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Developing a Specialty Within Your Accounting Practice

Developing a Specialty Within Your Accounting Practice

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by Hugh Duffy

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Developing a Specialty Within Your Accounting Practice

Most accountants that I know hate to compete on price. And yet, they continue to accept new clients who call into the office.

To avoid being viewed as a generalist accounting firm and being seen as a "jack of all trades" who works with all types, I would recommend developing a specialty within your practice so gradually, you have some competitive advantage and will make your practice more attractive to a buyer when you decide to sell.

Developing a specialty, also known as a niche, takes at least 3-6 years to develop. If successful, here are the benefits of developing a specialty:

-Specialty practices are often more attractive when you eventually sell

-Specialty practices generate more referrals from clients and competing accounting firms

-Specialty practices are more scalable because you reduce the variety of work and easier to create efficiencies

-Specialty practices attract more leads from a broader geographic area

    To develop a specialty, you need to understand your niche audience inside and out. By this, you need to understand your target audience's nuances, pain points, life cycle, where they spend time (e.g., conferences, continuing education), pending legislation that is industry specific, and make your brand messaging speak to them. If you need more examples before jumping on board, I would recommend "Blue Ocean Strategy" written by Mauborgne and Kim.

    Why Develop a Niche Specialty Accounting Practice?

    At some point down the road, you want to sell your accounting practice, whether it is 5 or 30 years down the road. Given this, start with the end in mind. In other words, what will make your accounting practice appear more attractive to larger accounting firms and command a premium?

    While that may be hard to answer today, it is easy to identify what they are not interested in acquiring. Here are the aspects that most larger accounting firms will not be interested in buying from you:

    • Audit engagements - Larger, regional firms will not want to buy your audit engagements so avoid these.
    • Orphan 1040 clients - Bigger fish will not want most of your 1040 clients. 
    • Tax Resolution cases - These engagements are not evergreen clients so avoid this area.
    • On premise clients (outsourced controller) - Engagements that require you to be on the client's premise will not be interesting to larger fish. With technology, you need to re-engineer these engagements into virtual service clients.

    While the above clients might generate attractive cash flow, your goal is to build assets that are transferable and can be sold to a larger regional accounting firm.

    Niche Specialties Reduce Your Competition

    Developing a niche dramatically reduces your competition. And if you structure your accounting firm to address their pain points, this will make it harder for competitors to follow your lead. As you scale up your practice and acquire hundreds of these types of clients, there will be additional consulting and value-added services that fall into your lap.

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    Hugh Duffy, BYF CEO and Co-Founder

    Hugh is the consummate marketing coach for accountants and takes pride in the impact that it has on their practice, and lives. Hugh has more than thirty years of marketing experience. Since 2003, he has been teaching accountants on how to improve their marketing and make more money from their accounting practice.