Finding the Perfect Niche to Keep Your Practice Modern
As modern practice owners, we are in need of balance. We need to pay attention and adjust our strategy to current accounting trends and changes in the industry. But, it’s important to also forge your own unique path. One of the best ways to do this is to find your accounting practice niche. Having a niche will help you increase job satisfaction, gain clients easier, hire the right people, standardize your workflows, improve your marketing ROI and resonate with the audience you are best at doing business with.
It’s important to note that there is no one right niche. You may segment your market and find a niche by industry, location, age, the type of work you do or a combination of factors. And, while this may seem complicated or daunting at first, the following steps will simplify the process and help you nail down your niche:
Step 1: Discover Your Passion
What are you best at? What interests you most? Following your passion will make it easier to increase your knowledge and skills, while making it feel less like work. Have your team ask themselves the same questions. Your team should also be passionate about the work they’re performing. The following are some different segments to consider:
- Are you passionate about your local community, or do you have an online one? Do you want to niche by location?
- Age or Tech Savviness
- Do you love working with younger people, older people or a mix? Are you passionate about working with early adopters? Are you good at coaching and training tech laggards?
- Type of Service
- Do you want to be a full-service firm, or is there a particular service or group of services that provide you and your clients the best value?
- Industries that come to mind include dentistry, lawyers, construction, eCommerce, healthcare and manufacturers. Do you have a particular overabundance, preference or experience in a given set industry or sub-vertical?
- Business Size or Complexity
- Do you want to specialize on small-, medium- or large-sized businesses?
- Business revenue
- Do you like to work with business owners who are hobbyists or part-timers making less than $100,000? Do startups energize you? Perhaps $500k-$2M, $2-$5M, $5-20M or beyond?
Step 2: Which Clients are Satisfied, and why?
Take a look at which of your clients are most happy. What are the similarities between those clients? What industries are they in? Is there a pattern to who your most happy clients are? What do your best clients recommend you focus on? The answers to these questions are good indicators of your passion and what you gravitate towards.
Step 3: Vectors of Similarity
Here, you want to look at your clients and all the various ways they may overlap and intersect, with respect to those you are most passionate about and whom you are serving best. Some examples of common vectors:
- Industry and sub-verticals
- These include lawyers, doctors, manufacturing, distribution, retail and eCommerce.
- Company Size (employees, revenue)
- Number of employees, revenue and more.
- Service Needs
- Are you providing audit, tax, payroll, accounting, bookkeeping or advisory, for example, or a combination?
- Business Complexity
- This can be driven by employee headcount, but also by industry.
- Geographic Location
- Local, global or specific to a particular locale? Do they require specific expertise?
- Tech Savviness
- Very tech savvy, or not at all? Do they use many apps?
- Life Stage of business
- Startup, growing, mature or declining … which one describes your stage?
- Owner Characteristics
- The owner generally embodies the business, no matter if they are type-A, organized, disorganized or laid-back. The way the owner interacts with their business and their employees is often the same way they will interact with you.
The goal, here, is to find trends amongst those clients you have the most passion for, and who are most satisfied with your work.
Step 4: Consolidate to Make Groupings
Now, take all of the data from the previous steps and group them so that they may better be evaluated as a possible niche. Can you take three or four of those vectors and start to see a trend? For example, you may find a group of clients of a certain business size, life cycle, industry and location.
Optional Method: Evaluating and Choosing a Niche (using Harvey Ball method)
While steps 1-4 above provide a qualitative method, many people would like a more scientific method to narrow in on their niche. The steps below provide a more advanced method that helps to narrow down to the top 2-3 segments to consider.
- Step A: List Criteria of Evaluation
- Identify 10-12 criteria for evaluating the groupings you have made. These can be things such as passion fit, clients’ willingness to pay and how big the market is for that segment.
- Step B: Select the Top Five Criteria of Evaluation, and Use a 100 Point Exercise to Enable a Weighted Scoring
- From the list of 10-12 criteria listed previously, choose your top 5 of interest. For those, distribute 100 points based on their importance to you. It shouldn’t be evenly distributed, but reflect on what you decide is most important.
- Score Each Segment (or customer) for Your Criteria on a Scale of 1-5
- Using the analyses from steps 1-4, take the client segments derived earlier to evaluate each, using a Harvey ball scoring method for relative scoring on a five-point scale. If you don’t know what your segments are, list out your existing top 10 customers and evaluate them. Give each segment or customer a score from 1 (low) to 5 (high) to rate how they fit each of the evaluation criteria. For instance, if the evaluation criterion was "willingness to pay" and your existing customer doesn’t hesitate to pay the quoted price for the services proposed, then they would score a 5. If they were a penny-pincher, then you might score them a 1.
- Give your other segments a score from 1-5, based on how well they do for each of your weighted criteria.
- Do the Math
- With the matrix of scores for each segment complete, it is just a simple matter of multiplying each group’s 1-5 scores by each criterion’s respective weight percentage. For example, one segment may have a 4 on passion fit, and if passion fit has a weight of 40%, the resulting score would be 1.6. Add that to the other four criterion’s weighted scores and you’ll get the composite total for each segment (which will be less than 5).
- Evaluate the Results
- Sort the composite scores from highest to lowest. This will bring those segments that you most want to work with to the top.
- Pick Your Segment(s) of Choice
- Pick whether the first, second or a hybrid of the two top segments, should be your niche.
This exercise will help you to identify the ideal niche for your practice to focus on. Now, the only thing left to do is to go all in. Involve yourself completely in this chosen niche and be an expert in that field. Learn how they think, how they speak and what they want. Use your knowledge to shape the services you offer and how you market them. If you can prove you have designed exactly what they need, and have the skill set to back it up, you will set yourself apart from all of your competitors. Your modern practice model is how the world will see and feel your commitment to being different.