Adapting to Today's Market Needs
When Peter Freuler took over his father’s Kissimmee, Florida CPA practice in 2005, it was highly dominated by 1040s, which included filing 700 individual returns and 125 business returns. At that time, his firm’s revenue was approximately $245,000. Today, his firm has more than doubled its revenue to reach $525,000 in 2013 and the hourly realization rates along with profit margins are much more attractive.
How did Peter change the direction of his business and grow revenue? By not being afraid to evolve. He strategically changed the direction of his business by moving from individual tax engagements to working with small businesses.
“We’ve steadily and strategically grown more business- focused,” he said. “We don’t turn down individuals, but we are not trying to be H&R Block, either.”
Focus on Real Estate
Peter recognized a need to market his firm to attract more clients. He knew that targeting just anyone with the need for CPA services would not work, so he decided to create industry niches to differentiate his practice, attract a certain type of client, and gradually strengthen our firm’s knowledge of that particular industry sector.
“Our original niche in dental and medical accounting started with just one client. This part of our business has stabilized as the healthcare industry as gone through regulation changes and some hospitals are buying medical practices,” he said.
As a result, the need for another business evolution occurred. Peter decided to augment his medical practice accounting niche with a real estate accounting niche. About two years ago, the local real estate market started to turn around so we decided to create a niche within the real estate sector amongst commercial property owners, residential property investors, and even non-resident property owners, which there are many in the Orlando area.
“Around 2008, the drop in the property value of vacation real estate dropped in the Orlando area,” said Peter. “Individuals and investors started buying vacation condos as investments and called our practice, asking questions. Pretty soon we were able to answer those questions easily; and our second niche was born!”
Peter’s clients include international investors who have purchased U.S. property, as well as brokerage firms, property management firms and individuals who purchase the property as an investment.
“Some of our clients receive an easy 15% to 20% yield on rental property investments, but they need help with some of the more complex tax issues they face,” he said. That’s where we now excel.
The Niche Advantage
As Peter can attest, establishing a niche helps accounting firms and other businesses market themselves. The niche differentiates you from the competition, establishes you as a subject matter expert and enables you to reach your target market more easily. Over time, these type of business clients become easier for our entire staff to manage because of repetition.
Yet, creating a niche alone does not necessarily increase your business unless you complement it with marketing that effectively reaches this target audience. In Peter’s case, he uses a combination of print newsletters designed specifically for real estate businesses in conjunction with direct mail letters to generate new leads amongst local businesses. He also has a website designed specifically for real estate businesses that targets local businesses and non-resident property owners who may reside in Europe, South America or throughout the United States. The Orlando area is very unique in that it has many residential property owners who come there periodically for vacations and manage it remotely as a rental property.
About 60% of our new business comes from Internet leads, which more than offsets the cost of maintaining three websites. The nice thing about internet leads is that the prospect has been hunting for a particular accounting firm, is ready to buy, and then takes the time to call us with their specific questions. And often, they are more than willing to work with us remotely, so they are more efficient to service over the old fashioned hand holding client.
“A lot of clients call us because their former CPA could not answer their real estate tax questions, so they start searching and find our website,” said Peter. This puts us into a consultative type situation, which we enjoy, and is very easy to close.
Peter added that CPAs need to understand that achieving measurable results takes time and a continued commitment. “I’ve often been asked about the ROI of my marketing. I tell people it is a long-term investment. Interestingly, I recently got a call from a prospective client who received a direct mail piece from me three years ago!”
About the Author
Hugh Duffy is co-founder and chief marketing officer of Build Your Firm, an accounting marketing and accounting website development firm. Hugh teaches a series of Accounting Marketing Workshops; has a LinkedIn Discussion Group called Modern Marketing Methods for Accountants; and provides outsourced marketing for accountants. He can be reached at 888-999-9800 x151, or at firstname.lastname@example.org