Advantages of having a niche practice

“The riches are in the niches, but the fortune is in the follow-up.” —Pat Flynn, author and motivational speaker

As accountants, it’s in our nature to want to help everyone, so when we first establish our practices, we accept almost any fish that jumps into our net. But somewhere along the way, we get tired of trying to be all things to all people, and competing with every other accounting firm in town who is also trying to be all things to all people.

When no one has a strategic advantage in the marketplace, that puts downward pressure on pricing and strains everyone’s staff to the breaking point.

It worked for our firm

I should know. I ran into that generalist trap with my first firm. As the hours got longer without a commensurate increase in revenue, the stress took a toll on my mental and physical health. I eventually sold the firm; it was the smartest thing I ever did.

After a little time to regroup, Andy Lane and I started Tri-Merit and decided from the beginning to specialize in one specific area: specialty tax credits such as cost segregation, renewable energy, and research and development.

I immediately saw the benefits of specializing. First, it was very gratifying to see the positive impact we were having on our clients’ businesses when we could tell them: “Guess what? We’re going to save you $100,000,” rather than telling them: “You’re going to owe $30,000.”

And before long, we became the go-to experts in the specialty tax credits area. This gave us pricing leverage, and the motivation to niche down and learn everything we possibly could about specialty tax credits.

Having a niche specialization becomes a virtuous circle.

If you look at many of the successful small- and mid-size tax and accounting firms, you’ll find they have a specialization in several selected areas. Having a niche helps distinguish you apart from the competition; it also is good for client recruitment and retention. That’s because you can position yourself as the “go-to” experts in any number of industries and specialty practice areas.

Having a niche can also give you a recruiting advantage because you’ll have a better chance of attracting talent with niche-specific industry or practice-area experience,  such as tech startups, craft breweries, or not-for-profit organizations. That expertise will shine through when you start “wowing” your clients, and demonstrating how well they understand their pain points and opportunities.

Still not convinced?

A niche practice drives satisfaction

According to our firm’s annual CPA Career Satisfaction Survey, three in four CPAs (73%) that specialize in a specific niche or sector are “highly satisfied” in their careers. Compare that to just 45% of respondents who don’t have a niche. In addition, respondents with a niche specialization were evenly split between sole practitioners, small firms, mid-size firms and large firms. Unfortunately, just one in five (21%) respondents to our survey report having a niche specialization.

The accounting firm, Sensiba LLP, has five niche areas and allows employees to pick one industry niche they’d like to focus on, as well as the role they would like to play in that niche. On a podcast we did together, my good friend John Sensiba told me that within each niche, the firm’s employees can further choose if they want to be in a tax, accounting, or advisory role.

Likewise, at Tri-Merit, we put greater emphasis on hiring good people than on filling a specific role or job description. We have a very open work environment that encourages each team member to find ways to align their passions and skills with the work they do at our firm. I‘m proud to say many employees have changed jobs and roles during their time at Tri-Merit, and are almost always happier after the switch. That’s one of the reasons why our retention is so high and why we continue to grow aggressively.

How to develop a niche

If you’d like to develop a niche but aren’t sure where to start, first take a step back from your day-to-day responsibilities. Ask yourself what part of your job really lights you up with enthusiasm and which parts you dread.

Think about how you could spend the majority of your day doing the things that light you up with enthusiasm. Chances are there is a certain type of client based on their industry, service type, personality, or size that’s in your sweet spot.

Think about your hobbies and passions; are they in home brewing, yoga, paddle boarding, adopting pets, or something else?. Do you have clients in these areas or could you start bringing them into the firm?

As the old adage goes: “If you like what you do, you’ll do more of it, and as you do more of it,  you’ll keep getting better at it.”

Start your niche today

The question isn’t whether you can afford to specialize; it’s whether you can afford not to. Start by identifying what energizes you. Look for patterns among your favorite clients. Take that first step toward building a practice that is professionally rewarding and personally fulfilling. Your future self will thank you for it.