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Should you niche or not?

20th Jun 2024
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Are you running an accountancy practice? Or is it running you?

AVN helps you to take back control of your practice.

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It’s a recurring question for accountants. Should you specialise in a specific type of client? Or is it better to work with a broad range and offer a more generalised service? Shane Lukas looks at the pros and cons.

Should you niche or not - AVN Inspiring Accountants - image of two wall niches

Let’s start with the different types of niche. Most often niching is thought of as a particular industry, but it could just as easily be to a specific set of circumstances. 

For example, the niche of one accountant I’ve worked with was based around a particular kind of client. In his case, this was business owners with a turnover of £1m - £2m who wanted to grow to £10m and then sell. With this focus, he was able to appreciate the specific challenges that businesses face at this point in their growth journey and use his specialist knowledge to help them achieve their objectives.

Your niche could also be geographical or perhaps start-ups or family businesses. It could even be a particular personality profile who you find it easy to connect with, someone you know will listen to and act on your advice.

I believe niching has many advantages for accountants – as long as you do it right.

5 benefits of niching

1. Build a deep understanding of your clients

Immersing yourself in a particular niche means you can really dig deep into the challenges they face and develop services to tackle them. You start to understand how to use the right language and terminology so you can connect better with those working within it.

2. Better client relationships

That deep understanding of your clients’ business helps to build lasting relationships. They are much less likely to seek out another accountant when you are offering a service that’s hard to find elsewhere. 

3. Streamline your services

When you’re focused on servicing a particular type of client, your operations become more effective. You can streamline your processes (e.g. onboarding or delivery methods), develop standardised methodologies and leverage your experience to work more efficiently. So the number of processes decreases, overhead costs reduce and profitability goes up.

4. Target your marketing

The beauty of niching is that you don’t have to try to be all things to all people. Your marketing can be laser focused on your ideal clients, demonstrating that you understand their specific needs.

Another accountant I’ve worked with chose IT as his niche. But he wanted to keep promoting his other services. So he focused his niche marketing on just one channel, LinkedIn, and kept the information on his website as a more general accountant. This really helped him to target his LinkedIn activity and attract only those clients who were right for his niche. In fact, due to his positioning and the foothold he had in the sector, he was approached by a management consultant who wanted to add an accountancy arm to their business, resulting in a very profitable joint venture.

5. Charge premium prices

When you’re known as a specialist it’s easier for clients to perceive your value. As long as you can demonstrate how your particular skills and knowledge are benefiting the client, they will be happy to pay a higher price. 

Of course, there are downsides to choosing to niche.

The disadvantages of niching

1. All your eggs in one basket

This is the biggest drawback and probably the key reason why accountants hesitate to niche. If your chosen sector suffers a downturn or a rapid change (think how Covid stopped many businesses dead overnight or how technology has revolutionised others) your own business may become vulnerable.

2. Limited market size

The pool of potential clients is smaller than when you target a broader market. This can limit your opportunities to grow your practice with a consequent impact on revenue and profitability.

3. Missed opportunities

If you narrow your focus too much, you could miss out on potential opportunities in related markets. It could be that your specialism is applicable in another area, but you won’t see it if you aren’t looking out for it.

My suggestion to counteract these disadvantages is to limit your niche to 40% of your client base. This ensures your practice is still exposed to other industries/business types and allows cross-fertilisation of ideas and concepts. It’s also important to keep evaluating the viability of your chosen niche and to stay flexible in meeting their needs.

If you’d like more help on identifying your ideal client and finding the right niche, download my book, Putting Excellence Into Practice.  It gives you a comprehensive methodology for building your perfect accounting practice. Download Putting Excellence Into Practice here