Operating within a specific niche is one way to grow your firm. A niche is a certain market or target audience you have expertise in and purposefully market to. For example, at Summit Virtual CFO by Anders, we market our outsourced CFO services to four niches: creative agencies, law firms, cannabis operators, and transportation and logistics companies.
After years of "niching down" by marketing to and servicing specific audiences, I have found that many firms are curious about this business strategy but are a bit skeptical at the same time. There are many myths flying around the internet about how niching down can harm your firm. That's why I'm writing this article: I want to show why these myths are false and share how niching down has actually helped us grow as an accounting firm.
Myth 1: Finding and pursuing a niche will limit your customer base and negatively impact profits.
This first myth is absolutely false. I believe this way of thinking comes from the idea that operating within a specific section of the market reduces the size of a company's client pool. However, if you select a niche with a large number of potential clients, your customer base will not be limited. For example, I serve as a virtual CFO in the cannabis niche, a rapidly growing industry with few accounting firms providing services to companies operating within it.
With any firm, it's imperative that you determine who your target customer is and develop marketing strategies that will help you provide accounting services to that customer base. Selecting and pursuing a niche is a piece of that process. Being strategic in your marketing and the services you provide means you will likely attract more clients than if you pursued a wider audience with a more general message. This is the case because you're communicating that you understand the challenges and needs of this specific audience and are available to address them.
Also, niching down does not mean excluding clients outside a specific section of the market from becoming a client. We have had clients outside of our verticals request our services, and we have taken them on as clients. If you find yourself in a similar situation, I recommend taking those companies on as clients if you can provide the same products and services to help them achieve their goals.
Myth 2: You will succeed by pursuing a niche you're passionate about, regardless of what industry research yields.
Following your passion is often encouraged in business. While it is definitely necessary that you select a niche that you and your team are passionate about, it's only one of a few factors that will help you choose a niche that leads to growth. These other factors include:
- Economic figures that determine if the companies operating within your chosen niche are big enough to grow and sustain your accounting practice. These figures might include these companies' revenue growth and disposable incomes. Both of these figures will answer the question of whether or not these businesses have the money to hire your team.
- The services you provide, which indicate whether your team has the skill set necessary to address the challenges and needs of your chosen audience.
- The current industry landscape, including the number of companies and competitors operating within the market. Before selecting your niche, you should also know the industry's lifecycle stage. Is business accelerating, booming, decelerating or tanking for these companies? If business is up or booming, you might consider serving this industry. If you discover an industry that's decelerating or tanking, you likely should avoid that niche.
Myth 3: To become a thought leader, you must be an expert within a specific niche.
Accounting firms typically use traditional outbound marketing methods to build their client base. These methods include reaching out to potential clients by placing advertisements in print publications, cold-calling possible clients, participating in direct mail campaigns, advertising on television and radio, and telemarketing. However, at Summit, we take an inbound approach to our marketing, where we nurture the client through thought leadership. Our potential clients reach out to us because we've been providing content that has alleviated some of their pain points already, and they are ready to become a client to get more problems solved. Our thought leadership strategies include hosting webinars, using search engine optimization, sending emails packed with helpful blog posts and sharing on social media.
Establishing yourself and your team as thought leaders in the niche you've chosen will communicate to the world that you're well-versed in the specific industry you're serving, which attracts more people within this niche. However, you don't have to be the one and only expert in that field or niche. You just have to leverage what you already know and share that knowledge with others through marketing. If you still don't feel ready to label yourself as a thought leader, I suggest taking on more opportunities to share your insights and experiences. The more you speak on what you know, the more comfortable you get with the idea of being a thought leader.
Deciding on a niche is a great way to grow your accounting firm. The key is to choose a niche wisely. The first step to successfully marketing your new niche is to communicate your team's expertise by using thought leadership tactics, ultimately encouraging your target audience to become clients. Hopefully, debunking some of these myths inspires you to niche down to achieve your growth goals!
