate. If you do have access to a business’s annual income, simply entertain businesses with at least six figures plus as those are the ones that have proven they can generate sales and require the value of your accounting firm’s services.
10. Business Information Source
Business people use different sources of information to make crucial business decisions. Some sources include articles, blogs, magazines, journals, podcasts, and training sessions or consultations. To be sure that you’ll be working with a business that has a future, you should know where their information is coming from.
As a company that specializes in marketing coaching for entrepreneurial accountants, we know that our clients usually get their information from the general big three for accounting firms: CPA Academy, Facebook, and YouTube.
It’s important for you to know your client’s sources because the information your client gets from them is what businesses depend on to solve problems, improve what they offer, and stay on top of the competition. When businesses continue to rely on unreliable sources and use wrong information, they are bound to fail or decline someday.
11. Emotional Drivers
Every judgment or decision people make is driven by both conscious and subconscious emotions. In business, financial reward is just one of the many motivators that keeps people working for more. But, you’ll also want to know the emotional drivers of your clients to ensure you can give them the results they really want.
The major emotional drivers of most entrepreneurs are time, money, and impact. How do I win my time back? How do I make more money while not working longer hours? How do I deliver the best level of impact to my clients, family, and the other things that I care about the most? Most questions that drive business owners are somewhere in this line.
To take your clients’ experiences to the next level, you should identify their specific needs, desires, pain points, challenges, personal goals, professional goals, fears, common objections, and frequently asked questions (FAQ). If you know what propels them forward and then incorporate these into your services or products, you will be able to sustain your dream clients for a considerably long time.
12. Paradigm Shift
Massive adjustments in norms, standards, set values, and more should be anticipated to happen as time passes. A paradigm shift in business refers to when monumental changes take place in a market, making it necessary to overhaul your current business models, processes, and products to move forward.
A paradigm shift can also refer to a drastic change brought about via life-changing circumstances. Given this, it’s crucial to periodically check in with your clients to see how they are doing. Try to ask them for at least five common problems, if applicable, in their businesses and possibly even in their personal lives.
Suppose your client’s main issue is not having profit and loss (P&L) statements. For this case, uncertainty in their business’s profitability is the negative emotional driver currently troubling them. Now think about the positive emotions that your clients can gain when you make them experience the power of your services.
When they have monthly check-ins with financial experts like you, you’re providing your client with clarity and confidence, that directly addresses their pain points. By making considerations for paradigm shifts, you’ll have a better understanding of what you need to talk about with your dream clients.
A lot of accounting, bookkeeping, and tax professionals have a really hard time choosing a niche. No one else but you can know which niche market will be the best for your accounting firm. But don’t fret, there are options to help make things easier for you.
Choosing a niche is closely tied to identifying & finding your long-term dream clients. To choose a niche market and find your dream clients, start by knowing which types of niche markets you should avoid.
After crossing those out, evaluate the key factors or relevant demographics that characterize your potential clients and their businesses, and then weigh in your own preferences and inclinations.
What Should You Do Now?
Choosing a niche market from scratch can be really difficult and time-consuming, so you should consider applying what we’ve shared. Your ability to gain high-value clients will get easier when you find a niche for your accounting firm because a specialist will always beat a generalist.
If you want to make more money, you need to focus on three things: expanding your networks, having the right mindset, and improving your skillsets in the industry. With quality coaching and training, you can significantly improve your skillset and produce more tangible results that will increase your value and worth.
We’re very glad to inform you that we can help your accounting firm attract the high-paying clients you dream of. Let’s choose the best niche market for your accounting firm together when you TRY our FREE training session. Click Here to Claim Your Spot Now!
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